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Updated January 19, It's certainly the bubble getting the most attention this week, but people should also be careful of risks in the property and stocks markets, according to a report by Danish investment bank Saxo Bank. A bubble is "the situation created when prices go super-exponential" and causes a "departure from fundamentals", he said.
Another characteristic is that it's driven by "pure speculation" as "traders are buying and selling without even considering the fundamental value of the asset". However, he warned this is followed by an eventual "sudden sharp decline when the bubble bursts".
The entire cryptocurrency market plunged on Wednesday, amid fears of a major regulatory crackdown in South Korea. It was a sea of red, with the big players bitcoin, Ethereum and Ripple dropping by more than 20, 25 and 40 per cent respectively.
Jacob Pouncey, Saxo Bank's crypto analyst, said "will be a make-or-break year for the burgeoning crypto[currency] asset market". Furthermore, there are parallels that can be drawn between cryptocurrencies and the dot-com boom in the late s. In a similar vein, companies like beverage maker Long Island Iced Tea Corp have capitalised on the current "crypto bubble" by renaming itself "Long Blockchain Corp", which saw its share price skyrocket in December.
But its impact would not have much of an impact on the wider economyaccording to Capital Economics. He identified the riskiest property markets to be Australia, London, Hong Kong, Sweden, and Norway — where housing prices kept rising despite the global financial crisis. Australia's household debt to income ratio is around per cent, and tipped to grow further. However, investors may feel comforted knowing there's always someone in a less fortunate situation.
The authors of the report stated Australia's housing bubble has been going on for 14 years, with properties appreciating by per cent — and average home prices 6.
In contrast, London property has shot up per cent in 21 years, with average home prices 12 times higher than typical household incomes. Hong Kong's prospective buyers were found to be in an even worse position — with a per cent rise in values, and home prices 18 times higher than average incomes. What's behind the rampant rise in property prices is "accommodative monetary policy and excess liquidity," Mr Dembik said. In other words, too much money being lent very low interest rates which makes it all too easy for people to borrow above their means.
Although stock markets, particularly in the United States, are posting "record-highs" on an almost-daily basis, the report did not go so far as to call it a bubble. At most, he conceded "a correction is likely" since investor sentiment is "so overextended that investors can only be disappointed". As for what he sees believes might cause this 'non-bubble' to pop, the biggest risks are "policy mistakes" from China and US central banks, and whether inflation undershoots, or overshoots. First posted January 19, If you have inside knowledge of a topic in the news, contact the ABC.
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Meghan Markle's about to say "I do" to a life of weirdly-shaped headgear, constant surveillance, and creepy commentary about whether she is fulfilling her function as an heir oven.
Fun times indeed, but she's still had it better than Our Mary did. Australia has no policy designating English as the official language, but an explicit "English first" policy for signage would treat speakers of every other language as second-class citizens. In a worrying sign for the region, the number of attacks has been on the rise, driven in part by the return of fighters from the frontlines of Islamic State's battles in the Middle East.
Houses are going up at such a rapid rate in one part of Sydney that local infrastructure has no way of keeping up unless all future residential proposals are suspended, the State Government says.
By business reporter David Chau. Aside from bitcoin and cryptocurrencies, the property and share markets are at risk of a sharp correction, according to Saxo Bank Flickr: Pump turns to dump — bitcoin and cryptocurrency prices plummet. Bitcoin 'bubble' dwarfs dotcom boom, prices 'have a lot further to fall'.
Shares skyrocket on new photo currency. What bitcoin says about us Bitcoin is a formula almost guaranteed to end in tears, but still speculators pile in to the bubble, writes Ian Verrender.
Is the property boom over? With east coast property prices now stalling, or even heading backwards, the expert consensus is that Australia's real estate boom is over. But what happens next? Why we buy cryptocurrency despite the risks Will those who've made cryptocurrency profits pay their tax?
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Connect with ABC News. Got a news tip? Editorial Policies Read about our editorial guiding principles and the enforceable standard our journalists follow. Meghan Markle meet Princess Mary Meghan Markle's about to say "I do" to a life of weirdly-shaped headgear, constant surveillance, and creepy commentary about whether she is fulfilling her function as an heir oven.
Putting English first Australia has no policy designating English as the official language, but an explicit "English first" policy for signage would treat speakers of every other language as second-class citizens. The return of IS fighters to SE Asia In a worrying sign for the region, the number of attacks has been on the rise, driven in part by the return of fighters from the frontlines of Islamic State's battles in the Middle East. Housing outgrowing infrastructure By Angelique Lu Houses are going up at such a rapid rate in one part of Sydney that local infrastructure has no way of keeping up unless all future residential proposals are suspended, the State Government says.
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