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History of CFDs

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In the financial market, a CFD or contract for difference is basically a contract between the buyer and the seller. This contract stipulates that the seller will be paying the difference between the present value of an asset along with its value at the time of contract to the buyer. Here, it is to be noted that if the difference between the current value of the asset and the value of the asset at the time of contract is negative, the buyer needs to make the payment to the seller. To be very brief, CFDs are basically financial derivatives allowing traders to reap the best benefits of prices moving down or prices moving up on core financial tools.

CFDs are generally used for speculating on the short position and the long position markets. At present, CFDs are widely available in Austria, Australia, Cyprus, Canada, Germany, France, Israel, Hong Kong, Italy, Ireland, Japan, United Kingdom, Norway, The Netherlands, Poland, Russia, Sweden, Romania, Luxembourg, Singapore, New Zealand, Switzerland, South Africa, Spain, Turkey and Portugal. CFDs are not permissible in various other countries.

Brief History Associated with CFD Trading

CFD Trading is a new and highly advanced financial instrument. It was first conceived in the year 1990 and since then it has seen good growth. CFDs were first developed in London by Smith New Court- a derivative brokerage firm which was later bought by Merrill Lynch. This firm possessed a number of hedge fund customers who were in the look out of a method of short selling the market while making use of high leverage for placing larger bets. CFDs came as the best answer for such clients.

CFDs also gave the large hedge consumers the option capability of avoiding stamp duty quite similar to the London Stock Exchange members. Initially, CFDs were used for offsetting the risk of great loss from trading on sticks in London Stock Exchange. They were considered one of the most favorable financial instruments that did not require a very huge margin or exchange of physical shares.

The Technology Boom in the 1990s

The technology boom of the 1990s offered a very huge population of new and volatile stocks considered ideal for CFDs. Long term investments were made completely unwanted due to the rate at which the price changes were taking place in the tech stocks. This allowed the market traders to contemplate on the direction of the stocks by making the effective use of CFDs. GNI was the very first company that brought CFDs to the private investors.

The company did this with its creation of a highly advanced online trading system known as GNI Touch. The system allowed the small investment companies and the private investors to trade on London Stock exchange without getting direct access. At present, estimates offer clear evidence of the fact that 25% of the stock market turnover of Britain is associated to CFDs. CFDs have also started spanning different countries throughout the globe making their way to markets like Stock Exchange of Singapore and Toronto Stock Exchange.

CFDs are Highly Beneficial in Trading on Stocks in Large Amounts

CFDs serve as one of the most inexpensive methods of trading on stocks on large amounts without going through the hassle of purchasing and selling underlying stock. The CFD brokers have been successful in creating markets where investors can easily earn good amount of money on stocks that continuously rise and fall.

It is also important to note that CFDs have also eliminated the requirement of accessing live markets for speculating on the directions of different stocks. CMC Markets is one of the best financial derivatives dealers in UK offering online trading in CFDs across the world markets. It is a company that launched CFD services in the retail market in the year 2000 and at present it operates as one of the major CFD providers in the United Kingdom.

What CFDs can be Traded?

One of the most important features of CFDs is the potential of trading international indices and shares. This works even when the traders o not have direct access to the market. There are different varieties of CFDs available for the Australian, German and UK traders giving them the flexibility of indirectly trading shares of Apple, IBM and Google.

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Major housing markets to shine this year and next: Reuters poll

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BENGALURU (Reuters) – The outlook for major global housing markets is brighter than previously thought due to expectations for a broad based economic recovery and easy monetary policy, with only a low risk that a COVID-19 resurgence will derail activity, Reuters polls showed.

Over 100 million people have been infected by the coronavirus, leading to a healthcare crisis and deep economic recessions, but fiscal and monetary stimulus, and the rollout of vaccines, mean the global economy is set to recover this year.[ECILT/WRAP]

While already high unemployment caused by the pandemic is expected to rise further, the Jan. 15-Feb. 1 poll of over 130 property market analysts showed average home prices would rise this year and next in most countries polled.

That compares to largely pessimistic predictions made in September.

An economic rebound, loose monetary policy, government stimulus, pent-up demand and tight inventories were expected to boost housing market activity to varying degrees in Australia, Britain, Canada, Dubai, India and the United States.

“A solid economic recovery bolstered by more fiscal stimulus, still-low mortgage rates, and unmet demand should continue to prop up home sales and construction in 2021,” said Gregory Daco, chief U.S. economist at Oxford Economics.

“We expect some gradual moderation in price growth over the course of 2021 as home sales cool, but sparse inventory will keep a solid floor under home prices.”

Reuters Poll: Major housing markets outlook https://fingfx.thomsonreuters.com/gfx/polling/bdwvkybkqvm/Reuters%20Poll%20-%20Global%20housing%20markets%20outlook%20-%20Feb%202021.PNG

Three-quarters, or 77 of 102 analysts, said in response to an additional question that the risk of a COVID-19 resurgence derailing housing markets this year was low.

Although the U.S. economy on average contracted last year at its sharpest pace since the Second World War due to the pandemic, it had little bearing on housing market activity, an immunity the sector was expected to carry this year.

Despite the recent surge in coronavirus infections and renewed restrictions imposed in the United States, house prices there were forecast to rise over the next two years and activity was expected to continue on a strong course. [US/HOMES]

“The recent COVID-19 surge has not had any noticeable impact, with transactions near record high levels despite record high case growth,” said Brett Ryan, senior U.S. economist at Deutsche Bank.

“Pent-up activity from COVID-19-shutdowns earlier in the year will soon start to wane and transactions will likely normalize. More housing supply will come online as vaccination picks up at the same time that base effects will start to roll off.”

Reuters Poll: Global house prices outlook – Feb 2021 https://fingfx.thomsonreuters.com/gfx/polling/xklpylyqbvg/Reuters%20Poll%20-%20Global%20house%20prices%20outlook%20-%20Feb%202021.PNG

When asked about the primary driver of housing market activity this year, over 55% of respondents, or 57 of 101, chose an economic recovery and easy monetary policy.

Of the remainder, 20 analysts named a desire for more living space and 18 said a successful vaccine rollout, while six chose fiscal stimulus.

Australian and Canadian house prices were expected to rise significantly this year and next, helped by low mortgage rates and massive fiscal spending. [AU/HOMES][CA/HOMES]

When asked what was more likely for housing market activity, 58 of 100 respondents said an acceleration. The others expected a slowdown.

Those views were swayed by a somewhat modest outlook for the British, Dubai and Indian housing markets compared to the rest.

Indian house prices were expected to barely rise this year despite an economic recovery and supportive policies, and Dubai house prices were predicted to fall at a slower pace this year and next compared to the previous poll. [IN/HOMES][AE/HOMES]

British house prices were forecast to flatline this year.[GB/HOMES]

“While we expect a strong start to the year, we expect momentum to wane following the end of the stamp duty (property sales tax) holiday in April. Towards the end of the year the housing market should settle,” said Aneisha Beveridge at estate agents Hamptons International.

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Windsor and London, Ont. make top three most affordable housing markets for 2020

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WINDSOR, ONT. — While the price of housing has been on the rise, Windsor and London are still considered the most affordable markets in Ontario.

According to a Point2 study, Halifax, N.S., Windsor and London make up the top three most affordable markets in 2020, with most homeowners’ mortgages in Windsor and London accounting for 11.4 per cent of their income.

“In all three cities, incomes have been increasing at a faster pace than home prices in the last decade,” the study says.

With the exception of Oshawa, Ont., Point2 says incomes in all of the 10 most affordable cities have increased fast home prices.

However, according to Point2’s latest study, increased income is “no match” for the surging home prices in the 50 most populous cities. The disparity between home prices and slower moving incomes means more cities are becoming unaffordable.

A market is considered unaffordable when homeowners are spending more than 30 per cent of their income to cover mortgage.

The study says 2020 caused disruptions due to the pandemic, but those challenges are “just the most recent events undermining” homeownership affordability in Canada.

“In the last 10 years, the share of income needed to afford housing has gone up exponentially, with monthly mortgage payments becoming a financial burden for increasing numbers of homeowners across the nation,” the study says.

Over the last 10 years, mortgage affordability has worsened in 38 of the country’s 50 largest real estate markets, and the number of unaffordable markets has jumped from six to 16.

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Even with the highest apartment vacancy rate since 2012, rent in London, Ont. keeps rising

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Even with hundreds of new apartments on the market last year, the average monthly rent in London, Ont., rose by seven per cent in 2020 to an all-time high of $1,119 a month. 

The new data was published in the Canada Mortgage and Housing Corporation’s (CMHC) rental market survey, which is a yearly snapshot of the apartment rental market across Canada, which reported London, Ont., saw its lowest vacancy rate in nearly a decade. 

The CMHC survey data from October 2020 suggests the overall vacancy rate in the London region was 3.4 per cent, which is a 1.6 per cent increase in the vacancy rate from the same period last year. 

With a 3.4 per cent vacancy rate, it puts the London region slightly higher than the national average of 3.2 and with a seven per cent bump in average monthly rent to $1,119, it puts London more in line with the national average of $1,508, according to CMHC data. 

“The vacancy rate did increase, however when you break down the reason, it’s more of a supply story,” Anthony Passarelli, a senior analyst with the CMHC, told CBC News Friday.

“The vacancy rate didn’t increase because there was more people renting, it was actually because London had a pretty strong increase in rental units last year.”

Passarelli said 746 new apartment units came online between the fall of 2019 and the fall of 2020, pushing the overall vacancy rate to height unseen since 2012. 

“It really wasn’t the function of demand being lower for renting. It was more of a strong increase in supply. Generally it’s not that strong an increase, it just happens to be this year.”

The data suggests the surge in supply has not forced landlords to offer anything in terms of concessions on rent. All bedroom types saw gains, with bachelor apartments leading the way with an 8.5 per cent increase over last fall to an average monthly rate of $774. 

It means cheaper apartments are in short supply, according to CMHC data. Last year’s survey suggests only 2.3 per cent of the region’s rentals were considered affordable, which is 30 per cent of average household income. 

While vacancies in the London region may have risen overall, Abe Oudshoorn, a homelessness advocate and the managing editor of the International Journal on Homelessness, said it only reflects the upper tiers of the rental market. 

On the lower end, the demand to get out of homelessness and into housing continues to put pressure on the supply of cheaper rentals.

He said it means landlords aren’t looking to give concessions on rent, even with the pandemic still raging, because once it’s over they know it will be back to business as usual and they can almost name their price. 

“If you’re a landlord you know this is time-limited,” Oudshoorn said. “There’s not a huge motivation to sign yourself into a renter at a lower rate if you know it’s going to pick up.”

It’s why the homelessness situation in the city seems worse than ever before, he said, even with the public sector providing temporary housing through the course of the pandemic. 

“We have a temporary mitigation right now, it’s the WISH project and it’s the motel hotels.”

WISH, or the COVID-Winter Interim Solution to Homelessness, is a coalition to try new solutions for survival and sheltering during London’s coldest months. This winter, the City of London is funding two temporary shelters for up to sixty people.

“It has de-intensified shelters and allowed them to make their COVID changes and decreased the number of folks who are urban camping at the moment.”

Oudshoorn said governments need to invest in more housing that’s geared to income, which would alleviate the stress on the apartment rental market caused by competition between people with low to moderate income looking for cheaper accommodations. 

“It’s not like we’re even investing to build at the bottom end, we’re just investing to stop the inflation of rent,” he said, noting most attempts at subsidizing rent are aimed at affordable housing rather than geared-to-income. 

Come spring, temporary housing for the city’s homeless will end. If the federal government makes good on its promise to give each Canadian a jab of COVID-19 vaccine by September, Oudshoorn said competition for an affordable apartment will become even more intense. 

“It is bleak,” he said. “Londoners are often being priced out of both the purchase and the rental market by folks across the province.”

Passarelli said he agrees with Oudshoorn’s interpretation of the rental market, adding the same trend is being reflected in most cities across the province. 

“I definitely agree. The data bears that out and this is not just in London. This is in most markets in Ontario. It’s harder to find a lower rent apartment, there’s more demand there.”

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