Insidemma Blog

A growing number of fintechs are positioning themselves as an alternative to profit-hungry banks whose investments are driving climate change. But the newcomers threaten to be overtaken by reality.

Every card payment supports a climate protection project, deposits flow into sustainably operating companies as credit – and the account fees equalize emissions: With these promises the Hamburg-based financial startup Tomorrow wants to stand out from the crowd of current account providers. “Banking shouldn’t cost the world” is the credo, it is meant literally.

The idea is not revolutionary new. Several sustainability banks are already active in Germany with a similar claim. The GLS cooperative bank, founded in 1974 with more than 242,000 customers, is considered the market leader. Tomorrow positions itself as a modern climber who finally wants to “get the topic out of its niche”, as managing director Jakob Berndt says.

Regulatory coercion and social pressure

“More and more startups are bringing together the topics of digitization and sustainability,” says Markus Duscha, managing director of the Fair Finance Institute he founded. You benefit from two trends of recent years: “On the one hand, the regulatory requirements in the direction of sustainability are increasing, and on the other hand there is pressure from society,” says fintech expert Duscha.

As a direct consequence of the financial crisis in 2008, sustainability banks experienced an influx. Today, the new awareness of climate change is fueling business. With their digital products, the startups primarily address young people who have brought the topic to the streets under the umbrella of the “Fridays for Future” movement. There is also a tailwind from politics. For example, the federal government has set up a “Sustainable Finance” advisory board, which is supposed to develop recommendations in order to develop Germany into a leading location for sustainable finance.

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growney keeps the costs of the investment as low as possible and, as an online asset manager, can do without expensive infrastructure expenses – important for the compound interest effect of the investment. At growney you get a transparent fee strategy so that you always know where you stand: there is a service fee, everything is included. Depending on the value of the deposit, it is 0.39 to 0.99 percent per year. For example, with an investment amount of EUR 10,000 you have costs of only EUR 69 per year, with EUR 50,000 it is only EUR 195. ** This puts growney far below the average fee that branch banks charge for asset management.

An investment researcher has chosen harsh words to warn investors about Tesla stock. The e-car maker’s paper could be the most dangerous stock on Wall Street.

For Tesla stock, there seemed to have been only one path in the past few months – steeply uphill. Since the beginning of the year, Tesla has more than quintupled its value on the stock exchange. Most recently, after the announcement and the implementation of the share split, there was a fireworks display. Only last week’s performance was disappointing. Profit-taking and a general slump in tech stocks drove down five percent. The right time to jump on the line of success now? An expert warns.

Trainer: Tesla shares are heavily overvalued

On CNBC’s Trading Nation program, investment researcher and New Constructs boss David Trainer said he believed Tesla stock was grossly overvalued. Even if the best-case scenario always occurs at Tesla in the coming years – for example in terms of the number of electric cars produced and sold, the profit margin or the conquest of new business areas – profits should still be significantly higher.

Tesla’s rating is currently 159 times higher than profits would allow, according to Trainer. Based on the share price, Tesla should have a market share of 40 to 110 percent, assuming the current average sales price of 57,000 US dollars. Tesla is currently one of the largest houses of cards that is ready to collapse, said coach, according to CNBC .

The recent stock split could prove to be an additional threat to potential investors. For trainers, the step of splitting Tesla shares into five parts is an attempt to get inexperienced stock traders to buy. It is clear that the entry barrier for buying paper with a share split – as Apple had carried out at the same time – is falling. Before the share split at the end of August, you had to pay more than $ 2,200 for a Tesla paper, after which it was $ 460. On Friday, Tesla shares traded at $ 418.

Tesla stock should cost more like $ 40 to $ 50

According to Trainer, a realistic valuation would place Tesla stock in the $ 40 to $ 50 range. According to the investment researcher, Tesla is not in the top 10 on the electric car market in Europe. The stricter laws in terms of CO2 emissions would have caused the traditional car manufacturers to catch up when it comes to pure electric and hybrid vehicles. In the US, similar requirements can be expected in the long term. Trainer paid tribute to Tesla and its CEO Elon Musk for their pioneering role in the electric car sector. But a look at the fundamental data ensures that he keeps his hands off the stock.

The month-long boom in tech stocks is said to have been fueled by one player –  Softbank . The Japanese group is said to have bought massive stock options on technology stocks.

Before the slump of the past two days, tech stocks in particular experienced an unprecedented boom . Tech companies such as Apple, Amazon, Facebook and Tesla have almost doubled their market value since spring. Apple, for example, became the first company in the world to reach a market value of two trillion dollars in August . According to coincident reports from the Wall Street Journal (WSJ) and the Financial Times , this price firework on the stock market could have been fueled by a single player.

Softbank: Boom triggered with call options?

According to the insiders quoted by the two renowned business newspapers, the Japanese Softbank group is said to have bought massive stock options on technology stocks in March, as the Handelsblatt reported. According to the WSJ, the purchase volume of the options is said to have amounted to four billion US dollars. Specifically, the whole thing is about so-called call options. These are options to buy shares at previously set – higher – prices. With put options, investors bet on falling share prices.

Because banks that offer call options have to have a correspondingly high number of the underlying shares in stock, these in turn drive the price further up. The options acquired by Softbank are said to have faced tech stocks valued at around $ 50 billion, according to the WSJ. In addition, Softbank is said to have spent another four billion dollars on shares in Amazon, Microsoft and Netflix, as well as a stake in Tesla. Softbank has not yet commented on this.

Big Five dominate US stock exchanges

The so-called Big Five, Apple, Microsoft, Amazon, Facebook and Google parent Alphabet, have pulled the overall market up with their massive price increases. After all, the five stocks make up almost a quarter of the S&P 500 index. Accordingly, market observers fear a general collapse in the stock markets if the tech stocks – as happened on Thursday and Friday – weaken.

Incidentally, Softbank is not likely to be the only player who has influenced the market with the strategy of call options. In the case of Salesforce, whose shares had shot up by 26 percent on the day the quarterly figures were announced, stock traders suspect such influence from an unknown investor. Incidentally, the Financial Times compares these investors with the so-called whales , who are said to own a large part of the existing Bitcoins and other cryptocurrencies. You can trigger large price fluctuations with purchases and sales.

Brussels and Beijing have been negotiating fairer competition for six years. The tensions between China and the USA are bringing new momentum to the talks. But is a breakthrough realistic?

In the opinion of European companies, China must make a big leap to successfully conclude an investment agreement with the EU.

“The European side has made it very clear that China cannot hit in the middle,” said Jörg Wuttke, President of the EU Chamber of Commerce, with a view to the top talks between the EU and Beijing planned for the coming week.

According to Wuttke, fair competitive conditions already apply in Europe – for both domestic and Chinese companies. In China, however, this is still not the case. Therefore, it is up to Beijing to “close the gap.”

Chancellor Angela Merkel , EU Council President Charles Michel and Commission President Ursula von der Leyen want to join the talks next Monday via video conference with China’s President Xi Jinping. One of the topics will be the planned investment agreement, which has been negotiated for six years.

Indeed, against the background of increasing tensions with the USA, China had recently been optimistic that it would be able to initiate an agreement with the EU. Chamber President Wuttke, however, was not very confident that a really comprehensive deal that would satisfy EU companies could be made.

According to Wuttke, the time window for an agreement with China is also closing. There must be an agreement this year. Wuttke justified this with the fact that Beijing is countering more and more political headwinds not only in the USA, but also in EU countries – for example because of human rights violations. An agreement is becoming more and more difficult.

From the point of view of Wuttke, who presented his chamber’s annual position paper on Thursday, China itself would benefit from opening up further. The economic growth of the People’s Republic could experience a significant boost. The Chinese economy has so far lagged behind its potential.

Despite the numerous problems caused by the ongoing decoupling of the USA and China, according to Wuttke, it is not a realistic scenario to withdraw from China. After all, the most populous country contributes 30 percent to global growth.

European companies have benefited from the fact that China brought the corona pandemic under control earlier than other countries . The current momentum in the Chinese market is impressive. European carmakers and numerous luxury brands did good business again.

China’s successful fight against Corona also brings problems for European companies, said Wuttke. Due to ongoing entry restrictions, it is still difficult for companies to bring employees back to China . Business trips are hardly possible either.

EU companies struggled with problems in issuing visas. Travelers who come to China also have to go into quarantine for 14 days in a hotel room. Only then are they allowed to move freely.