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The 21st century’s teen years, bookended by a financial crisis at the start and the fintech revolution at the end, were a decade of disruption. From negative borrowing costs to bitcoin, here are 10 trends that have upended traditional economic and investment models in the past decade.

FAANG-TASTIC FIVE

If they were a country, they would be the fifth largest in terms of economic output, outgunning Britain and snapping at Germany’s heels. With a US$3.9-trillion market value (compared with around US$100-billion in January, 2010), tech giants Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc. and Google-owner Alphabet Inc. – collectively known as the FAANGs – are not only at the vanguard of history’s longest share bull run, but have transformed how humans work, shop, consume news and relax.

FAANGs comprise 7 per cent of the MSCI global equity index today, up from around 1.6 per cent in early 2010. The savvy investor who sank US$25,000 in Netflix in 2009 would now be sitting on US$1-million.

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And in the slip stream of the five pioneers, other tech titans are rising, from China’s BAT grouping of Baidu, Alibaba and Tencent to sector “disupters” Uber, Airbnb and Deliveroo. For better or worse, the world – and markets – have changed for ever.

PAYING TO BORROW

A defining feature of the years after the 2008-09 meltdown was the slide of interest rates and government borrowing costs below zero per cent, possibly for the first time in history. U.S. and German 10-year borrowing costs collapsed by 200 to 400 basis points this decade; the latter to as low as minus 0.7 per cent. Roughly US$12-trillion in debt carries negative yields, almost a quarter of all bonds outstanding.

The drivers – central banks’ asset buying, sub-zero interest rates, yield curve manipulation and the tech revolution’s deflationary effects – were in themselves groundbreaking, at least in terms of scale. The Bank of Japan holds assets collectively worth more than Japan’s economy. The European Central Bank’s balance sheet is a quarter the euro zone’s annual output but double decade-ago levels.

A CENTURY IN BONDS

With record-low rates and yield-starved investors, bonds with tenors longer than the average human lifespan have caught on.

A handful of 100-year bonds were around in 2010, but Mexico’s US$1-billion issue maturing 2110 started an issuance surge that saw U.S. and British universities, Ireland, Belgium and Austria, U.S. municipalities and corporations such as Coca Cola and Petrobras sell century bonds. Even junk-rated serial defaulter Argentina drew huge bids for its 2117-maturity bond.

Just more than 1,400 century bonds, worth almost US$170-billion are now outstanding, according to Refinitiv.

But … caveat emptor. Buyers of the Argentine century bond have watched it lose half its value. Austria’s issue, also sold in 2017, is up more than 60 per cent.

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COINING IT

In 2010, bitcoin was an idea causing ripples in niche online forums. Ten years later, cryptocurrencies are intertwined with finance, business and politics.

Crypto markets, non-existent in 2010, are now worth more than US$200-billion, having hit a US$815-billion peak at the apex of the bitcoin bubble. Having changed hands for just three cents in its first public trade, bitcoin now trades at more than US$7,500. That’s off its peak near US$20,000, though – a reminder of its volatility. Usage has also spread. Coin Metrics estimates that from 130 active bitcoin addresses a decade back, there are now nearly 750,000.

Crypto took many guises through the 2010s, from rebel technology to a tool for criminals, speculative token to the great hope for frictionless payments. While it never really shook off doubts over security, virtual money and blockchain tech have evolved at a dizzying pace, typified recently by Facebook’s push to launch its Libra token and steps by central banks to create their own digital currencies.

PASSIVE AGGRESSIVE

Sometimes it’s better to be passive. The punter who opted to ride the past decade’s equity boom through an exchange-traded fund (ETF) tracking the S&P 500 would have earned 200 per cent, but at a fraction of the fee a mutual fund manager would have charged. Hence spectacular ETF growth – assets have swelled to almost US$7-trillion, from less than US$2-trillion in 2010, consultancy ETFGI says. Low investment fees should help extend the boom: total ETF assets could hit US$50-trillion in 2030, Bank of America predicts.

INVESTMENT CLIMATE

With the hottest four years on record occurring in the past four years (according to the World Meteorological Organization), climate is shaping investor thinking in a way it did not a decade ago.

Crop failures, floods and wildfires can all inflict portfolio losses. More funds are reducing exposure to polluting industries, embracing renewables and water conservation technologies or investing in the likes of plant-based meat company Beyond Meat, whose 2019 IPO was greeted with rapture on Wall Street.

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More than US$30-trillion is held in sustainable or green investments, the Global Sustainable Investment Alliance estimates, more than doubling from 2011.

Green bonds debuted in 2007 to fund projects with environment benefits. This year, issuance totalled a record US$200-billion-plus.

SHALE OIL

Having learned to wring oil from shale with fracking, the United States has vaulted to the top of the oil producer rankings, with 12.5 million barrels a day (b/d) of output, double 2010 levels. Shale oil production exceeds nine million b/d, from less than one million b/d in 2010, making the United States an oil exporter for the first time in 40 years.

The shale boom is partly why conversations around energy have switched from peak supply to peak demand. Surging output comes alongside environmental concerns, meaning an oil glut is likelier than shortages.

ELECTRIC DREAMS

Having relied for more than a century on the internal combustion engine, the global auto industry is being upended by battery-powered cars. In 2010, electric-car maker Tesla Inc. went public and its shares, launched at US$17, now trade at more than US$400.

Hundreds of billions of dollars have been pledged to develop a new generation of electric cars. Industries supplying car batteries are booming and demand for their main component, lithium, could triple by 2025.

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EV sales so far have disappointed – two out of 100 cars sold today are electric. Gasoline and diesel vehicles are cheaper and EV charging infrastructure is limited.

But increasing alarm over climate change and government incentives to steer consumers away from fossil fuels means the electric revolution looks unstoppable.

FLASH BOYS, FLASH CRASHES

Tech’s transformative power has not bypassed currency trading floors. Ten years ago, dealers did the buying and selling for banks and clients. Today, electronic trading comprises 90 per cent of some products, doubling in this period. Another shift is towards “algos” – computer programs that follow preset instructions, or algorithms, to trade, often at speeds impossible for humans.

From being largely nonexistent a decade ago, algo trading now comprises a fifth of FX spot volumes on Refinitiv FXall, a platform for the buyside. On another venue EBS, more than 80 per cent of the order book is algo-driven, the Bank for International Settlements estimates.

One side effect is that “flash crashes” – wild exchange rate swings – have become frequent, ostensibly because of algos that are programmed to turn off if markets become volatile.

The winners? Those who can afford the most sophisticated algos. Almost half of global currency trading is now with the top five banks, with smaller institutions – and of course, traders – having to exit.

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GOING TO POT

Marijuana took a trip this decade from street corners to stock markets. The first pure-play U.S. pot stock – Tilray Inc. – debuted on Nasdaq in 2018, leaping 36 per cent on the first day. And 18 months since Canada legalized recreational cannabis, hundreds of pot stocks are trading.

Pot also spawned one of the decade’s asset bubbles. Dubbed the green rush, shares in firms such as Aurora Cannabis Inc. and Canopy Growth Corp. rose several-fold before peaking in October, 2018. At their high, the 10 biggest components of a pot stock benchmark, the Alternative Harvest ETF, were worth US$50-billion.

A year later, US$30-billion had gone up in smoke. Blame regulation and overproduction hitting cannabis prices. A sign of a maturing industry? The highs may have evaporated, but pot stocks aren’t going anywhere. Except perhaps London, which may host the next set of cannabis listings in 2020.

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