This Week’s Top Headlines

i) Bitcoin hit its highest level in over a year, surging above $31,400 on Friday before paring back some of its gains to $30,600. Excitement in the markets were spurred by a wave of interest in crypto from financial giants, as BlackRock last week applied to register a Bitcoin spot Exchange Traded Fund (ETF).

ii) The pound sterling has reached a seven-year high against the ringgit, currently standing at RM5.95. It is up by an astonishing 16.41% since its low in February. The Bank of England surprised the markets on Thursday by raising interest rates beyond expectations and projected that further hikes are likely if inflation persists.

iii) Touch n’ Go’s digital loan service, GOPinjam, has registered over 88,000 individuals in just a little over a year after its launch. A total of RM91.1 million worth of loans have been disbursed by the firm as of March 2023, according to the Ministry of Finance.

Scroll down to read the details.

Shoutout to all Learners and Gatherers! Thank you for all your support.

Get early access to our newsletter and miss nothing from the markets. Join our journey towards financial literacy today.

Our private announcement group will keep you updated with market movers and urgent matters. For only $1/month, you'll receive our weekly newsletter every Sunday night and daily notifications on important events, some with detailed thoughts from economist Mr. Sani Hamid.

✅ No commitments.

✅ Cancel anytime.

✅ Zero ads, zero shills.

Bitcoin rallies by 26% in 10 days

Ignited by the excitement of a Bitcoin spot Exchange Traded Fund, the world’s largest cryptocurrency reversed all of its losses since April and jumped by 26.6% in just 10 days.

It is currently trading at $30,600, having retraced slightly from its 12 month high of $31,400 on Friday.

The fear and greed index, which tracks the current sentiment of investors in the crypto market, swung hard right into greed, where it previously spent almost two months hovering at neutral territory.

Vijay Ayyar, head of international markets at CoinDCX, stated that Bitcoin has strong support at the $25,000 level.

What are ETFs and why does it matter anyway?

Exchange Traded Funds (ETFs) are a type of pooled investment security that function very similarly to mutual funds. They often follow a certain sector, index, commodity, or other asset, but unlike mutual funds, they can be bought or sold on a stock exchange just like normal stocks can.

Buying a spot Bitcoin ETF allows investors to gain exposure to the asset without having the risk of owning it.

Last Thursday, BlackRock filed an application for a spot bitcoin ETF and listed Coinbase as its custodian. This comes even as major US crypto exchanges have been hammered by huge regulatory pressure from the Securities and Exchange Commission (SEC).

BlackRock is the world’s largest asset manager, with $8.59 trillion of assets under management as of Dec 2022. Its entry into the crypto industry will bring a substantial influx of new capital into the ecosystem.

Following BlackRock's announcement, several other asset management firms, including WisdomTree and Valkyrie, have subsequently filed their own applications for a Bitcoin ETF.

1 pound sterling is now RM5.95

The British pound has rallied by an astonishing 16.41% since its low of RM5.116 in February.

Currently at a 7-year high, analysts believe that it is entirely possible for the pound to strengthen to RM6.00 against the local note, given the prevailing negative sentiment surrounding the ringgit.

Why is the pound rallying?

On Thursday, the Bank of England shocked the markets by implementing a half-point increase, bringing interest rates to 5%.

The unexpected move marks the 13th consecutive hike, pushing rates to a level not seen since 2008.

The decision comes as the UK battles stubbornly high inflation.

Figures released on Wednesday showed that inflation remained unchanged at 8.7% in May, which is over 4 times higher than the Bank of England’s target of 2%.

The data is likely to compound concerns that Britain’s cost-of-living crisis may intensify in the coming months.

In comparison to Malaysia, it’s clear why the ringgit has weakened significantly against the pound.

Although BNM has raised the OPR five times to 3.0% in the past year, it is nothing compared to the aggressiveness of the Bank of England, which raised rates by 5.0% in the same period.

The pound has also strengthened against the US dollar recently as the Federal Reserve winds down its rate hike campaign.

In its most recent meeting, the Fed held interest rates steady at 5.25% and said that only 2 more rate hikes are expected for the rest of the year.

Pound’s rally is likely to continue against the ringgit for the foreseeable future.

The Bank of England has made it clear that it will push interest rates higher if inflation persists.

Meanwhile, analysts are expecting BNM to hold the OPR at 3.0% for the rest of the year, as local inflation has continued to moderate to 3.3% in May from 3.7% in February, marking the slowest pace in nine months.

These factors will widen the difference of interest rates between both countries, driving more demand towards the sterling pound.

Touch n’ Go’s digital loan service attracted over 88,000 individuals just a year after launch

Launched in April 2022, GoPinjam is a digital personal loan service that operates in collaboration with CIMB.

It is accessible to all Malaysians, provided they have a minimum monthly income of RM800.

Borrowers have the flexibility to request loan amounts as low as RM100 for a week or as high as RM10,000 for a 12-month period.

The fixed interest rates range from 8% to 36% per annum and depend on factors such as the loan amount, tenure, and eligibility.

Just a year after launch, a total of 88,620 individuals have taken loans from TnG’s GOPinjam.

According to the Ministry of Finance, an impressive RM91.1 million worth of loans have been disbursed by the firm as of March 2023.

Roughly 55% of the applicants are youths under the age of 30, with an average loan size of RM1,500 per person.

Unlike Shopee’s Sloan which only requires a valid NRIC to be eligible for a loan, GoPinjam requires additional documents from applicants.

These include a month’s payslip from a company registered in Malaysia, 3 months of EPF statement, and a B/BE form e-Filing acknowledgment receipt.

The convenience has been attracting youths to take on unnecessary debt.

Despite this, the MOF has defended GOPinjam, stating that the service is licensed and discourages people from relying on unlicensed moneylenders like Ah Longs.

That’s all for this week’s newsletter!

*This issue was written at 10.45 AM on 25th June 2023 and completed at 2.30 PM the same day. To get early access to our newsletter, be our patron for as little as $1/month!

DISCLAIMER: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.