Get the investor scoop on a scandal-heavy week involving Facebook, cryptocurrency, and Aussie banks. What’s it all mean for you and your investments? (Reading time 3:50 mins)

This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.


1. Facebook’s data nightmare

Facebook’s share price suffered a sharp fall after concerns and backlash increased over the company’s harvesting of user data. This followed mounting reports regarding Cambridge Analytica’s use of data from 50 million Facebook user accounts, which was allegedly acquired deceptively.

It appears to have come as a shock, with the social network saying “the entire company is outraged” in a statement released on Tuesday.

What does this mean if you’re invested in Facebook?

This is not a simple case of sloppy security and user data being hacked. It relates to user data being provided to third parties, perhaps without sufficient privacy protocols in place.

For Facebook shareholders, there are two key concerns – both of which may impact the company’s growth prospects.

Firstly, whether some Facebook users may stop using the platform due to privacy concerns. Secondly, whether governments might start imposing more stringent privacy regulations on tech giants like Facebook.

What does this mean if you’ve invested money with AtlasTrend?

One of AtlasTrend’s managed funds is invested in Facebook shares. Our investment team believe the spate of recent data breaches within social media may lead to tighter regulation of the industry.

While we believe Facebook will need to stamp out bad actors on its platform, we don’t believe there will be any meaningful downside risk to earnings growth.


 2. Cryptocurrency bans extend to tech giants

The tech giants – namely Google and Facebook – have led the way in banning cryptocurrency advertising on their platforms.  

Google is the latest ad company to join in on crypto crackdowns, and reports have surfaced since indicating Twitter is planning to follow suit.

What does this mean if you’re invested in tech stocks?

A Google representative cited seeing enough consumer harm or potential consumer harm from cryptocurrencies as the reason for the ban. From a reputation and potential liability perspective, it makes a lot of sense for the large tech giants to ban cryptocurrency advertising.

If the cryptocurrency bubble bursts, and Google, Facebook or Twitter were seen to have profited hugely from cryptocurrency advertising – it would be a PR disaster for all of them.

This type of self-regulation is an important move by the tech giants, particularly with various governments around the world working on how to best regulate them.

What does this mean if you’ve invested money with AtlasTrend?

Some of AtlasTrend’s managed funds are invested in Alphabet (Google’s parent company) and Facebook. The two technology companies dominate the online advertising market globally; it’s often referred to as the digital advertising duopoly.

We believe they will both continue to impose advertising restrictions on their respective platforms. The online advertising market is growing fast enough that selected advertising censorship by Google and Facebook is unlikely to dampen their future growth prospects.

In fact, we think it’s good risk management.


 3. Banking royal commission unearths scandal after scandal

The Royal Commission into misconduct in banking, superannuation and financial services is off to a disturbing start. It has already revealed embarrassing and downright questionable activities by the major banks.

The wrongdoings uncovered so far have ranged from offering overdrafts to people who can’t afford it, and conflicts of interest with mortgage brokers, through to selling insurance to customers who can never claim on the insurance.

One bank has even been caught out for failing to provide emails it was asked to put forward as part of the inquiry.

What does this mean if you’re invested in Aussie banks?

It could be an uncomfortable time for Australian bank shareholders during the Royal Commission. In the short term, any significant revelation that puts a bank at risk of a material financial penalty could negatively impact that bank’s share price.

The problems could compound in the long term. We believe there will be building political pressure to increasingly regulate how the banks make money.

Bank shareholders should pay close attention to the final recommendations from the Royal Commission; they’ll act as a window into potential future regulations that could hamper Aussie bank profits.

What does this mean if you’ve invested money with AtlasTrend?

AtlasTrend’s managed funds are not invested in Australian banks, so the Royal Commission findings shouldn’t have any direct impact on the investments within the funds.

Given the royal commission is just getting started, more troubling details of misconduct will likely come to light – further reinforcing our view some major players in the financial services sector don’t always have their customer’s best interest at heart.

In the past, customers haven’t had access to an alternative service provider as banks were the only players in town. Nowadays, technology is allowing nimble, customer-focused firms to compete with big banks. We are excited to be part of this fintech revolution.


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About Kent Kwan

Kent Kwan is a Co-Founder of AtlasTrend, an investment platform that makes it easy for anyone to learn and invest in trends impacting our world. Kent has over 17 years experience in financial markets including as Chief Investment Officer at Arowana International Limited, and roles at JP Morgan and Macquarie.