A Triumphant 2016 and a better 2017

A Triumphant 2016 and a better 2017

2016 turned out to be a good vintage for the stock market.  US, UK, Germany and Japan stock markets all had a good run in the second half of the year (as of 22 December anyway).  Who could have guessed that?  Brexit turned out to be a great opportunity to buy stocks in developed markets and Donald Trump winning the US President Race was a turbo charge to the stock markets.  Italy referendum ended up being a celebration party and stocks rallied harder.  The currency market was skewed.  The mighty US Dollar gained so much against the Euro, the British Sterling, the Japanese Yen and the Chinese Yuan since the Trump victory.  Currency brokers had a great November and December.  The world is suddenly so beautiful and rosy if stock chart is the only reference.

2017 is definitely going to be a busy year for UK government with Brexit issues filling up their email inbox.  Uncertainties are going to be the core components in any business.  Lucky for some, the weak Sterling is a life saver.  Companies with cost base in Sterling and income in USD or oversea clients are feeling the joy.  Technology, pharmaceutical, oil, global banking and finance, tourism, education, security sectors are some obvious ones.  These companies contributed to the rally that took FTSE 100 to above 7,000.  FTSE100 had a range of 5500 to 7100 level in 2016.  Pretty much any entry point to the market during the year is a good entry point.  2016 is a good vintage indeed.  Will this trend follow in 2017?  We need to consider the currency.  Where is the Sterling heading against the US Dollar and the Euro?  There are people betting on Sterling, Euro and the USD all becoming 1 to 1.  Yes, GBP 1 = EUR 1 = USD 1.  This means GBP drops another 19% against USD.  It sounds unreal and it would be a black swan.  But an 18% drop already happened in 2016.  On the other side, can anyone see GBP getting back to 1.49 against the USD in 2017?  This would be an even bigger black swan.  Especially if one takes into the account of what the Euro zone is facing in 2017.

2017 is a year of election for the Euro zone.  The Netherlands’s General Election is on 15 March.  France’s Presidential Election has its first round on 23 April and second round on 7 May.  Germany’s Federal Election on 22 October.  Italy may also have a Prime Minister election in 2017.  Each of these could bring a new leader with a political agenda on leaving the EU.  In most EU member countries, there is a political party with leaving the Eurozone as its political statement.  It is expectable.  There are hardcore Manchester United fans and there are hardcore Man City fans.  But there is only one champion each year.  Fortunately, the Premier League champion does not get to decide on leaving the EU.  Otherwise we could be in and out of Brexit every year.  Maybe the Dutch, French and German elections would turn out to be a nonevent like Italy referendum.  I doubt it.  So there should be a few opportunities to enter the stock market in 2017.  Currency wise, Euro is within walking distance to parity level with USD, 1.047 as of 22 December.  All Euro needs to do is to swing like a pendulum and we are likely to witness EUR 1 = USD 1 in 2017.  So please do not be surprised.  A weak Euro is helping export economy in the Eurozone like Germany.  Italy and Spain will benefit as well but they really need to issue more debt to keep the country going.  Austerity stops working when your income is dropping faster than you can cut cost.  Italy has 63 different administrations and such historical setting means any austerity measure is likely to be diluted or even resisted.  Italian banks are too big to fail as that will hurt the depositors and could cause social unrest.  There is a good reason why some people think Italy needs to leave the euro and goes back to lira.  To buy time, the European Central Bank continues to print Euro, pump money to the countries that need help and allow Euro to weaken further.  Hopefully, someone will have a cure in the future.

If USD strength continues in 2017, Europe and UK stock markets have the wind behind them.  UK has already set its sail on the Brexit route.  Euro zone is likely to hold itself together in 2017 while the money printing machine probably needs to work overtime.  Assume both Euro and Sterling weakens hand in hand against the USD, 2017 could be a good vintage in volatile weather conditions.

Donald Trump and Beppe Grillo

Donald Trump and Beppe Grillo

Donald Trump is the next US President.  The world was stunned.  Republican has also won majority seats in Congress, beating the Democrats in both the Senate and the House.  On 8 November, the actual day of election, Asia markets panic and came off on the back of Trump leading the race.  Europe opened low.  Surprisingly, US market opened strong and seemed to be celebrating Trump victory.  The S&P 500 index rallied 3.4% from 2131.52 to 2204.72 from 7th November to 23^rd November. Trump made comments about removing Obamacare and Dodd Frank.  Healthcare stocks and banking stocks put on a massive rally.  Pfizer and Merck were up 3.4% and 2.6% from 7^th to 24^th November.  JP Morgan share price went from USD 69.88 to USD 78.86, up 12.9%, in the same period.   Citibank, Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch all went up 13.8%, 17.0%, 20.7% and 20.9% respectively in the same period.  

The market took Trump America first gesture very seriously and the USD strengthened against all major currencies.  USD JPY moved 8% from 104.2 to 112.6 between 8 November and 24 November.  The Chinese Yuan weakened from 2.3%, the EUR and GBP also lost 5% and 0.4% against USD.  Gold also dropped to USD 1180 level as investors expect US Fed to increase interest rate in December.  A strong currency with an expectation of a rate hike attracts a lot of money. The USD strength may be fiercer than anyone could expect.  But there were signs.  Bank of Japan has been waiting for this opportunity to welcome a strong USD.  Remembered when Bank of Japan announced QQE in October, the market did not react much.  The market knew Bank of Japan is running out of tricks to depreciate JPY as the market was willing to bet that Bank of Japan cannot push JPY weaker.  However, Bank of Japan can wait for a stronger USD and the US President Election was the catalyst.  As JPY weakened, the Japan stock market has been strong.  Nikkei 225 has rallied from 7% from 8^th November to 25^th November.  On the other hand, Eurostoxx 50 rallied 1% from 7^th November to 24^th November.  FTSE100 went up 0.3% in the same period.  Banking stocks in Europe also enjoyed a nice rally.  HSBC went up from GBp 59.15 to GBp 61.45 from 7^th to 24^th November.  Lloyds, Barclays, Duetsche Bank, Credit Suisse and BNP were up 6.4%, 16.3%,  11.0%, 11.3% and 5.3% respectively in the same period.

December could be a difficult month for Europe with the Italy referendum taking place on 4 December.  Could this be the 3^rdpolitical surprise this year after Brexit and Donald Trump?  Mr Matteo Renzi, Italy Prime Minister and leader of the centre-left Democratic Party, is putting up a referendum to reduce power from Italy’s 20 regional governments and the Senate.  It is a threatening tactics and Mr Renzi is saying to voters either to give him more power or he will step down.  A bit aggressive from an Italian in some eyes.  The flip side of passing this referendum is that if the Prime Minister is a disaster, the Senate can do very little and Italy will be stuck with the wrong leader for 5 years.  If the referendum dose not get pass, Mr Renzi is likely to step down.  Then Mr Beppe Grillo, a former comedian and leader of the Five Star Movement, may get a shot at the top job.  The former stand-up comedian is outspoken and he wants to abandon the euro.  Five Star Movement is an anti-establishment party and they want to leave the Eurozone.  Italeave may become a real word rather than a joke on Twitter.  If the outcome is yes, Mr enzi gets the power he wants.  All future Italy Prime Minister would also benefit from it and enjoy a 5 years guarantee mandate.  Such power could be mis-used and may not be good for the country in a long run.  Especially if the next Prime Minister is Mr Grillo, Italeave may happen.  If the outcome is no, Mr Renzi steps down and Mr Grillo may also be the next Prime Minister.  Mr Grillo may call a referendum on abandoning the euro.  At least, there will be balance from the Senate and the Chamber of Deputies and Mr Grillo may not get what he wants.  Either way, Italy is clearly at a point of unstable equilibrium and more conflicts within the country is expected.  Yes may mean short term positive for the Euro and no could trigger panic selling.

Full blown constitutional crisis may hit GBP

When was the last time the English, the Scots, the Welsh and the Irish (Northern) agree on the same thing?  Teresa May has quite a big task to make sure the four legs of the table are standing before Britain bargains the Brexit terms with the Eurozone.  Scotland’s first minister, Nicola Sturgeon, is making Brexit more interesting by mentioning the possibility of the second vote for Scotland Independency on the table.  One tangible impact is the weakness of the British Pound, it touched 1.106 against the EUR on 14 October.  On 14June, it was EUR 1.258 for GBP 1. Against the US Dollar, GBP hit 1.218 on 17 October.  On 17 June, it was USD 1.430 for GBP 1.  Great for tourism, education and perhaps investment.  FTSE 100 has been strong since the buggy jump from Brexit.  FTSE100 was as low as 5982.2 on 27 June and it is at 7020.47 as of 21 October.  FTSE100 was also above 7000 level in April 2015 and at that time, GBP was around 1.36-1.4 to EUR.  Let’s look at a scenario.  If GBP and EUR becomes parity, so GBP weakens another 10% against the Euro and GBP 1 is EUR 1.  Never say never.  Analysts at HSBC and UBS are making such forecast.  UK has been running deficit in both fiscal and current account balances since the financial crisis in 2008.  It is like the country is swiping credit cards and spending more than it makes for 7 years.  You can afford that if you happen to have the money printing machine as well.  One of the potential outcomes is that people stop believing in the money coming out from the printing machine, the British Pounds.  Companies and countries that sell goods and services to the UK may prefer to have the sale in EUR or USD prices.  Even if they receive GBP from UK clients, they would convert GBP to EUR or USD.  This makes the GBP goes lower against the EUR or USD.  The Bank of England might need to increase interest rate to encourage people to hold on the GBP in their bank account.  This sounds extreme but it is textbook logic.  If Britain becomes 4 individual nations all want their own deal with Euro zone, which could trigger the market to panic.  The Eurozone definitely does not like Brexit but they do not want to see a broken Britain neither.  The headline news of “GBP 18 billion divorce bill for Brexit” scared many British tax payers and probably gave Nicola Sturgeon a stronger voice when he meets Teresa May.  Meanwhile, foreigners are enjoying the cheap Sterling and shopping luxury items in London.  For investors with GBP income, the key words for investment are diversification and protection.

While the GBP move could trigger market panic, another black swan is swimming away.  Hillary is increasing her lead against Donald Trump in the US presidential race.  On the surface, Donald Trump would be less predictable than Hillary in terms of impact to the global political scene and economy.  Hillary has been a full time politician for decades.  Back in 1977, President Jimmy Carter appointed Hillary to the board of directors of the Legal Services Corporation and she was the first woman to be chairman of the board of directors of the Legal Services Corporation in 1978. President Obama appointed her as Secretary of State in 2008.  In short, she has been in the circle for 40 years and politicians are familiar with her style and approach.  She is also very aware of the dos and don’ts in the White House.  Well, she may not be a technical person when it comes to emails.  Hillary winning the race against Donald could be a voter choice for stability.  It makes the market easier to read.  It also means the FED in US could continue its path to increase interest rate without listening to Donald.  Investors are already getting used no Quantitative Easing in US and preparing for rate hike in US.  A higher US interest rate could contribute to a stronger USD against GBP.  This is another straw on the camel back for GBP.

So far, the weakness in GBP is one reason of FTSE100 rally.  Glancing over some UK stocks, one may have a rosy picture over the UK economy.  Tesco closed 214.85 GBp on 19 October, a new high in 2016.  London Stock Exchange printed a 2016 high at 2922 GBp on 4 October.  BHP Billion had a peak at 1267 GBp on 10 October.  Of course, there are lesser performers to balance things out.  The banking sector is definitely not winning from Brexit.  Take Barclays as an example, it closed 183.2 GBp on 21 October, a fair amount below 214 GBp level at the beginning of 2016 but already a lot better than the 127.2 GBp low on 27 June.

Donald could give us the next buying opportunity

Donald could give us the next buying opportunity

It was a busy week on 19th to 23rd September with both US and Japan central bankers expressing their latest monetary policy.  US Central Bank did not increase interest rate in September FOMC meeting and the market now expects a December rate hike.  Japanese Central Bank made it clear about its determination to maintain zero interest rate policy.  It sent Nikkei 225 from 16,492 on 20th September to 16,809 on 21st September, 1.9% higher, and Japanese Yen actually strengthened from 101.85 to 100.39.  Financial Institutes are getting used to negative interest rate in Euro, so zero interest rate is not that scary.  Global stock markets have put on a great run since Brexit and further upside from here could trigger profit taking.  Many speculators are probably looking for opportunities to offload and the market friendly outcome from Japan and US central bankers meetings helped.   European stock markets had a good run from no monetary tightening and FTSE 100 and Eurostoxx 50 were up 3.0% and 3.3% from close on 16th September to 23rd September.  US market was actually lagging with 1.1% movement in S&P and 1.2% in Nasdaq in the same period.

HSBC has put on a good run since Brexit and its share price went up from GBp454.45 (23rd June) to 574.48 (23rd September), up 26%.  HSBC shares buyback, downsizing and de-globalization helped.  In the same period, Barclays, Lloyds, RBS, Deutsche Bank, Santander share prices moved -7.8%, -21.2%, -27.1%, -28.0% and -4.8% respectively.  Comparing these European giants to their US competitors, Goldman Sachs, JP Morgan, Citibank and Wells Fargo share price movement were 8.6%, 5.8%, 6.4% and -3.8%.  Banking stocks in general are not expensive in terms of valuation but the future is still dark.  The regulatory risk and cost could be brutal.

Apple share price had some luck with better than expected iPhone 7 launch and Samsung's nightmare with the Note 7 battery.  Samsung Note 7 disaster could mean a shift from high end Android users to Apple.  As a tech stock, Apple is trading at relatively reasonable valuation.  Apple Pay could actually be a wild card and it has launched in China already.  User comments have been positive.  Apple share price was USD 112.71 as of 23rd September, beating April high at USD 112.1, still far away from USD 133 2015 high print.

Twitter announced it has put itself up for sale on 23rd September and its share price rallied 21.4%.  Smart move.  Better to let go while there are takers than hanging on like Yahoo.  The social media space is hot but the investment in technology and competition for talents are stressful battles.  Competing against facebook and Google social media portfolio is more than a tall order.  Twitter itself is probably at a cross road, to acquire or to be acquired.   Already, market mentioned Salesforce.com, Verizon, Microsoft and Google have shown interest to buy Twitter.  Verizon just bought Yahoo.   Google could turbo charge Twitter with its Chrome, Gmail, Google map, YouTube, Google Play, Google search and Android all with over 1 billion users.

With rate hike concern out of the way until December, the spotlight moves to Donald Trump versus Hillary Clinton.  It looks like it is going to be a real tight race between them.  Maybe as tight as George W Bush and Al Gore.  If Donald Trump leads the poll, the market may panic and post a significant correction.   This could be a good chance to buy.  Looking at the market since the Global Financial Crisis in 2008, buy on big dip has been a good trade.  The US and European stock markets are at high level as global companies are still growing.  The tech stocks like Amazon and ARM, the retailers like Zara and H&M, the pharmaceutical companies have made up ground for the financial and resources sectors.  The central bankers are printing money to make up for the deleveraging in the financial sector.  Someone must be benefited from the low interest rates.  Picking the right sector, right stock and right timing need a lot of luck.  Index Funds especially Exchange Traded Funds on FTSE100, Eurostoxx 50, S&P 500, Nasdaq are convenient instruments to capture market movement.  Another asset that everyone is familiar with is property.  Property prices in London, Paris, Zurich, New York, San Francisco,  Hong Kong and Shanghai have certainly reflected that there is plenty of money chasing hard asset.  The Central Bankers have been using money supply as a universal solution to deflation and recession.  Negative to zero interest rate, quantitative easing, drop money from helicopter, all with the purpose to get money moving.  Whether the next US president is Donald or Hillary, the tricks are the same.  Obama launched Obama care, Donald may favor the construction sector as he builds a wall between US and Mexico.  Hillary may benefit the IT and security sector as she needs a more powerful email system with better encryption.  The reality is that US is run by a complex system consists of different political parties, the parliament, the government, layers and layers of organization and bureaucracy.  If Donald wins, US politics will surely become more entertaining and lead to more coverage in social media.  The world will goes on and the money printing machines are likely to continue.

Let’s celebrate

Let’s celebrate

Great Britain team brought home 67 medals from Rio Olympics beating the record of 65 medals from London Olympics in 2012.  This put team GB second in the Rio medal table after USA and above China.  This is an amazing achievement considering Great Britain population of 65 million versus China 1.3 billion and the effort that the Chinese put into Olympics.  Another amusing result is women’s volleyball.  The Chinese ladies won 5 out of 8 games and got gold medals.  The Serbia team won 6 out of 8 games and got silver.  The US team won 7 out of 8 games and got bronze.  It is about which battle to win not how many battles you win.

Similarly in investment, it is more important to be right on one big win than on many small bets.  Brexit could be the best entry point to the stock market this year.  Now, the stock market in US and Europe are looking toppish.  UK political scenery is clear and Brexit work has started.  Market refocuses on EU monetary policy which means expecting the Central Bank to continue pumping money to the system.  Bank deposit and high grade bonds are giving investors zero to negative return.  Sitting on cash is not a sustainable option for money managers.  Investing in stocks is the lesser of two evils and this could be a driver for potential further upside in the stock market.  Another piece of good news to the stock market is the Brent crude oil price is getting back to USD 50 a barrel.  This gives oil producing countries like Russia and Saudi Arabia some breathing space on their budget and shines some light to the oil and gas companies.  Money managers who switch out of bond investment into equity could be buying index funds and probably index ETFs (Exchange Listed Funds) with good daily trading volume.  There are ETFs on Eurostoxx 50, German DAX, French CAC, FTSE 100, US S&P500, Nasdaq, Japan N225 and China A50 with great trading volume and low management fee.  The good daily trading volume is important for money managers so they could get in and out of the ETFs easily.  If they feel like getting out of the ETFs and get back to the bonds, it is just a matter of pressing a few keys.

London Underground going for 24 hours service is an interesting topic and it comes with 24 hours restaurants, bars, gyms, etc.  The economy taking a vampire shift could indeed boost jobs, cut pollutions because of less driving and lift London property prices in general.  It also helps London securing its position as the currency trading place in European time zone.  Currency trading is round the clock and highly electronic.  So London traders sitting in their office can indeed trade in US and Asia timezone with clients all over the world.  Same applies to Spread Betting and CFD (Contract for Difference) business that offers margin trading on stocks, currency, precious metals (eg Gold) and commodities (oil, copper, etc).  The next question is where to find the labor force to man the sleepy hours.  Everyone knows the answer is the hard working talents from the EU community.  This is going to make Boris’ job interesting.

Donald Trump has similar hair to Boris and his falling popularity surprisingly has nothing to do with his hair style.  The audience seems to getting bored of Donald’s “you are fired” Apprentice infotainment marketing approach.  Even within the Republicans are feeling divided.  On the other hand, Hilary Clinton has got a lot more united support from Democrats as a whole, at least from the surface.  Hilary is gaining while Donald is losing steam as we could see from the poll.  Hilary is too experience to make silly mistake to let Donald come back with a knocked out punch.  Obama started his Presidency with the Global Financial Crisis and his two terms turned out to be a great bull run in stock market.  Too early to say if the bull run in US stock market could continue if Hilary moves into the White House (as President this time).  However, Donald will certainly give the world a lot of surprises and more volatility to the stock market.  Maybe Donald is good news for the construction and building materials companies because of the great wall along the border to Mexico.  One common theme between the 2 candidates is that National Security budget is likely to increase and security and surveillance related companies should deserve investors’ attention.

A messy world with plenty of opportunities.

A messy world with plenty of opportunities.

Watching the news, it is hard to be optimistic.  Brexit has happened before Grexit.  Donald Trump could become the next US President.  Racial tension in US.  Terrorist attack in Nice and shooting in Munich.  It has been a month since the Brexit referendum and many people feel the world is in a bit of a mess.  Many sad stories and many uncertainties.  The British Sterling jumped off the cliff after Brexit vote and against the EUR, it was at 1.3055 before, went to as low as 1.1646 on 7 July and rebounded to 1.1937 as of 22 July.  That was a near 3-year low against Euro.  Against the US Dollar, the British Pound went below 1.30 to a 31-year low.  There was a big side show going on in GBP versus JPY.  It was at 154.77 before referendum and the Pound weakened to JPY 130.18 on 8 July, rebounded to 139.02 as of 22 July.  In short, the entire Britain has become 10% cheaper in the eyes of American, European and Japanese. 

Since Brexit, we have Japanese Softbank buying UK chip-designer ARM, US AMC Entertainment buying London-based Odeon & UCI Cinemas Group, China’s Fosun International buying English football club Wolverhampton Wanderers.  The Softbank ARM deal is a GBP 24.3 billion takeover and it will be Europe’s biggest-ever technology deal if it goes through.  ARM is the largest London-listed tech company by market capitalization and the Cambridge-based group is a market leader in chip design for mobile devices.  Investors get nervous whenever “biggest-ever” deal goes through.  It could mark the burst of a bubble.  Remember the dotcom bubble and the telecom merger and acquisition saga around Orange, Mannesmann and Vodafone back in 2000.  In June, Microsoft announced to acquire LinkedIn for USD 26.2 billion.  Also in June, China’s Tencent and its partners announced paying USD 8.6 billion for the majority stake of Finnish game maker Supercell.  The sellers are Japan’s SoftBank and Supercell current and former employees.  The deal values the “Clash of Clans” developer at USD 10.2 billion, nearly double from a year ago.  According to thinkgaming.com, Clash of Clans daily revenue is estimated to be USD 453,000 and 24,600 daily installations.  It ranked 5^th on top grossing games and 48^th on top free games as of 24^th July.

Maybe not many people are familiar with smartphone games “Clash of Clans”, but many grew up with Nintendo Gameboy and Pokemon Pikachu.  Pokemon was first released in 1996.  In July 2016, Pikachu entered the smart phone games arena with a global block buster Pokemon Go.  Pokemon Go was released in Australia, North America, Europe and Japan.  It beat Candy Crush Saga record in US to become one of the most used smart device apps.  As of 22 July, Pokemon Go was downloaded by more than 40 million people worldwide.  The game makes use of location, camera and augmented reality technology.  It combines real world with the virtual world so one could take their children to Hyde Park to catch virtual pocket monster and battle with other players in Trafalgar Square.   On 19^th July, Nintendo share price in Japan was at one stage doubled since the launch of Pokemon Go and it has come off 10% from its JPY 32,700 5 years high to closed at JPY 28,220 as of 22 July.  Its market capitalization is JPY 4 trillion or GBP 28.8 billion, a bit higher than ARM.

The bargain hunting was across the board.  The European stock market has also digested the Brexit news pretty well.  Eurostoxx 50 Index dropped from 3037.67 as of 23 June (Thursday) to a bottom of 2,697.44 as of 27 June (Monday) and recovered to 2972.23 as of 22 July.  The FTSE 100 index was 6,338.1 on 23 June, dived to 5,982.2 on 27 June and now higher than pre-Brexit level at 6,730.48.  Of course, if we take 10% off due to GBP weakening, it is weaker than pre-Brexit.  UK banking stocks have not recovered.  Taking the same 3 dates as above, RBS pls was 250.50 GBp, 174.30 GBp and 188.92 GBp.  Lloyds was 72.15 GBp, 51.15 GBp and 54.49 GBp.  Barclays was 186.95GBp, 127.20 GBp and 151.80GBp.  Aberdeen Asset Management share price matched the performance of FTSE 100.  It was 312.70 GBp on 23 June, 245.80 GBp on 27 June and 316.00 as of 22 July.  Hargreaves Lansdown was 1389.00 GBp, 1056.00 GBp and 1271.74 GBp.  One could see the more UK centric the business, the more hammered are the share prices.  Too early to say the worst is over but for sure, the smart money is in full action already.

Virtual Reality takes over real life

Virtual Reality takes over real life

Remember the movie Matrix in 1999. Keanu Reeve was wiring himself to a pod that sends his mind to another virtual world. Knowledge and martial art could be downloaded to his brain and he saved the world in a Hollywood way. This is now happening to our current generation. The new generation of games will make gamers put on a pair of goggles for hours. You will see your children screaming and jumping around the house wearing these goggles and you have no clue what they have been eating. The tiny screen could give the gamers the experience of sky diving or wrestling with a zombie in their own living room. This actually sounds worse than everyone looking at their mobile phones at the dining table on Christmas. Virtual Reality (“VR”) could make the people in your house further away from the real world. There is a more real version of VR. Augmented Reality in simple terms is to project a virtual world in a real world. So through the screen, one will see Spiderman hanging on his ceiling and Captain America sitting at his desk. There are some day to day commercial use in AR. For example, one goes into a Porsche showroom and if you have the right App, you could point your phone at the latest white 911 and change the color to red and change the exhaust pipe, leather color inside, etc. Or you can point your phone at your living room, drag and drop different Ikea furnitures to get a feel of what the living room would look like with a new sofa and dining table.

The giant multi-national companies of course want to make a living with this new technology. Sony Playstation and Microsoft Xbox obviously would take this chance to secure their fans base with launching new VR games. It would be amazing to play Winning Eleven and tackle Messe in virtual reality. Samsung has launched a pair of goggles for you to attach your latest Samsung handset to experience VR anytime anywhere. HTC launched an almost NASA laboratory like gadget called Vive that minimizes the lag between your hand turning and the display on the goggles. Apparently, it should make the users less dizzy. Facebook bought Oculus Rift for USD 2 billion in 2014 and the headset was launched at EUR 700 a piece in March 2016. Oculus already can take you to experience Games of Thornes with virtually real sword and sheild. The combination of Facebook and virtual reality could be explosive. Friends will have virtual gathering or could attend a distant birthday party without the travelling.

Big money is being poured into VR. According to a report from Digi Capital, in 2015, USD 700 million was invested into Virtual Reality and Augmented Reality. In 2016, USD 800 million investment went into Magic Leap, the hottest startup in the VR world and it is based in Florida. Apparently, it will really turn you into an Iron Man, maybe not the flying part but the bit when you could throw a globe in the middle of your study room and it expands to the galaxy. If Magic Leap could turn an apartment in Eelphant and Castle to a townhouse in Chelsea, the USD 800 million is very well spent. AR and VR revenue is forecast to hit USD 120 billion annually globally by 2020.

VR uses a lot of computation power. This makes the future of cloud computing even brighter. Amazon and Google have mentioned their VR initiative here or there. But these two giants do not need to necessarily compete with their own gadgets. Google has launched a smartphone or two but it is happy to see Apply, Samsung and Huawei fighting for market shares as long as there more and more smartphones sold on the planet. More smartphones mean more searches and more revenue for Google who still dominate the search engine world. Amazon similar enjoys more online shoppers who use smartphones to shop while they are waiting for their transport.