Before the bell: Trump’s only success is the bitcoin price

Bitcoin surges past 111,000 dollar. Gimv jumps. Montea and Qrf go ex-dividend. Japanese interest rate hits 25-year high.

We’re often hesitant to talk about bitcoin—let alone other cryptocurrencies—because it doesn’t quite fit the image of a prudent, conservative investment. Okay, we can understand the case for allocating a small portion of a portfolio to gold as diversification from bonds and equities. So why not, some argue, a (very) small slice in digital gold too? As always, the longer and harder something rallies, the more believers it gains. Bitcoin surged past a new record of 111,000 dollar yesterday. The reason? As with many market moves these days, Trump II seems to be behind it. A new bill is in the works concerning so-called “stablecoins,” crypto tokens backed by official currencies or real assets. With Trump likely in power for another three years, many assume there’s more crypto upside to come. But be careful—if he loses the House and/or Senate in next year’s elections, his dominance—and thus the Trump-fueled crypto optimism—could vanish quickly. So far, Trump’s track record is less “great” than promised: Wall Street is in the red, bond yields are rising, business confidence is shaky, and consumer sentiment is waning. Oh, and also: self-enrichment, cozying up to dictators, and embarrassing international partners. But yes—bitcoin is at a record high.

In Asia, the Hang Seng is up 0.5% and Japan’s Topix index climbs 0.7%. BYD continues its rally with a 3.3% gain and has already advanced 77% this year. As is typical on a Friday, there’s little corporate news, though Unifiedpost—now operating under the name Banqup—is an exception in Brussels. At 11:00, the European Central Bank will release a wage growth indicator for the eurozone. Montea (3.74 euro) and Qrf (0.84 euro) go ex-dividend today.

A holding with value and plenty of cash

Gimv jumped 5.3% after a strong annual report. The financial year only ended on 31 March, but from now on it will align with the calendar year, ending on 31 December. That means the next fiscal year will span just nine months. The stock climbed thanks to robust results: the portfolio value rose by 19.3%. Following a capital increase in March, the cash position —relatively speaking— has swelled to near Berkshire Hathaway levels. Gimv is now well-positioned to seize new investment opportunities as they arise. The company is often criticized for its relatively high cost structure. Unlike holdings such as Sofina and Brederode, Gimv invests more heavily in smaller, unlisted businesses, and its managers play an active role in supporting those firms. That costs money. That’s why it’s smart to use the capital increase to scale up—spreading the fixed costs and reviewing the cost structure itself. At today’s price, Gimv is trading at a 13% discount to its net asset value.

Japan’s interest rate rises again

Japan is often overlooked by investors, despite being a wealthy nation with a business cycle that frequently diverges from the West. Today, the country reported inflation of around 3.5%—higher than in many other economies—despite having battled deflation for over a decade. Analysts now expect a fourth interest rate hike soon. In March 2024, Japan ended its era of negative interest rates. Ten-year government bonds now yield 1.57%, and the 30-year rate has hit 3.17%—the highest in 25 years. It’s no surprise that the yen is rallying from its historically low levels. That may not be a bad thing for Japanese firms, many of which have substantial overseas operations.

Did you know…

that Gimv delivers far better returns than Participatiemaatschappij Vlaanderen (PMV)? According to De Standaard, Gimv generates a return on equity of 14.7%, while the similarly sized PMV earns just 1.3%. Gimv was originally state-owned by the Flemish government, but the government exited completely last year.

This article was translated from Dutch and was originally published on Spaarvarkens.be.