Welcome to the January 2024 issue of Mintos Insight, where we focus on the latest financial updates shaping the landscape. In our first Mintos Insight of the year, we review the performance of major asset classes in 2023 and reflect on our year at Mintos.
For more detailed coverage over the last year, check out our 2023 editions of Mintos Insight.
A year of transformation
2023 was an exciting year for us.
One of the key highlights for us was the introduction of Fractional Bonds. We launched this product to democratize bond investments, making them more accessible for a wider range of retail investors. These bonds allow investors to buy portions of larger assets, previously unattainable due to high minimum investment requirements. With a starting point of just €50, Fractional Bonds opened up opportunities for regular income streams and portfolio diversification with more modest investments.
Further broadening our offerings, we also introduced Mintos Core ETF. This move was aimed at facilitating long-term, diversified investments without the burden of commissions. These ETF portfolios, featuring reputable providers, are tailored to suit varying risk appetites, enabling investors to align their investment strategies with their financial goals more effectively.
2023 also saw a significant rise in investments in loans on our platform. By December, the total investments in Notes reached €113.7 million, marking the most substantial growth observed in two years.
Looking across the asset classes
Stocks
In 2023, the stock market experienced a significant recovery. The year was characterized by impressive performances across major indexes: the Nasdaq Composite soared with a 45% increase, while the Nasdaq 100 Index outperformed with a nearly 55% surge.1 The S&P 500 also saw substantial gains, rising by 26%, while the Dow Jones Industrial Average grew by 13.7%.2
Technology, along with communication services and consumer discretionary sectors, led the market’s upswing. In contrast, sectors like utilities, energy, and consumer staples lagged, reflecting a shift in investor interest towards growth-oriented areas.
Mega-cap technology companies played a pivotal role in this resurgence. Meta Platforms and Nvidia witnessed astounding growths of 188% and 240%, respectively, while Tesla’s market value doubled. Apple and Microsoft maintained dominance with market capitalizations of $2.99 trillion and $2.79 trillion. This surge led to debates about the overvaluation of these tech giants, amidst expectations of a broader market rally spurred by potential rate cuts from global central banks.3
Looking forward, the stock market shows a promising outlook for 2024, with over 50 major global elections poised to further influence market trends.4
Bonds
A key moment was the Federal Reserve’s announcement in December that the cycle of rate hikes had ended, which sparked a wave of enthusiasm across the market. This decision particularly invigorated the riskier segments of the bond market, as investors started to anticipate rate cuts in 2024. A notable example of this trend was Italy’s benchmark 10-Year Government Bond yield, which experienced its most significant monthly drop since the eurozone debt crisis in 2013.5,6
The European Central Bank’s (ECB) policy decisions also played a crucial role in shaping the bond market’s landscape. The ECB’s choice to gradually phase out bond reinvestments under its pandemic scheme by the end of 2024, rather than an abrupt halt, added a layer of bullish sentiment to the market.7 Despite this, the European bond market faced high volatility throughout the year. For instance, German bond yields, which move inversely to prices, fell to levels some banks had not anticipated until the end of 2024, suggesting a possible limitation to further declines in yields.8
Real estate
The European commercial real estate investment landscape faced a notable downturn in the first quarter of the year, hitting its lowest point in 11 years. This decline was mainly attributed to higher interest rates and a cautious economic outlook, leading to a reluctance among investors to pursue acquisitions. This downturn was most evident in the office sector, a traditionally vital component of European real estate, which saw a record low in sales.9
In Germany, the residential property market underwent a considerable shift. Property prices witnessed a decline of more than 5% in 2023, with projections indicating a stagnation for 2024. This marked the most significant property crisis in Germany in recent decades, a situation exacerbated by rising interest rates and broader economic challenges.10
Despite the fall in property prices, rental costs continued to escalate. This divergence created a unique situation where housing affordability became an increasing concern, as more potential buyers, anticipating a further drop in house prices, turned to renting. This shift added pressure to the rental market.
These developments in the European real estate market signal a time of recalibration, driven by factors such as fluctuating interest rates, the overall economic outlook, and the emerging challenges in housing affordability. The commercial sector, in particular, saw a slowdown in investment activity. Meanwhile, the residential market in Germany highlighted a complex situation where declining property values contrasted with rising rents, underscoring the multifaceted nature of the housing affordability issue.
Mintos Activity: December 2023
In December, Mintos continued its strong performance, with investments in Notes reaching €113.7 million. According to Peteris Mikelsons, Head of Partnerships at Mintos, “This marks the second-best month in 2023, following the peak in November.
However, the supply of new loans failed to meet the surging demand, resulting in a substantial decrease in available Notes for euro-denominated investments, which ended the month at €53 million. This supply-demand imbalance had a direct impact on interest rates, which settled at 11.5% for EUR-denominated investments in December.
Simultaneously, our Fractional bonds offering gained significant traction, with an additional €2.5 million in investments during the month.”
Additionally, we expanded our offerings by introducing Exchange-Traded Funds (ETFs), with a total of €1.9 million invested since its inception in December. As we continue to diversify our offerings, Ieva Langenfelde, Senior Product Owner, remarks, “The first iteration of Mintos Core ETF was unveiled just ahead of the festive season. We’re actively engaging with our users to gather valuable feedback, which will be instrumental in shaping and prioritizing enhancements for future versions.”
Refer a friend to Mintos, and you can both earn
We’re back with our refer-a-friend program! For a limited time only, invite your friends to join Mintos. When they invest €1000 or more before 31 March 2024, you both earn a €50 bonus. Your friend will also receive a 1% bonus on the average investment in the first 90 days.
Disclaimer:
This is a marketing communication and in no way should be viewed as investment research, advice, or recommendation to invest. The value of your investment can go up as well as down. Past performance of financial instruments does not guarantee future returns. Investing in financial instruments involves risk; before investing, consider your knowledge, experience, financial situation, and investment objectives.
1 Team, M. I. D. (n.d.). 2023 Review & 2024 Outlook. Nasdaq. https://www.nasdaq.com/articles/2023-review-2024-outlook
2 U.S. Equities Market Attributes December 2023. (n.d.). S&P Dow Jones Indices. https://www.spglobal.com/spdji/en/commentary/article/us-equities-market-attributes/#:~:text=For%202023%2C%20the%20S%26P%20500,(3.42%25%20with%20dividends)
3 Mega-cap companies saw strong gains in 2023 amid tech optimism. (2024, January 2). Reuters. https://www.reuters.com/markets/us/global-markets-marketcap-2024-01-02/
4 Lawless, J. (2024, January 10). 2024 will see high-stakes elections in over 50 countries | AP News. AP News. https://apnews.com/article/global-elections-2024-preview-cb77b0940964c5c95a9affc8ebb6f0b7
5 Meeting calendars and information. (n.d.). https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
6 Italy 10 Year Government Bond. (n.d.). https://www.wsj.com/market-data/quotes/bond/BX/TMBMKIT-10Y/historical-prices
7 ECB decides on detailed modalities for reducing asset purchase programme holdings. (2023, February 2). https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.pr230202~1a4ecbe398.
8 Germany 10 Year Government Bond. (n.d.). https://www.wsj.com/market-data/quotes/bond/BX/TMBMKDE-10Y/historical-prices
9 European commercial real estate investment slumps to 11-year low in Q1 2023. (2023, April 27). https://www.reuters.com/markets/europe/european-commercial-real-estate-investment-slumps-11-year-low-q1-2023-2023-04-27/
10 European commercial real estate investment slumps to 11-year low in Q1 2023. (2023, April 27). https://www.reuters.com/markets/europe/european-commercial-real-estate-investment-slumps-11-year-low-q1-2023-2023-04-27/
