• ARI Media

10 Things the Teens Brought World Markets


The 21st century’s teen years, bookended by a financial crisis at the start and the fintech revolution at the end, were a decade of disruption. From negative borrowing costs to bitcoin, here are ten trends that have upended traditional economic and investment models in the past decade:


1/FAANG-TASTIC FIVE


If they were a country, they would be the fifth-largest in terms of economic output, outgunning Britain and snapping at Germany’s heels. With a $3.9 trillion market value (versus around $100 billion in January 2010), tech giants Facebook, Amazon.com, Apple, Netflix, and Google-owner Alphabet — collectively known as the FAANGs — are not only at the vanguard of history’s longest share bullrun but have transformed how humans work, shop, consume news and relax.


FAANGs comprise 7% of the MSCI global equity index today, up from around 1.6% in early 2010. The savvy investor who sank $25,000 in Netflix in 2009 would now be sitting on $1 million.


And in the slipstream of the five pioneers, other tech titans are rising, from China’s BAT grouping of Baidu, Alibaba and Tencent to the sector “disrupters” Uber, Airbnb, and Deliveroo. For better or worse, the world — and markets — have changed forever.


2/PAYING TO BORROW


A defining feature of the years following the 2008-2009 meltdown was the slide of interest rates and government borrowing costs below 0%, possibly for the first time in history. U.S. and German 10-year borrowing costs collapsed by 200 to 400 basis points this decade; the latter to as low as minus 0.7%. Roughly $12 trillion in debt carries negative yields, almost a quarter of all bonds outstanding.


The drivers — central banks’ asset buying, sub-zero interest rates, yield curve manipulation, and the tech revolution’s deflationary effects — were in themselves groundbreaking, at least in terms of scale. The Bank of Japan holds assets collectively worth more than Japan’s economy. The European Central Bank’s balance sheet is a quarter of the euro zone’s annual output but double decade-ago levels.


3/A CENTURY IN BONDS


With record-low rates and yield-starved investors, bonds with tenors longer than the average human lifespan have caught on.


A handful of 100-year bonds were around in 2010, but Mexico’s $1 billion issue maturing 2110 started an issuance surge that saw U.S. and British universities, Ireland, Belgium and Austria, U.S. municipalities and corporations such as Coca Cola and Petrobras sell century bonds. Even junk-rated serial defaulter Argentina drew huge bids for its 2117-maturity bond.


Just over 1,400 century bonds, worth almost $170 billion are now outstanding, according to Refinitiv.


But … caveat emptor. Buyers of the Argentine century bond have watched it lose half its value. Austria’s issue, also sold in 2017, is up more than 60%.


4/COINING IT


In 2010, Bitcoin was an idea causing ripples in niche online forums. Ten years later, cryptocurrencies are intertwined with finance, business, and politics.


Crypto markets, non-existent in 2010, are now worth over $200 billion, having hit an $815 billion peak at the apex of the bitcoin bubble. Having changed hands for just 3 cents in its first public trade, bitcoin now trades over $7,500. That’s off its peak near $20,000, though – a reminder of its volatility. Usage has also spread. Coin Metrics estimates that from 130 active bitcoin addresses a decade back, there are now nearly 750,000.