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Gulf Today
23-05-2025
- Business
- Gulf Today
Rising Taiwan-China tension makes investors jittery
Foreign investors could once barely imagine that China would invade neighbouring Taiwan, but with Donald Trump as president of the United States, many view it as a tail-risk scenario they must prepare for, although they cannot find ways to do so. The democratically-governed island has long been a point of contention in US-China relations, which have worsened since Trump entered the White House in January and launched trade tariffs that have rattled markets. Investors fear that if China attempts to take over what it considers 'sacred' territory, it risks a war that ushers in the end of Taiwan as a market with its own currency and identity, while the only other alternative is peace and the status quo. For investors, the choice therefore is to stay out completely or stay invested and hope for the best. The risk of any invasion is difficult to hedge, said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. 'You can't settle any trades, the currency might disappear altogether,' he said. 'You either carry on like it's business as usual, or stay away.' The odds of China invading Taiwan have risen to 12% on betting platform Polymarket from close to none earlier this year. Skittish foreign investors have pulled nearly $11 billion out of Taiwan stocks this year, although much of that was fuelled by concerns over tariffs and the economy and they made a tentative return in May. While the United States has long stuck to a policy of 'strategic ambiguity,' on Taiwan, not making clear whether it would respond militarily to an attack, Trump's predecessor, Joe Biden, said during his time in office that US forces would defend the island if China were to attack. Rising geopolitical tensions from Trump's talk of a new global order and his disregard for Russia's takeover of swathes of Ukraine have raised doubts about such US protection for Taiwan, according to Reuters. While Taiwan has lived under the threat of Chinese invasion since 1949 when the defeated Republic of China government fled there after losing a civil war with Mao Zedong's communists, the two sides have not exchanged shots in anger for decades. Yet, tension has simmered across the Taiwan Strait that separates the island from China. China's two-day war games around Taiwan in April further fuelled investor worries. The latest barbs came this week as Taiwan President Lai Ching-te used a news conference marking his first year in office to pledge peace with China, only to have China's Taiwan Affairs Office say his remarks were a 'two-faced tactic' and that Taiwan cannot 'stop the inevitable trend of national reunification'. Lai, whom China calls a 'separatist', rejects Beijing's sovereignty claims, saying only the island's people can decide their future. Goldman Sachs' Cross-Strait Risk Index, which gauges the intensity of geopolitical risk by counting the number of news articles mentioning tension, has been rising since Trump won the US election last year. The Taiwan investment rationale centres on Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker and the semiconductor industry's crown jewel. TSMC, which counts Nvidia and Apple as major clients and whose stock is listed in Taipei and New York, powered the stock market to record highs earlier this year. 'TSMC is so big that the expectation among investors is the United States will defend Taiwan, and defend it strongly,' said Dave of Aravali. 'That is the hope.' Yet TSMC has been in Trump's crosshairs as he unleashed tariffs in April and later delayed some duties to negotiate with foes and allies alike. Local fund managers say while there may be no way for investors to hedge against an actual war, they do have options to hedge against possible market declines driven by fear of war.
Yahoo
23-05-2025
- Business
- Yahoo
How young traders are getting rich betting on things like Rotten Tomatoes scores and the pope
Catholicism warns against gambling addiction. But that didn't stop traders on Kalshi from wagering over $10 million on the answer to 'Who will the next pope be?' Kalshi, along with other prediction-market platforms like Polymarket and ForecastEx by Interactive Brokers IBKR, allows traders to bet on seemingly just about anything — from egg prices to interest rates to the U.S. presidential election. And while it's easy to scoff at some of the more outlandish prediction markets — like 'Will Luigi Mangione plead guilty to murder?' — critics may be glossing over something important. My daughter's boyfriend, a guest in my home, offered to powerwash part of my house — then demanded money After 25 years, I finally asked for separate checks — and my friends iced me out. Did I do something terrible? This hedge-fund manager has made about 50% in each of the last two years. Here's his home run trade. My husband used my money to renovate his house. Will I now get half of his property in a divorce? My ex-wife said she should have been compensated for working part time during our marriage. Do I owe her? Although these markets are relatively new, they already are reaching a broad audience and have become quite complex. And just like more traditional financial markets, traders have developed sophisticated arbitrage and market-making strategies to clear hefty sums of cash. Coby Shpilberg is a 21-year-old who lives in Palo Alto, Calif. With a background in data analytics, he works as the chief technical officer at Adnexi, a clinical-trial startup he co-founded with his mom. At work, Shpilberg uses data science to identify people to participate in clinical trials. Outside of work, he uses that same expertise to trade on Kalshi. Shpilberg has been trading on Kalshi for about a year. At first, he tried his luck trading markets that revolve around Rotten Tomatoes scores for recent and upcoming movies. He noticed that movie critics would release their reviews, which would then get uploaded to Rotten Tomatoes in batches, thus affecting a movie's score. Shpilberg had a theory that if he built an algorithm that scraped the Rotten Tomatoes website for updates, he'd be able to trade those markets faster than others and thus gain an edge. He tried it but ended up losing money. Next, Shpilberg had a theory that he could do something similar with the weather markets on Kalshi, using data to predict the temperatures in New York City better than anyone else. Again, he didn't make any money. In his first six months trading on Kalshi, Shpilberg was down a couple hundred dollars. Then, around the election, things started to change. 'What I was trying to do was essentially arbitrage. I had information where I thought I was quicker than everyone else. So I thought I could buy stuff better. Didn't turn out to be true,' Shpilberg told MarketWatch. 'But then my mindset switched to do market-making.' And that's when Shpilberg found his edge. Market makers exist in all types of financial markets, trading things like equities, derivatives and more. In equity markets, the way market-making works is that a market participant, usually a large financial institution, will execute very large volumes of stock orders both on and off exchanges. Market makers are willing to take the opposite side of anyone who wants to trade, making profits by setting their price parameters to ensure they collect a 'spread' — which is the small difference between the price a seller is asking for (the 'ask') and what a buyer is willing to pay (the 'bid'). This difference may be just a few cents or fractions of a cent per stock, but because market makers handle so much volume, they can turn a sizable profit. For example, the market makers Citadel Securities and Virtu together handled more volume in December 2020 than the entire New York Stock Exchange. Last March, Citadel Securities reported $9.7 billion in trading revenue for the past year. Kalshi's contracts are binary, meaning each contract has two sides. There's a 'yes' side that pays out $1 per contract if a certain outcome happens, and a 'no' side that pays out $1 per contract if the outcome doesn't happen. The cost to buy one side of the contract reflects the anticipated likelihood of that event happening, so a 'yes' contract that costs $0.60 represents a 60% probability and pays out a net $0.40 if the outcome occurs. In order to make markets on Kalshi, Shpilberg has resting orders on both sides of the book, and he sets his buy and sell prices wide enough to collect a profitable spread. With this setup, he's willing to sell contracts to anyone buying and buy from anyone selling, as long as they meet his prices. The individual spreads may seem relatively small, but because market-making is a numbers game, Shpilberg is able to profit by executing a large volume of orders. 'That was the real unlock and where I started to become profitable,' Shpilberg said. Although Shpilberg's strategy isn't exactly the same as the market-making done by institutions in other financial markets — where there are strict rules about what institutions can and can't do — it's similar in the sense that the strategy provides liquidity on both sides of a trade and the goal is to collect a spread while remaining position-neutral. Kalshi has an official market-making program for institutions and other entities that want to make markets on its platform. Financial firm Susquehanna International Group is one of the institutions that participates in this program. Kalshi requires the official market makers in this program to meet certain requirements, undergo auditing and take certain positions to ensure market smoothness and integrity, according to a company spokesperson. The company said that individual traders are not part of this official program and therefore their strategy is not market-making in the official sense. But this also gives those individuals more flexibility in how they trade. Shpilberg built an algorithm using the Kalshi trading application programming interface, or API, and ChatGPT. This algorithm looks over all the new markets on Kalshi, then checks each market for a list of characteristics that Shpilberg has personally identified. These characteristics tell Shpilberg and his algorithm that the specific market is good for market-making and more likely to be profitable. Once identified, the algorithm sends a notification to Shpilberg through a private Discord server, telling him what to buy. After putting hours into building his algorithm and debugging it, Shpilberg got the process mostly automated and now spends less than an hour per week actually trading on the Kalshi platform. In just a few months, Shpilberg was able to wipe out his negative profit-and-loss balance and make over $165,000. Market-making on platforms like Kalshi doesn't always work. Since traders take positions on both sides of a trade, there's a risk of holding the wrong side of the trade at a bad price if the market shifts too rapidly in the other direction. For example, if they are selling 'yes' contracts and collecting a $0.02 spread, their entire volume could get picked off if the market thinks that 'yes' outcome is much more likely than the market maker has priced. This means that the traders who are market-making on Kalshi have to be strict about the parameters surrounding what markets they trade in and how much volume they're willing to handle. '[Kalshi] is a really cool playground to flex these skills and learn how to take advantage of financial markets, and create a little bit of edge,' Shpilberg said. 'I really believe it's going to create a whole new generation of market makers and introduce, with a very low barrier to entry, automated trading to a whole new generation of people.' Shpilberg said that he once made a post about market-making on Kalshi on his private Snapchat story, and one of his friends responded saying he was market-making on Kalshi, too. In spring 2023, a group of undergrads at the University of Southern California created a Kalshi market-making algorithm as part of a school assignment. The algorithm ran probability simulations on the daily close of the S&P 500 SPX and entered positions in Kalshi's S&P 500 prediction market that allowed the traders to profit off of a spread. In their test, the students 'achieved a $6.80 profit on a $33.40 initial investment' according to their GitHub page. Jack, a senior at Princeton University who asked MarketWatch not to disclose his last name, has made about $150,000 as a market maker on Kalshi since he started using the platform around the time of the 2024 election. 'I think that there's a clear space for retailesque market makers, which is kind of unique,' he said in an interview with MarketWatch. Market-making is far from the only strategy that traders on Kalshi use to seek gains. 'Personally I do see it as a form of investing or day trading. There are also definitely arbitrage opportunities to be found if you know where to look,' Hunter Foschini, a 23-year-old who works in sales, told MarketWatch. 'I actively look for profitable opportunities daily, and I find them pretty often.' Foschini said his trading strategy consists of doing 'deep research' in order to find information to trade on. He also developed his own models and algorithmic trading strategies, which he said has helped give him an edge. While he didn't disclose how much he's made with his strategies, he said he's profitable overall. 'I also know or have spoken with numerous traders who use prediction markets to make a living, and some of them have crossed seven figures in profit,' Foschini said. Prediction markets, in their current form, are still a somewhat recent development. But these markets have been evolving and will continue to evolve. As that happens, they may begin to resemble other once-new markets, like the options market or other derivative markets. 'I think that if this trajectory of success continues, more and more money comes into the markets. And I think that this means betting markets will become more and more efficient,' Davide Accomazzo, an adjunct professor of finance at Pepperdine Graziadio Business School, told MarketWatch. More money in prediction markets means more liquidity, more efficiency and more accurate pricing. Coincidentally, that may mean less opportunity for arbitraging to take advantage of market inefficiency. Accomazzo made the comparison to the S&P 500 SPX, which sees large volumes of trading and is able to price in news very quickly. As a result, it's very hard for professional traders to beat the index. But that doesn't mean traders will stop looking for ways to gain an edge. 'People, for some reason, will always look for ways of gambling,' Accomazzo said. 'Is this a good tax strategy or a sham transaction?' My mother wants to give me her home. I have a plan to avoid taxes. My husband and I spend more money on our daughter and her family than on my single son. Do we compensate him? Is now a good time to buy an iPhone? A 5-star fund manager is capitalizing on Trump's global market shake-up. Here's how. Morgan Stanley turns bullish on U.S. stocks. Here's why it says the market lows have already been made. Sign in to access your portfolio
Yahoo
22-05-2025
- Yahoo
A Gambling Platform is Taking Bets on Which Escaped Louisiana Inmate Will Be Captured Next, and the Internet is Disgusted
All eyes have been on New Orleans since the news broke about ten inmates being held on a variety of charges – including second-degree murder, armed robbery and assault – escaping from the Orleans Justice Center on May 16. But while some concerned about public safety are holding their breath until the five inmates who are still at large are captured, others are keeping track on which will be captured for the benefit of their bottom line. Polymarket, a cryptocurrency-based platform which allows users to place their bets on everything from the team that will win the 2025 NBA Championship to who will be the next president of Suriname, just announced that users can bet on which of the inmates who are still at large will be captured by Friday. 'PRISONER PARLAYS?' the company captioned a May 20 post on X to let users know about the option to bet. 'Which inmates will be captured by Friday?''How many inmates caught by Friday' and 'All Orleans escapees captured by Friday?' are among the options Polymarket users have to cash in on the inmate's capture. And as you should expect, lots of people online have opinions about this, including plenty who find the idea of betting on human beings in this way pretty repulsive. 'It's giving squid games. gross,' wrote one disgusted commenter on X. Others were quick to cosign. 'This is the most degenerate sh*t I've seen this year,' wrote someone else. But while most people who spoke out were totally against the idea, one commenter thought the inmates who are still on the run should find a way to use the platform to make a little money for themselves. 'Damn .. if they were smart they would bet on themselves and cash out big,' wrote someone on X. For the latest news, Facebook, Twitter and Instagram.
Yahoo
22-05-2025
- Yahoo
New Orleans jailbreak: Crypto site lets users bet on next inmate capture
The Brief Five inmates are still at large after escaping from the Orleans Justice Center on May 16. The betting site Polymarket is letting users wager real money on who will be caught by Friday. Authorities have arrested several people for aiding the escape and warn the fugitives are "armed and dangerous." A cryptocurrency-powered prediction site is allowing users to place real-money bets on which of the remaining New Orleans jail escapees will be captured by Friday. The market, hosted by blockchain platform Polymarket, lists the names of five inmates who escaped from the Orleans Justice Center on May 16. As of Friday, May 23, more than $6,500 had been wagered. Each inmate is listed with dynamic odds based on trading activity, with users earning $1 per share if their chosen fugitive is caught by the deadline. The wagers are part of a growing niche of speculative betting on real-world events—from elections to celebrity news. The backstory Ten inmates escaped through a hole behind a toilet, sparking a citywide manhunt. Five were quickly recaptured, but five remain on the run. Authorities warned that the escapees should be considered "armed and dangerous." Among them is Derrick Groves, convicted of double murder in 2024. The others were awaiting trial on charges ranging from robbery to assault. Polymarket's betting system uses cryptocurrency to allow users to buy and sell shares on outcomes. The more users bet on one result, the more expensive it becomes to buy, and vice versa. Users aren't betting against the site—they're betting against each other. By the numbers As of Wednesday afternoon, here's how much had been wagered on each fugitive and their perceived odds of recapture by 11:59 p.m. ET May 23: Antoine Massey: 32% chance, $1,408 wagered Leo Tate: 32% chance, $1,035 wagered Derrick Groves: 31% chance, $492 wagered Jermaine Donald: 29% chance, $1,042 wagered Lenton Vanburen: 25% chance, $1,619 wagered The market rules say it will resolve based on confirmation from law enforcement that a suspect is physically placed in custody by the deadline. What they're saying Polymarket posted Tuesday on X: "PRISONER PARLAYS? You can now bet on which inmates from the New Orleans jailbreak will be captured by Friday." The post gained over 980,000 views. Louisiana State Police spokesperson Katharine Stegall told Newsweek earlier this week: "We have every intention to continue pushing forward with our law enforcement partners until each of the fugitives is back in custody." Authorities have already made multiple arrests related to the escape. Jail employee Sterling Williams was charged Tuesday with aiding the breakout. Two more people—Cortnie Harris and Corvanntay Baptiste—were arrested Wednesday for allegedly transporting or feeding fugitives. What's next Officials continue to investigate how the escape was organized. Orleans Parish Sheriff Susan Hutson has said she believes it was an inside job, and multiple staff members have been suspended. While the betting market has amused some online, the situation remains serious. The escapees pose a public safety threat, and law enforcement agencies say they are treating the search with urgency. The Source This article is based on data and user activity from Polymarket's publicly accessible betting platform as of May 23, 2025. Additional details about the jailbreak, inmate identities, and recapture status were reported by Newsweek and confirmed by statements from the Orleans Parish Sheriff's Office and Louisiana State Police. This story was reported from Los Angeles.
Yahoo
22-05-2025
- Business
- Yahoo
No place to hide from any China-Taiwan conflict, investors say
By Ankur Banerjee SINGAPORE (Reuters) -Foreign investors could once barely imagine that China would invade neighbouring Taiwan, but with Donald Trump as president of the United States, many view it as a tail-risk scenario they must prepare for, although they cannot find ways to do so. The democratically-governed island has long been a point of contention in U.S.-China relations, which have worsened since Trump entered the White House in January and launched trade tariffs that have rattled markets. Investors fear that if China attempts to take over what it considers "sacred" territory, it risks a war that ushers in the end of Taiwan as a market with its own currency and identity, while the only other alternative is peace and the status quo. For investors, the choice therefore is to stay out completely or stay invested and hope for the best. The risk of any invasion is difficult to hedge, said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. "You can't settle any trades, the currency might disappear altogether," he said. "You either carry on like it's business as usual, or stay away." The odds of China invading Taiwan have risen to 12% on betting platform Polymarket from close to none earlier this year. Skittish foreign investors have pulled nearly $11 billion out of Taiwan stocks this year, although much of that was fuelled by concerns over tariffs and the economy and they made a tentative return in May. The benchmark index is down 6% this year. While the United States has long stuck to a policy of "strategic ambiguity," on Taiwan, not making clear whether it would respond militarily to an attack, Trump's predecessor, Joe Biden, said during his time in office that U.S. forces would defend the island if China were to attack. Rising geopolitical tensions from Trump's talk of a new global order and his disregard for Russia's takeover of swathes of Ukraine have raised doubts about such U.S. protection for Taiwan. While Taiwan has lived under the threat of Chinese invasion since 1949 when the defeated Republic of China government fled there after losing a civil war with Mao Zedong's communists, the two sides have not exchanged shots in anger for decades. Yet, tension has simmered across the Taiwan Strait that separates the island from China. China's two-day war games around Taiwan in April further fuelled investor worries. The latest barbs came this week as Taiwan President Lai Ching-te used a news conference marking his first year in office to pledge peace with China, only to have China's Taiwan Affairs Office say his remarks were a "two-faced tactic" and that Taiwan cannot "stop the inevitable trend of national reunification". Lai, whom China calls a "separatist", rejects Beijing's sovereignty claims, saying only the island's people can decide their future. Goldman Sachs' Cross-Strait Risk Index, which gauges the intensity of geopolitical risk by counting the number of news articles mentioning tension, has been rising since Trump won the U.S. election last year. "If aggression toward Taiwan occurs, the investment decision becomes binary: stay exposed and absorb extreme volatility, or exit swiftly to preserve capital," said Steve Lawrence, chief investment officer of Balfour Capital Group. CROWN JEWEL The Taiwan investment rationale centres on Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker and the semiconductor industry's crown jewel. TSMC, which counts Nvidia and Apple as major clients and whose stock is listed in Taipei and New York, powered the stock market to record highs earlier this year. "TSMC is so big that the expectation among investors is the United States will defend Taiwan, and defend it strongly," said Dave of Aravali. "That is the hope." Yet TSMC has been in Trump's crosshairs as he unleashed tariffs in April and later delayed some duties to negotiate with foes and allies alike. Local fund managers say while there may be no way for investors to hedge against an actual war, they do have options to hedge against possible market declines driven by fear of war. However, Li Fang-kuo, chairman of Uni-President's securities investment advisory unit in Taiwan, is sceptical of the need for such hedging, as he believes foreign investors are misreading the level of risk of a cross-strait war. "We shouldn't interpret it from a geopolitical risk perspective. The key issue is the tariffs." Rich Nuzum, global chief investment strategist at pension fund adviser Mercer, said his clients that have looked at the risk found the best option was to diversify. "I think stress-testing for crisis is being done more and more." Sign in to access your portfolio
