US President Joe Biden’s US$1.9 trillion stimulus is to start flooding into the US economy soon, and some analysts have said much of that money might end up invested in stocks or bitcoin.
Over the weekend, the US government began sending the US$1,400 direct payments that are to go to nearly everyone in the US.
About US$400 billion in payments are to flow directly to households, going to individuals earning less than US$75,000 a year or married couples making up to US$150,000, as well as their children.
The direct payments amount to US$5,600 — tax free — for a typical family of four, funds officials hope will boost the US economy.
However, a majority of Americans have said that rather than spend, they would use the money to pay off debts, add to savings or to invest, according to one survey by Bank of America Corp, which interviewed 3,000 people.
The bank found that 30 percent would use the money to repay their debt, 25 percent would save it and 9 percent would invest.
Those funds would “stay within the financial system and don’t create demand for goods and services in the real economy,” the report found.
With only 36 percent saying they intend to spend the checks, “it’s not clear who will be doing all the sustained, voracious consumption markets now are pricing in,” it said.
Major stock indices hit new records two days in a row after Biden signed the stimulus measure into law last week, as investors are betting the rush of funds would spur a rapid recovery of the world’s largest economy.
Mizuho Securities Co found that about 10 percent of the stimulus, or about US$40 billion, would be invested in equities or in cryptocurrency such as bitcoin.
A survey of 235 people making less than US$150,000 found that 35 to 40 percent of respondents said they would invest part of their stimulus checks in stocks and cryptocurrency.
Sixty-one percent of those investors intend to buy bitcoin, said Dan Dolev, one of the leaders of the Mizuho study.
“We were very surprised” that bitcoin “is a bigger investment vehicle than stocks,” he said on CNBC.
Bitcoin on Saturday reached US$60,000, an all-time high.
Another survey of 430 people by Deutsche Bank AG found that “survey respondents plan to put a large chunk [37 percent] of any forthcoming stimulus directly into equities,” which it called a sizeable inflow into the stock market.
In two prior rounds of stimulus checks last year as the COVID-19 pandemic brought the economy to a screeching halt, only about 8 percent of the funds went into stocks, the bank said.
The survey showed that young people, aged 25 to 34, account for the biggest share of people planning to play the markets with their stimulus money, followed by those aged 35 to 44.
Goldman Sachs Group Inc estimated that with the Biden plan, “households will represent the largest source of demand for US stocks in 2021.”
Goldman Sachs economist David Kostin said the bank estimates household demand for equities this year would jump to US$350 billion from US$100 billion, “which reflects faster economic growth and higher interest rates than we had assumed previously, additional stimulus payments to individuals, and increased retail activity in early 2021.”
Anna Bhobho, a 31-year-old housewife from rural Zimbabwe, was once a silent observer in her home, excluded from financial and family decisionmaking in the deeply patriarchal society. Today, she is a driver of change in her village, thanks to an electric tricycle she owns. In many parts of rural sub-Saharan Africa, women have long been excluded from mainstream economic activities such as operating public transportation. However, three-wheelers powered by green energy are reversing that trend, offering financial opportunities and a newfound sense of importance. “My husband now looks up to me to take care of a large chunk of expenses,
SECTOR LEADER: TSMC can increase capacity by as much as 20 percent or more in the advanced node part of the foundry market by 2030, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to lead its peers in the advanced 2-nanometer process technology, despite competition from Samsung Electronics Co and Intel Corp, TrendForce Corp analyst Joanne Chiao (喬安) said. TSMC’s sophisticated products and its large production scale are expected to allow the company to continue dominating the global 2-nanometer process market this year, Chiao said. The world’s largest contract chipmaker is scheduled to begin mass production of chips made on the 2-nanometer process in its Hsinchu fab in the second half of this year. It would also hold a ceremony on Monday next week to
TECH CLUSTER: The US company’s new office is in the Shalun Smart Green Energy Science City, a new AI industry base and cybersecurity hub in southern Taiwan US chip designer Advanced Micro Devices Inc (AMD) yesterday launched an office in Tainan’s Gueiren District (歸仁), marking a significant milestone in the development of southern Taiwan’s artificial intelligence (AI) industry, the Tainan City Government said in a statement. AMD Taiwan general manager Vincent Chern (陳民皓) presided over the opening ceremony for the company’s new office at the Shalun Smart Green Energy Science City (沙崙智慧綠能科學城), a new AI industry base and cybersecurity hub in southern Taiwan. Facilities in the new office include an information processing center, and a research and development (R&D) center, the Tainan Economic Development Bureau said. The Ministry
State-run CPC Corp, Taiwan (CPC, 台灣中油) yesterday signed a letter of intent with Alaska Gasline Development Corp (AGDC), expressing an interest to buy liquefied natural gas (LNG) and invest in the latter’s Alaska LNG project, the Ministry of Economic Affairs said in a statement. Under the agreement, CPC is to participate in the project’s upstream gas investment to secure stable energy resources for Taiwan, the ministry said. The Alaska LNG project is jointly promoted by AGDC and major developer Glenfarne Group LLC, as Alaska plans to export up to 20 million tonnes of LNG annually from 2031. It involves constructing an 1,290km
RSS