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A Brexit Deal at last! | Flow Traders Investment Competition | Week 8


Following last weekend’s bad news, this week stock markets have known a frenetic start . On Saturday night it became clear that the COVID-19 virus had mutated in the north of England. This mutation sharply increases the infection rate, which would in turn make lockdowns less efficient against the propagation of the virus. In response to this mutation, EU countries decided to close their borders to the UK. This bad news linked to the Brexit uncertainty led to the Monday morning stock market tumble. The Stoxx-600 went down 2.3%, and the London FTSE shrank by 1.7%.


Thankfully, every cloud has a silver lining, and the stock markets quickly recovered with the help of trans-Atlantic good news. Indeed, in the US an agreement was reached for a 900 billion stimulus package. The deal includes a $600 stimulus check to all US adults and 300 billion of aid for small business. This partially compensated the morning market sell-off as the NASDAQ and the S&P 500 closed at -0.1% and -0.4%.


This good news did not last long as Donald Trump rejected the package on Wednesday. He  claimed that the direct payments and the tax-breaks for corporate food and beverages were not high enough. He does not agree with the two-year term of the tax break, and thinks it should be indefinite instead. This would greatly benefit his own business as Donald Trump is the owner of a large number of hotels and subsequent restaurants. Trump got support from the democrats, however, the republicans refused to modify the deal. The stimulus saga is to be continued.


Lastly, on Thursday evening a Brexit deal was announced. After 10 months of negotiations the UK and the EU have finally managed to agree on the terms of Britain's exit out of Europe. The

UK House of Commons will have to approve the treaty on the 30th of December. It is expected that the deal will be widely backed by all parties. Keir Starmer, the Labour Party leader has for instance already stated his intention of voting in favour of the deal as it would probably still be better then a no deal. The European members will likely vote the terms of the treaty in early february.


Overall the indexes showed little movement this week. The S&P 500 declined by a small -0.2% while the Dow Jones and the NASDAQ closed on 0.1% and 0.4% respectively.


Looking at our investment competition, CFQ still tops the table with an M2 of 8,34%. This is 1.86% higher than the runner-up Fundamenta Fortis. The highest return of 11.98% was achieved by Capital Phi investments. Further down we have seen some movements especially from Borsa Valori gaining 14 spots in a week and ending at rank 24. The most unfortunate investment group was Ares that had to celebrate Christmas with 17 spots less.


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