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Portfolio Diversification using Financial Derivatives

Portfolio Diversification using Financial Derivatives. Presented by: Amro Abdu Middle East Head of Sales. What is Portfolio Diversification.

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Portfolio Diversification using Financial Derivatives

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  1. Portfolio Diversification using Financial Derivatives Presented by: Amro Abdu Middle East Head of Sales

  2. What is Portfolio Diversification - A financial management technique that aims to minimize the effect of a single poorly performing investment in the portfolio by spreading out the risk among a balanced mixture of investments.

  3. Why Diversify • “Don’t put all your eggs in one basket” • Limit impact of poorly performing investment • Increase exposure to multiple markets

  4. Guideline to diversification • What are my investment goals? • What is my time frame to reach these goals? • Can I afford to invest regularly? • What growth rate do I need to reach my goals? • What is my risk tolerance to reach my investment goals

  5. Types of Diversification • Horizontal Diversification • Vertical Diversification

  6. Instruments of diversification • Commodities • Stocks and stock indices • Forex

  7. What are CFDs? A Contract For Difference is exactly that, it is a contract with an entity (broker) to exchange the difference between the opening value and the closing value of an instrument, whether that instrument is an individual equity, a bond, a future, option and so on.

  8. commodities • Agriculture • Energy • Metals

  9. Agriculture CFDs • Softs • London CoffeeLondon SugarLondon CocoaOrange Juice US CocoaUS Cotton No. 2US Sugar 11US Coffee "C"

  10. Soft Commodity Fundamentals • Beginning Stock • Production • Imports • Total Supply • Demand (local Demand and Overseas) • Ending Carry over stocks

  11. Energy CFDs • Oils • NYMEX WTI crude oilBrent crude oil

  12. Major Energy Fundamentals • Weather • Seasonality • API and DOE report (supply/demand) • Geopolitics • Opec

  13. Metals CFDs • Metals • GoldSilverCopperPlatinumPalladium

  14. Metal Fundamentals • Gold: Central banks, Geopolitics, China and India, Inflation and Interest Rates • Silver: Copper, Zinc, and lead production, photography market, India • Platinum: Japan, automotive industry and the environment. • Copper: Industry and construction, geopolitics

  15. Stocks CFDs • United States • WallStreet 30US SPX 500US Tech 100 • Europe • Netherlands All-ShareAustria 24Belgium 20Germany 160UK 350 • Spain 35Italy 40France 250Switzerland 28 • Australia • Australia 500

  16. Indices • Europe • UK 100Netherlands 25Finland 25 Norway 25 Denmark 20 Hungary 14France 40Germany 30Germany Mid-Cap 50 EU Stocks 50Spain 35Poland 20Italy 40Switzerland 25NEW! Sweden 30NEW! Austria 20 • North America • WallStreet 30US SPX 500US Tech 100US Small-Cap 2000NEW! Mexico 35NEW! Canada 60 • Australia • Australia 200 • Asia • Hong Kong 40Japan 225NEW! India 50NEW! China H-SharesNEW! Singapore Blue ChipNEW! Korea 200 • Africa • NEW!South Africa 40

  17. Equity Fundamentals • General Economic Activity • Interest rates • Inflationary Expectations • Political Consideration • Investor Attitudes • Innovation

  18. Forex • 3.4 Trillion a day in volume • Leverage of up to 400:1 • Low minimum capital requirements • 24 hours 5.5 days of trading • Transparency

  19. Forex Fundamentals • Trade Balance • Wealth • Deficit/surplus • Interest Rates • Geopolitics

  20. Conclusion • “Do not put all your eggs in one basket”

  21. Questions

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