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Mercosur: The EU Gives the Green Light to the Agreement

Mercosur agreement: a new era for global trade?

After 25 years of negotiations, Mercosur and the European Union are closer than ever to finalising a strategic partnership. So, what does this actually mean?

Mercosur and the European Union may be on the verge of signing a trade agreement that the European Commission itself has called “the biggest free trade deal ever signed”. The EU-Mercosur agreement involves countries that account for approximately $20 trillion in GDP and 700 million consumers.

What Exactly Is Mercosur?

The Mercosur—or Mercado Común del Sur (Common Market of the South)—is an organisation established in 1991 by the Treaty of Asunción. Its purpose is to “promote a common space that generates business and investment opportunities through the competitive integration of national economies into the international market”. The full members are Brazil, Argentina, Paraguay, and Uruguay. Venezuela was also a full member but was suspended in 2016 due to anti-democratic practices. Bolivia is currently in the process of joining as the fifth full member.

Additionally, there are several associate members, who enjoy privileged status but are not part of the main bloc. These include Chile, Colombia, Ecuador, and Peru.

Mercosur is a common market with the goal of increasing the exchange of goods and services, as well as the free movement of people. This applies both regionally among South American countries and internationally through agreements with other blocs, such as the one with the European Union. To achieve this, member countries are working to mutually reduce customs barriers, thereby promoting economic integration.

In 2023, the Mercosur bloc generated $447 billion in exports and $357 billion in imports, which is equivalent to 10.9% of international trade. These figures include both internal trade among members and external trade with other countries.

What Does the EU-Mercosur Agreement Entail?

Negotiations between the EU and Mercosur have been ongoing for approximately 25 years, marked by periods of tension and détente. A breakthrough finally occurred on 6 December 2024 in Montevideo, Uruguay, when EU leaders reached an understanding with the South American bloc countries. This past Wednesday, the European Commission presented the treaties that will define the commercial agreement, representing another significant step towards its officialisation.

The agreement is a result of a shared desire to remove trade barriers, ensure a responsible and eco-friendly supply of raw materials—with a particular focus on addressing Amazon deforestation—and send a clear message in favour of regulated international trade and against all forms of protectionism.

Specifically, the agreement is based on a principle of reciprocity. European industries, primarily those in automotives, machinery, and spirits, will gain greater access to the Mercosur market. In return, Mercosur will be able to more easily export its agri-food products to Europe, including meat, sugar, coffee, and soy.

This latter point, in particular, has caused some concern among agri-food companies in France, Poland, and, to a certain extent, Italy. The primary fear is related to unfair competition. South American countries have less restrictive environmental and food regulations than the EU, allowing the use of antibiotics, pesticides, and hormones that are banned in Europe.

In any case, the agreement provides for a gradual easing of customs tariffs on 90% of goods traded between the two blocs. It also establishes preferential channels for both European and South American companies, giving them greater access to public tenders and investment opportunities.

According to the European Commission, the final result will be a 39% increase in EU exports to Mercosur and an estimated 440,000 new jobs created across Europe.

The Road Ahead

As anticipated, the EU-Mercosur agreement is not yet official. However, it represents a crucial phase in bringing the two blocs closer, especially as they seek protection from costly Trump-era tariffs.

This is an interim trade agreement, meaning it is provisional. As such, it does not require the approval of all 27 member states, but rather only the ratification of the qualified majority of the EU Council. This means at least 15 out of 27 countries (55%) that represent at least 65% of the population must vote in favour.

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Russia-Ukraine war: updates

Russia–Ukraine war: any updates?

It was a busy weekend for Donald Trump, who met with Putin, Zelensky, European leaders, and NATO representatives. What happened – and how did markets react?

It was an eventful and politically charged weekend: over the course of four days, a bold and unpredictable Donald Trump hosted Russian President Vladimir Putin, Ukrainian President Volodymyr Zelensky, six European heads of state, including Giorgia Meloni, and NATO Secretary General Mark Rutte in the United States. The aim? To seek a potential solution to a war that has now entered its fourth year, following Russia’s invasion of Ukraine.
Here’s a brief recap of what took place – and a final look at how the markets responded.

Trump and Putin: meeting in Alaska – 15 August

On 15 August, at a US military base near Anchorage, Alaska, US President Donald Trump met face-to-face with Russian President Vladimir Putin to discuss the ongoing war in Ukraine. The lead-up to the meeting attracted global attention, mainly due to Trump’s surprisingly warm demeanour towards Putin: red carpets, handshakes, pats on the back, and broad smiles.

But one detail, in particular, made headlines: the US President spontaneously offered his Russian counterpart a ride in the iconic, armoured presidential limousine – known as “The Beast” – away from cameras and microphones. What was said during that ten-minute ride remains unknown. What is certain, however, is that the two men were seen laughing and chatting amicably, like old friends.

As for the press conference that followed – the quotation marks are deliberate – very little of substance was shared. The two leaders answered virtually no questions, instead offering vague and formulaic statements.

Putin opened with praise for the atmosphere of “mutual respect”, going so far as to remind attendees that Alaska was once a Russian territory. He then shifted to the main topic: the war in Ukraine. Once again, the Russian leader insisted that peace talks could only begin if certain preconditions were met – namely, international recognition of Russia’s claims over disputed regions, Ukraine’s demilitarisation and neutrality, a ban on foreign military presence, and new Ukrainian elections.

Then it was Trump’s turn. Notably restrained, the US President – usually known for his long-winded statements – kept things brief. “There were many points on which we agreed”, “great progress”, and “an extremely productive meeting” were among the few phrases he offered. In essence, a lot of diplomatic smoke and mirrors, followed by the admission that no concrete agreement had been reached – but that “we have a very good chance of getting there”.

Trump, Zelensky, Europe and NATO meet in Washington, D.C.

Between Sunday and Monday, Donald Trump held talks with Ukrainian President Volodymyr Zelensky, before extending invitations to six European leaders – France’s Macron, Germany’s Mertz, Italy’s Meloni, Britain’s Starmer, Finland’s Stubb, and EU Commission President Ursula von der Leyen – as well as NATO Secretary General Mark Rutte.

The main topic on the agenda was clear: the security and territorial integrity of Ukraine. For months, Zelensky, alongside European and NATO officials, has been urging President Trump to provide firm guarantees that any peace deal must respect Ukraine’s sovereignty, and that future agreements must act as a deterrent against further Russian aggression. The proposal? To allow Kyiv to build a modern, specialised and well-equipped army that would discourage any future invasions.

The problem? As we saw earlier, Vladimir Putin is wholly opposed to this and has made very different demands.

What’s Next?

It’s difficult to predict, given Putin’s elusive nature and Trump’s unpredictability. That said, on August 19, Trump confirmed that Putin had agreed to a direct meeting with Zelensky, which would be followed by a trilateral summit involving the US, Russia, and Ukraine.

In a post on his Truth Social account, Trump wrote:
“At the end of the meetings, I called President Putin and began organising a meeting, at a location to be determined, between President Putin and President Zelensky. After this meeting takes place, we will have a trilateral meeting, which will include the two presidents and Mme”

UK Prime Minister Keir Starmer and German Chancellor Mertz also confirmed this announcement.

How did the markets react? 

The reaction from traditional financial markets was largely positive. The three major US indices – the Nasdaq, Dow Jones, and S&P 500 – initially rallied on news of the Trump–Putin summit in Alaska, before easing back slightly. Analysts suggest investors were hoping for more concrete results, rather than vague diplomatic gestures.

A similar trend was observed across European markets, particularly in Paris, Frankfurt, and London, which have all been performing strongly since early August.

The crypto market, however, told a slightly different story.

Between August 13 and 14, Bitcoin surged to a new all-time high of $124,000, before pulling back to around $115,600 after again failing to break through the resistance zone between $121,000 and $123,000.

Ethereum also came close to surpassing its own all-time high, missing it by just $100. It’s currently trading at around £4,300, with a renewed breakout attempt looking likely – especially now that the previous resistance at £4,100 seems to have become support.

As for the Total Market Cap, since the announcement on Thursday, 7 August, it has risen from $3.7 trillion to approximately $3.85 trillion – a gain of around 3.8% (roughly $150 billion).

Lastly, Bitcoin dominance continues to slide. Over the past 12 days, BTC’s market share has decreased by more than three percentage points, currently standing at 59.7% at the time of writing.

Is there a glimmer of hope?

So, can Donald Trump really bring Vladimir Putin and Volodymyr Zelensky to the same negotiating table? Are we genuinely moving towards peace, or is this just political theatre?

And what role will Europe play in the outcome?

Subscribe to our Telegram channel or sign up directly to the Young Platform below to stay up to date with all the latest developments.

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How the Stock Exchange works, explained simply

How does the stock market work?

NYSE, Nasdaq, LSE – what do these names mean? They refer to some of the world’s leading stock exchanges. But what exactly is a stock exchange, and how does it work?

The stock exchange, more commonly known as the stock market, is a financial marketplace where shares, bonds, and other securities are bought and sold. Once considered the domain of financial insiders, the stock market has now entered popular culture, thanks in part to numerous cult films that have graced cinema screens since the 1970s.

But what is the history of the stock exchange? What are its key components? And who are the leading players involved? Let’s take a closer look.

How and when was the stock exchange created?

The earliest recorded evidence of trading, lending, and deposit activities dates back to the second millennium BC, inscribed in the Babylonian Code of Hammurabi. Similar financial practices were also found among the ancient Greeks, Etruscans, and Romans.

However, these early forms of financial exchange cannot truly be considered a ‘stock market’ as we understand it today. The first genuine stock exchange was established in Amsterdam, in the Netherlands, around the 17th century.

The Middle Ages

In the late Middle Ages, the world of finance began to take on a more structured form with the emergence of the first banking institutions. Italy – particularly the cities of Genoa, Venice, and Siena – was, for many years, the central financial hub of Europe.

Around the 14th century, a new trading centre emerged that attracted merchants from across the continent, helping to shape a financial system that was still quite rudimentary. This was in Bruges, Belgium, specifically in the Ter Buerse Palace, built by the aristocratic Van der Bourse family. It was here, where merchants gathered to exchange goods and currencies, that the name ‘Borsa’ (stock exchange) originated.

Later, essential exchanges were established in Antwerp, Lyon, and Frankfurt, marking a shift from private to public management, with increasingly clear and stricter regulations.

The Modern Age

In the 17th century, the Amsterdam Stock Exchange became the most important in Europe – and likely in the world. This period also saw the creation of the first joint-stock companies, which significantly boosted the trading of securities, including government bonds and commodities.

The 18th century witnessed the rise of international trade, as well as the emergence of speculative bubbles. The most famous was the South Sea Bubble in England (1710–1720), when share prices soared before collapsing, causing heavy losses. It led to the Bubble Act, a law aimed at curbing speculation by limiting the formation of new companies.

Meanwhile, in New York, a group of merchants began meeting under a plane tree on Wall Street to trade securities – a humble beginning for what would become a future global financial centre.

The Industrial Revolution and the modern stock market

During this period, the stock market became crucial not only for company growth but also for the economic development of entire nations. London and Paris became key financial markets, funding industrial projects, infrastructure, and even colonial and military ventures.

In 1817, the New York Stock Exchange (NYSE) was officially established. Over time, it would grow to become the world’s largest stock exchange by market capitalisation.

The 20th century: successes and severe financial crises 

By 1900, the stock market had become the beating heart of the capitalist system. Economics and finance were now deeply interconnected. It was a century marked by sharp contrasts, alternating between periods of remarkable economic growth – such as the Roaring Twenties and the post-World War II boom – and severe financial crises, including the Great Depression of 1929 and Black Monday in 1987.

This volatility highlighted the need for regulation. Supervisory authorities such as the SEC (Securities and Exchange Commission) in the United States and Consob (National Commission for Companies and the Stock Exchange) in Italy were established to oversee financial markets, which were now dealing with enormous capital flows.

In 1971, the Nasdaq was founded, marking the beginning of the stock market’s transition from a physical trading floor, filled with shouting and hand signals, to an electronic system driven by computers and algorithms.

The digital age

Fast forward to today: the rise of the Internet has transformed how the stock market functions. It has brought greater accessibility, instantaneous transactions, unprecedented capital mobility, and the emergence of entirely new markets.

Now that we’ve explored its history, let’s take a closer look at how the stock market works today.

How does the stock market work?

To understand how the stock market works, it’s first essential to understand what it is. The stock market can be described as the financial engine that links the world of businesses with that of savers and investors. On one side, companies seek capital to fund their growth – whether by opening new branches, developing new products, or hiring staff. On the other hand, individuals look for opportunities to grow their savings. This is where the concepts of primary and secondary markets come into play.

The primary market is where shares are created. When a company lists on the stock exchange for the first time, it sells its shares directly to investors – a process known as an IPO (Initial Public Offering). Investors, by purchasing these shares, provide the company with the necessary funds to grow.

The secondary market, on the other hand, is the market in which existing shares are bought and sold between investors on a daily basis. Companies do not earn money from these transactions, but the market allows investors to profit from rising prices.

But shares are not the only financial instruments traded on the market. A large portion of investments also involves bonds. Understanding the difference between the two is fundamental.

What are shares?

As mentioned earlier, shares represent small units of ownership in a company. Investors buy them with the hope of selling them later at a higher price. Even by purchasing a single share, an investor becomes a partial owner of the company.

This ownership grants specific rights, such as receiving dividends (a portion of the company’s profits, although not always guaranteed) and participating in shareholder meetings.

However, buying shares comes with risks. Share prices are closely tied to the company’s performance. If the business thrives, the price typically increases. If it struggles, the cost can fall – sometimes dramatically. In extreme cases, shares can become worthless.

This is because share prices are determined by the balance of supply and demand. The more people want to buy a share – perhaps because the company has released a revolutionary product or reported record profits – the more its price rises. If demand drops, the price falls.

A helpful analogy: how much would you pay for a bottle of water in a city? Probably not much – it’s easy to find. But how much would you pay for that same bottle in the middle of the desert?

What are bonds?

Bonds differ fundamentally from shares. When an investor buys a bond, they do not become a shareholder; instead, they become a creditor. What does that mean in practice?

Put simply, a company issues bonds to raise capital, just as it does when issuing shares, but the mechanism is different. Buying a bond is similar to lending money to the company. The investor agrees to lend a specific amount, understanding that it will be repaid after a set period (e.g., five or ten years). In return, the company pays the investor regular interest payments, commonly referred to as coupons.

These coupons function like an interest rate, and the amount paid often reflects the company’s financial stability and trustworthiness. A well-established, transparent, and profitable company will typically offer a lower interest rate than a riskier, less stable one.

The same principle applies to government bonds, which a national government issues to finance public spending. For example, Italian government bonds tend to offer lower interest rates than Moldovan bonds, because Italy is generally considered more creditworthy and therefore less risky for investors.

Compared to shares, bonds are considered safer and more stable. However, this usually means they offer lower potential returns. As always, the general rule applies: higher risk, higher reward – lower risk, lower return.

What are indices?

This bonus section ties together both shares and bonds. So, what exactly is an index?

An index is simply a group or “basket” of listed companies (in the case of shares) or debt instruments (in the case of bonds), grouped according to specific criteria.

What kind of criteria? For example:

  • The S&P 500 includes the 500 largest publicly traded companies in the United States.
  • The NASDAQ-100 tracks the 100 largest non-financial companies listed on the NASDAQ.
  • The S&P Global Clean Energy Transition Index includes 100 companies worldwide that are involved in the clean energy sector.

For bonds, indices might group securities by maturity date, such as all government bonds with a 10-year or 30-year term.

These indices are useful benchmarks. They help investors assess overall market performance, track sectors, and compare their portfolios against broader trends.

Who operates on the market? The main players

Now that we’ve explored the tools and rules of the stock market, it’s time to understand who actually takes part.

Listed Companies

First of all, there are the listed companies themselves – without them, the stock market wouldn’t exist. As we’ve seen, these companies launch themselves into the financial markets to raise capital for expansion, innovation, or operations.

Investors: institutional and retail

Next, we have the investors, who buy shares and bonds in the hope of growing their capital. Investors can be categorised into two main groups: institutional investors and retail investors.

  • Institutional investors are the heavyweights of the financial system. They manage enormous sums of money and can influence the price trends of individual companies. This group includes mutual funds, pension funds, and insurance companies, which invest their clients’ money to generate returns and earn management fees in the process.
  • Retail investors, on the other hand, are individual savers who invest their own capital in the hope of earning a return on investment. If you’re reading this, chances are you already are – or soon will be – a retail investor. If so, we recommend checking out our blog for helpful content on avoiding common mistakes, understanding diversification, and overcoming cognitive biases in finance.

Financial intermediaries

Let’s now turn to the players who make investing possible: the financial intermediaries.

These operators form the essential bridge between those who issue shares and bonds and those who buy them. For various technical, legal, and security reasons, it’s not possible to trade directly on the stock exchange without going through these entities. In practical terms, we’re talking about banks and online brokers, which provide access to financial markets in exchange for commissions.

You might wonder, perhaps with mild irritation, “Why am I forced to go through an intermediary just to buy a share in Coca-Cola?” The answer is simple: for the same reason you need a driving licence to operate a car. You can’t just jump behind the wheel and press the pedals at random.

You might rightly argue that once you’ve got your licence, you can drive yourself. True – but can you build the car?

That’s the point. Building the “car” in this case means having ultra-secure IT systems, legal authorisations, direct exchange connections, and regulatory compliance. It’s a complex, expensive, and highly regulated activity – which is why supervisory authorities require only authorised intermediaries to operate in this space.

Supervisory authorities

Speaking of oversight, let’s talk about the supervisory authorities – the referees of the financial world. If the stock market were a football match, these are the officials ensuring that the game is played fairly and in accordance with the rules.

These authorities may be national, such as the SEC in the United States, CONSOB in Italy, or the FCA in the UK, or supranational, like ESMA (European Securities and Markets Authority) in the EU.

Their key responsibilities include:

  • Investor protection – ensuring that intermediaries act reasonably and responsibly towards consumers;
  • Market transparency – requiring listed companies to publish relevant information such as financial reports, quarterly results, and even executive changes;
  • Fair trading – monitoring markets to detect and sanction unfair practices like insider trading, where individuals trade using confidential or privileged information.

But you never stop learning.

In this article, we aim to provide an overview of the stock market, outlining its key components and how it operates. That said, what you’ve just read is likely just the tip of the iceberg.

Suppose you’ve landed here fresh from watching The Wolf of Wall Street, dreaming of sipping Martinis on a sun lounger in a luxury resort in the middle of the Pacific within a year, just like the next self-proclaimed guru. In that case, our advice is this: stay grounded and start learning seriously.

In the meantime, why not subscribe to our Telegram channel or even sign up directly to the Young Platform by clicking below? We regularly share guides, tips, and financial updates to help you stay informed and avoid being caught off guard.

See you next time!

Posted on

How the Stock Exchange works, explained simply

How does the stock market work?

NYSE, Nasdaq, LSE – what do these names mean? They refer to some of the world’s leading stock exchanges. But what exactly is a stock exchange, and how does it work?

The stock exchange, more commonly known as the stock market, is a financial marketplace where shares, bonds, and other securities are bought and sold. Once considered the domain of financial insiders, the stock market has now entered popular culture, thanks in part to numerous cult films that have graced cinema screens since the 1970s.

But what is the history of the stock exchange? What are its key components? And who are the leading players involved? Let’s take a closer look.

How and when was the stock exchange created?

The earliest recorded evidence of trading, lending, and deposit activities dates back to the second millennium BC, inscribed in the Babylonian Code of Hammurabi. Similar financial practices were also found among the ancient Greeks, Etruscans, and Romans.

However, these early forms of financial exchange cannot truly be considered a ‘stock market’ as we understand it today. The first genuine stock exchange was established in Amsterdam, in the Netherlands, around the 17th century.

The Middle Ages

In the late Middle Ages, the world of finance began to take on a more structured form with the emergence of the first banking institutions. Italy – particularly the cities of Genoa, Venice, and Siena – was, for many years, the central financial hub of Europe.

Around the 14th century, a new trading centre emerged that attracted merchants from across the continent, helping to shape a financial system that was still quite rudimentary. This was in Bruges, Belgium, specifically in the Ter Buerse Palace, built by the aristocratic Van der Bourse family. It was here, where merchants gathered to exchange goods and currencies, that the name ‘Borsa’ (stock exchange) originated.

Later, essential exchanges were established in Antwerp, Lyon, and Frankfurt, marking a shift from private to public management, with increasingly clear and stricter regulations.

The Modern Age

In the 17th century, the Amsterdam Stock Exchange became the most important in Europe – and likely in the world. This period also saw the creation of the first joint-stock companies, which significantly boosted the trading of securities, including government bonds and commodities.

The 18th century witnessed the rise of international trade, as well as the emergence of speculative bubbles. The most famous was the South Sea Bubble in England (1710–1720), when share prices soared before collapsing, causing heavy losses. It led to the Bubble Act, a law aimed at curbing speculation by limiting the formation of new companies.

Meanwhile, in New York, a group of merchants began meeting under a plane tree on Wall Street to trade securities – a humble beginning for what would become a future global financial centre.

The Industrial Revolution and the modern stock market

During this period, the stock market became crucial not only for company growth but also for the economic development of entire nations. London and Paris became key financial markets, funding industrial projects, infrastructure, and even colonial and military ventures.

In 1817, the New York Stock Exchange (NYSE) was officially established. Over time, it would grow to become the world’s largest stock exchange by market capitalisation.

The 20th century: successes and severe financial crises 

By 1900, the stock market had become the beating heart of the capitalist system. Economics and finance were now deeply interconnected. It was a century marked by sharp contrasts, alternating between periods of remarkable economic growth – such as the Roaring Twenties and the post-World War II boom – and severe financial crises, including the Great Depression of 1929 and Black Monday in 1987.

This volatility highlighted the need for regulation. Supervisory authorities such as the SEC (Securities and Exchange Commission) in the United States and Consob (National Commission for Companies and the Stock Exchange) in Italy were established to oversee financial markets, which were now dealing with enormous capital flows.

In 1971, the Nasdaq was founded, marking the beginning of the stock market’s transition from a physical trading floor, filled with shouting and hand signals, to an electronic system driven by computers and algorithms.

The digital age

Fast forward to today: the rise of the Internet has transformed how the stock market functions. It has brought greater accessibility, instantaneous transactions, unprecedented capital mobility, and the emergence of entirely new markets.

Now that we’ve explored its history, let’s take a closer look at how the stock market works today.

How does the stock market work?

To understand how the stock market works, it’s first essential to understand what it is. The stock market can be described as the financial engine that links the world of businesses with that of savers and investors. On one side, companies seek capital to fund their growth – whether by opening new branches, developing new products, or hiring staff. On the other hand, individuals look for opportunities to grow their savings. This is where the concepts of primary and secondary markets come into play.

The primary market is where shares are created. When a company lists on the stock exchange for the first time, it sells its shares directly to investors – a process known as an IPO (Initial Public Offering). Investors, by purchasing these shares, provide the company with the necessary funds to grow.

The secondary market, on the other hand, is the market in which existing shares are bought and sold between investors on a daily basis. Companies do not earn money from these transactions, but the market allows investors to profit from rising prices.

But shares are not the only financial instruments traded on the market. A large portion of investments also involves bonds. Understanding the difference between the two is fundamental.

What are shares?

As mentioned earlier, shares represent small units of ownership in a company. Investors buy them with the hope of selling them later at a higher price. Even by purchasing a single share, an investor becomes a partial owner of the company.

This ownership grants specific rights, such as receiving dividends (a portion of the company’s profits, although not always guaranteed) and participating in shareholder meetings.

However, buying shares comes with risks. Share prices are closely tied to the company’s performance. If the business thrives, the price typically increases. If it struggles, the cost can fall – sometimes dramatically. In extreme cases, shares can become worthless.

This is because share prices are determined by the balance of supply and demand. The more people want to buy a share – perhaps because the company has released a revolutionary product or reported record profits – the more its price rises. If demand drops, the price falls.

A helpful analogy: how much would you pay for a bottle of water in a city? Probably not much – it’s easy to find. But how much would you pay for that same bottle in the middle of the desert?

What are bonds?

Bonds differ fundamentally from shares. When an investor buys a bond, they do not become a shareholder; instead, they become a creditor. What does that mean in practice?

Put simply, a company issues bonds to raise capital, just as it does when issuing shares, but the mechanism is different. Buying a bond is similar to lending money to the company. The investor agrees to lend a specific amount, understanding that it will be repaid after a set period (e.g., five or ten years). In return, the company pays the investor regular interest payments, commonly referred to as coupons.

These coupons function like an interest rate, and the amount paid often reflects the company’s financial stability and trustworthiness. A well-established, transparent, and profitable company will typically offer a lower interest rate than a riskier, less stable one.

The same principle applies to government bonds, which a national government issues to finance public spending. For example, Italian government bonds tend to offer lower interest rates than Moldovan bonds, because Italy is generally considered more creditworthy and therefore less risky for investors.

Compared to shares, bonds are considered safer and more stable. However, this usually means they offer lower potential returns. As always, the general rule applies: higher risk, higher reward – lower risk, lower return.

What are indices?

This bonus section ties together both shares and bonds. So, what exactly is an index?

An index is simply a group or “basket” of listed companies (in the case of shares) or debt instruments (in the case of bonds), grouped according to specific criteria.

What kind of criteria? For example:

  • The S&P 500 includes the 500 largest publicly traded companies in the United States.
  • The NASDAQ-100 tracks the 100 largest non-financial companies listed on the NASDAQ.
  • The S&P Global Clean Energy Transition Index includes 100 companies worldwide that are involved in the clean energy sector.

For bonds, indices might group securities by maturity date, such as all government bonds with a 10-year or 30-year term.

These indices are useful benchmarks. They help investors assess overall market performance, track sectors, and compare their portfolios against broader trends.

Who operates on the market? The main players

Now that we’ve explored the tools and rules of the stock market, it’s time to understand who actually takes part.

Listed Companies

First of all, there are the listed companies themselves – without them, the stock market wouldn’t exist. As we’ve seen, these companies launch themselves into the financial markets to raise capital for expansion, innovation, or operations.

Investors: institutional and retail

Next, we have the investors, who buy shares and bonds in the hope of growing their capital. Investors can be categorised into two main groups: institutional investors and retail investors.

  • Institutional investors are the heavyweights of the financial system. They manage enormous sums of money and can influence the price trends of individual companies. This group includes mutual funds, pension funds, and insurance companies, which invest their clients’ money to generate returns and earn management fees in the process.
  • Retail investors, on the other hand, are individual savers who invest their own capital in the hope of earning a return on investment. If you’re reading this, chances are you already are – or soon will be – a retail investor. If so, we recommend checking out our blog for helpful content on avoiding common mistakes, understanding diversification, and overcoming cognitive biases in finance.

Financial intermediaries

Let’s now turn to the players who make investing possible: the financial intermediaries.

These operators form the essential bridge between those who issue shares and bonds and those who buy them. For various technical, legal, and security reasons, it’s not possible to trade directly on the stock exchange without going through these entities. In practical terms, we’re talking about banks and online brokers, which provide access to financial markets in exchange for commissions.

You might wonder, perhaps with mild irritation, “Why am I forced to go through an intermediary just to buy a share in Coca-Cola?” The answer is simple: for the same reason you need a driving licence to operate a car. You can’t just jump behind the wheel and press the pedals at random.

You might rightly argue that once you’ve got your licence, you can drive yourself. True – but can you build the car?

That’s the point. Building the “car” in this case means having ultra-secure IT systems, legal authorisations, direct exchange connections, and regulatory compliance. It’s a complex, expensive, and highly regulated activity – which is why supervisory authorities require only authorised intermediaries to operate in this space.

Supervisory authorities

Speaking of oversight, let’s talk about the supervisory authorities – the referees of the financial world. If the stock market were a football match, these are the officials ensuring that the game is played fairly and in accordance with the rules.

These authorities may be national, such as the SEC in the United States, CONSOB in Italy, or the FCA in the UK, or supranational, like ESMA (European Securities and Markets Authority) in the EU.

Their key responsibilities include:

  • Investor protection – ensuring that intermediaries act reasonably and responsibly towards consumers;
  • Market transparency – requiring listed companies to publish relevant information such as financial reports, quarterly results, and even executive changes;
  • Fair trading – monitoring markets to detect and sanction unfair practices like insider trading, where individuals trade using confidential or privileged information.

But you never stop learning.

In this article, we aim to provide an overview of the stock market, outlining its key components and how it operates. That said, what you’ve just read is likely just the tip of the iceberg.

Suppose you’ve landed here fresh from watching The Wolf of Wall Street, dreaming of sipping Martinis on a sun lounger in a luxury resort in the middle of the Pacific within a year, just like the next self-proclaimed guru. In that case, our advice is this: stay grounded and start learning seriously.

In the meantime, why not subscribe to our Telegram channel or even sign up directly to the Young Platform by clicking below? We regularly share guides, tips, and financial updates to help you stay informed and avoid being caught off guard.

See you next time!

Posted on

Banking risk: what is it and why is it triggered?

Explore what banking risk is and how it justifies the extra profits earned by banks.

What is Risk Banking? No, it’s not the latest expansion of your favourite board game, although the dynamics of conquest and strategy that govern it bear a striking resemblance. This term, cleverly borrowed from the famous board game, describes the recent trend among credit institutions—especially those with a bit of extra capital—to engage in mergers, acquisitions (M&A), and amalgamations. It’s akin to when you’ve gathered enough armies in the game to start eyeing your neighbour’s territories with interest.

One key macroeconomic factor associated with banking risk is the change in interest rates, a topic frequently discussed in our articles due to its significant impact on various markets, including the cryptocurrency market. When central banks raise interest rates to combat inflation—while many of us witnessed rising mortgage payments—it’s often a boon for bank profits. These additional earnings will likely be reinvested to promote growth and expansion. So, prepare yourself; the banking risk landscape for 2025-2026 is shaping up to be quite eventful.

The health of Italian banks

Before exploring the main topic, it is helpful to briefly review the health of credit institutions to understand the context in which this risky phenomenon develops. In recent years, banks have greatly benefited from central banks’ decisions regarding interest rates.

In 2023, Italy’s largest listed banks reported a combined net profit of EUR 21.9 billion, which increased to EUR 31.4 billion in 2024. At the European level, the earnings of the twenty largest banks reached approximately EUR 100 billion.

The primary driver of growth during this period was the European Central Bank’s decision to raise interest rates in an effort to combat inflation. From July 2022 to October 2023, reference rates increased from 0% to 4.5%. This rise led to an improvement in the net interest margin, which is the difference between the interest income generated from loans and the interest expenses paid on deposits. In simple terms, banks raised lending rates on loans more quickly than they increased the interest offered on deposits.

However, the positive results were not solely due to this factor. There was also a rise in net commissions, particularly from asset management services. These elements have contributed to the current situation where banks, having accumulated substantial profits—akin to conquered territories or bonus cards in a game—now possess significant liquidity, or ‘armies.’ The next step for these banks, in both contexts, is to invest these resources for further expansion.

The banking risk

The metaphor of banking risk is particularly fitting, as the sector is increasingly resembling a competitive arena. However, unlike a board game, the push for consolidation among banks is driven by several strategic motivations that are essential for their growth and stability. Here are the main factors:

  1. Seeking economies of scale: the primary objective is to unify operational structures and optimise costs through the rationalisation of internal processes and the integration of technology platforms.
  2. Geographical and product diversification: expanding territorial presence and broadening the range of services offered enables banks to mitigate the risks associated with concentrating on specific markets or customer segments, while simultaneously increasing cross-selling opportunities and, consequently, revenues.
  3. Increased competitiveness: larger banks generally have greater bargaining power and a higher capacity to invest in new technologies, human resources development and marketing initiatives, thus strengthening their market position.
  4. Strategic response to industry challenges: M&As are seen as a response to accelerating digitisation, the need to comply with increasingly stringent regulations (e.g., on capital and liquidity requirements), and the urgency of addressing cross-cutting issues such as environmental and social sustainability.
  5. Shareholder pressure: A relevant factor is the constant pressure exerted by shareholders to maximise the value of shares and dividends, and to attract new investors.

The banking risk: the most emblematic cases

The Italian banking landscape has experienced notable mergers and acquisitions (M&A) that have reshaped the credit sector. The merger between Intesa Sanpaolo and UBI Banca, finalised in 2021, is seen as a pivotal moment that sparked the latest wave of banking consolidation. This merger not only solidified Intesa Sanpaolo’s leadership but also catalysed further integration within the industry.

Another significant example is Crédit Agricole Italia’s acquisition of Credito Valtellinese (CreVal) between 2020 and 2021, which highlights the growing interest of foreign groups in enhancing their presence in key regions of Italy. Additionally, BPER Banca has remained an active participant in the market, acquiring Banca Carige in 2022 and engaging in ongoing discussions about a potential merger with Banca Popolare di Sondrio.

In the background, several hypotheses involving major players are circulating. There has been extensive discussion about UniCredit‘s interest in increasing its stake in Germany’s Commerzbank, as well as previous talks about a potential merger between UniCredit and Banco BPM. Currently, Banco BPM is working to finalise its takeover bid for Anima SGR, which is also attracting interest from UniCredit, with a bid exceeding EUR 10 billion. 

Meanwhile, Unipol, having been excluded from the recent sale of public shares in Monte dei Paschi di Siena, is focusing on facilitating a merger between Bper and Popolare di Sondrio, in which it holds a significant stake. 

Banca Monte dei Paschi di Siena (MPS) remains a central element in the mergers and acquisitions (M&A) dynamics, with the Italian government seeking market-based solutions for its eventual stabilisation and privatisation. In this context, there has been renewed speculation about a possible involvement of UniCredit..

What will be the following developments?

What will be the outcome of this phase of banking risk? It is complex to provide a clear answer, mainly because there won’t be an absolute or definitive winner. Banking risk, unlike the dynamics of a board game, is a continuous process that adapts to the changing economic and financial seasons.

The current period is undoubtedly critical. With interest rates falling, the exceptional profit margins that banks have enjoyed in recent years may begin to normalise. This situation prompts banks to reevaluate their strategies and develop new plans to maintain profitability and strengthen their competitive positions.

As a result, we can expect further consolidation within the industry. Large banking groups may seek to fortify their positions to compete effectively on a global scale, while smaller institutions will need to take action to avoid being left behind. This could involve forming strategic alliances or pursuing mergers to create national or specialised leaders in the market.

What about the customers and the economy as a whole? Proponents of these operations often emphasise the anticipated benefits related to increased stability, efficiency, and investment capacity. It will be crucial to monitor whether these significant manoeuvres lead to real advantages in terms of effective competition, service quality, and support for the real economy. In summary, the dynamics of banking risk are still ongoing, and the upcoming developments will continue to shape the future of the credit sector.

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Cognitive Bias in Finance: A Guide to Conscious Investing

Cognitive Bias in Finance: Invest More Consciously

Cognitive biases have a greater impact on your investment decisions than you realise. Explore the most prevalent ones in finance and practical strategies for recognising, managing, and overcoming them.

Cognitive biases are mental distortions that affect our thinking and decision-making, often clashing with the fundamentals of traditional economic theory. Because of these systematic biases, we, as investors in the financial world, are far from being the ‘rational actors’ that classical economists envisioned.

For a long time, the significance of cognitive biases has been overlooked. People tended to view individuals as robots, acting solely based on a balance of risk versus return and costs versus benefits. However, reality—and particularly the data, which rarely lies—presents a very different picture. 

What exactly are cognitive biases? How does behavioural finance define them? And, most importantly, how frequently do we fall victim to them?

Cognitive bias:  The origin of the term

Do you think you’re a good driver? Maybe you believe you’re better than the “average Italian driver.” If so, you’re not alone; most drivers share the same conviction. This phenomenon itself is paradoxical. The reason behind it? The overconfidence bias. But let’s not get ahead of ourselves; we’ll discuss that shortly.

To explore the intriguing world of cognitive bias in finance, we first need to understand what “bias” means. It’s an English term derived from the Greek word “epikársios,” which means “slanted” or “skewed.” Initially related to the game of bowls, it described a slightly off-target shot. You probably never heard your grandfather shout “Bias!” at the bowling alley, and there’s a reason for that: since the 1500s, the term has taken on a broader meaning. Today, we often refer to it as a “predisposition to bias” or, more specifically, in our context, a “systematic distortion of judgment.” In short, it refers to the tendency to see things a bit… askew.

What are Cognitive Biases?

The term “cognitive bias” has its origins in etymology, which we have briefly touched upon. It is essential to note that this concept has a strong foundation in psychology, mainly due to the pioneering research of two prominent figures: Daniel Kahneman and Amos Tversky. These Nobel laureates began exploring this complex topic in the 1970s.

So, what does “cognitive bias” actually mean? One could consider it synonymous with mental automatism or shortcuts, though these terms often carry a negative connotation. Our brains, to conserve energy, tend to take shortcuts instead of processing information straightforwardly. Unfortunately, these shortcuts can sometimes lead us astray. Cognitive biases can influence the beliefs we hold, the decisions we make, and even our habits. In summary, cognitive biases are serious matters; they can significantly alter our thinking processes, especially if we fail to recognise and address them. The key to managing these biases is to acknowledge their existence and thoroughly understand them.

Heuristics, sometimes dangerous mental deterrents

We are discussing cognitive biases related to finance, but money and investments often lack concrete evidence, don’t they? Don’t worry; we’re getting there. First, we need to clarify one last fundamental concept: heuristics, a term you will frequently hear in connection with bias.

In simple terms, heuristics are mental shortcuts that help us make quick decisions. The word originates from the Greek “heurískein, “meaning “to discover” or “to find.” These quick mental processes allow us to reach conclusions swiftly, enabling us to make decisions on the fly. Isn’t that fascinating? When an idea suddenly “pops into your head” without the need for extensive thought or complicated reasoning, that’s heuristics at work!

This phenomenon, often referred to as ‘magic’, occurs in our brains through a process known as attribute substitution. This process usually happens without our awareness. Our brain replaces complex concepts with simpler ones, allowing us to reach quick conclusions with minimal cognitive effort.

This intriguing mechanism can lead to cognitive biases. However, it is essential to recognise that not all heuristics are detrimental; some are known as ‘effective heuristics’. These are shortcuts that can be beneficial and make our lives easier. The real issue arises when we rely too heavily on ‘lazy’ or flawed heuristics, which can lead to problems, especially in finance.

Cognitive bias in the world of finance: When shortcuts become traps

Have you ever made a trade and felt like the Warren Buffett of your region, almost invincible? Or, conversely, have you recorded a loss and, instead of taking a moment to reflect, decided to increase your investment to try to “recover quickly”? If you’ve nodded in agreement at least once, welcome to the club—you’ve had your encounter with cognitive bias.

Don’t feel alone or wrong; this is entirely normal. Research shows that irrational thinking patterns are pervasive and significantly influence the decisions of many individuals when faced with uncertainty, such as in financial markets. Kahneman, in his book “Thinking, Fast and Slow,” explains that these “systematic errors” are an integral part of our thought processes.

It is essential to closely examine the most prevalent biases that impact the investment world. The goal is to recognise these biases so we can work to mitigate their impact. While eliminating them may be nearly impossible, we can aim to manage and reduce their influence.

Confirmation Bias

Confirmation bias refers to the tendency to seek out, interpret, favour, and remember information that supports our pre-existing beliefs or values, essentially acting as a form of selective blindness. 

For example, suppose you invest in shares of ‘Company X’ or a trending cryptocurrency. In that case, you may actively search for positive news about that asset on forums or social media, while ignoring or downplaying any negative information. You might think, “Oh, that famous analyst says it will go up? That’s fantastic! The other analyst believes it’s a bubble. He doesn’t know what he’s talking about!”

A study conducted by Park in 2010 and published in the Journal of Cognitive Neuroscience utilised functional magnetic resonance imaging (fMRI) to demonstrate that when confirmation bias is at work, areas of the brain associated with reward become activated. In simple terms, our brains release dopamine when we encounter information that aligns with our beliefs, even if those beliefs are incorrect.

Overconfidence bias

It is a very human tendency to overestimate one’s abilities, knowledge, and the accuracy of one’s predictions. Consider entrepreneurs who underestimate the challenges of starting a business or employees who are convinced they can meet unreasonably tight deadlines. While optimism can be a powerful motivator, it becomes problematic when confidence turns into arrogance. This overconfidence can lead to hasty decisions, disregard for genuine risks, and ultimately disappointing outcomes.

Research by Barber and Odean (2001), titled “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment,” highlights that this cognitive bias occurs more frequently among male investors. Males tend to overestimate their capabilities, which often results in more frequent trading and lower net returns compared to their female counterparts.

Anchorage bias

Anchoring refers to our tendency to rely too heavily on the first piece of information we receive about a topic, even if that information is not particularly relevant or accurate. This initial piece of information acts as a mental ‘anchor’ that affects all subsequent judgments. For instance, when we are tasked with making a numerical estimate, we are often influenced by a number we have encountered before, regardless of its relevance to the current situation.

A study by Hersh Shefrin in 2000, which is detailed in his book ‘Beyond Greed and Fear’—a classic in the field of behavioural finance—demonstrates how investors tend to ‘anchor’ themselves to historical price levels. This could be the price at which they purchased a stock or its historical high. These ‘anchors’ can significantly influence their expectations and future decision-making.

Bias of the Present

You may fall victim to this cognitive bias, which can lead to adverse outcomes, when you overvalue immediate benefits at the expense of future gains, even though the latter could be significantly greater. This reflects the mindset of “everything and now.” 

A 2008 study on retirement savings by Laibson, Repetto, and Tobacman demonstrates how this bias can contribute to chronic procrastination in long-term savings decisions. The common thought of “I’ll start my savings plan next month” often shifts to “next year,” and, eventually, “when the kids are grown up.”

This bias is effectively illustrated by economic models such as the “beta-delta” model, which simply shows that people do not discount time uniformly. We tend to give much more weight to rewards we can obtain immediately than to those that will come in the future, even when the wait is minimal. It’s as if our “future self” is a stranger to whom we are reluctant to show kindness.

Representativeness Bias

Tversky and Kahneman extensively addressed this heuristic in their seminal 1974 article, “Judgment under Uncertainty: Heuristics and Biases.” This heuristic is based on our tendency to evaluate the likelihood of an event or its association with a category by comparing it to a well-established prototype or stereotype in our minds. Unfortunately, this often leads us to ignore what is known as ‘base probability’—the actual frequency of that event in reality.

A classic example in finance is when investors choose to invest in a company merely because it belongs to a ‘hot’ sector, such as artificial intelligence today or renewable energy yesterday. They might also invest simply because the company’s name resembles that of a successful enterprise or because its founder has a likeness to Steve Jobs. In these cases, people focus on superficial similarities while neglecting essential fundamental analysis.

Consider roulette: if red appears five times in a row, many people would choose to bet on black, thinking it must come up next. This belief stems from the idea that the sequence R-R-R-R does not fit our perception of randomness. However, it’s important to remember that the roulette ball has no memory, and the probability remains the same with each spin.

Framing Effect

Even when not influenced by bias, we must acknowledge the framing effect. This psychological phenomenon illustrates how our decisions can change significantly based on how information is presented, or “framed.” Although the underlying facts may be the same, our perception—and ultimately our choice—can vary significantly depending on the way they are framed.

As Kahneman and Tversky have taught us, how a choice is formulated in terms of potential gains or losses can make a considerable difference. For instance, stating that a medical treatment has a “90% chance of success” feels much more reassuring than saying it has a “10% chance of failure,” even though both statements convey the same information.

Similarly, when we say that an active investment fund generated a 4% return while the reference market yielded only 2%, it can be framed as a success. However, if the annual management fees are 3.5% and inflation is 3%, the actual return is negative.

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How to unhinge cognitive bias

Now that we’ve become familiar with this cheerful little collection of mental traps, you might be asking yourself, “Am I destined to make poor financial decisions for the rest of my life?” The answer is a resounding NO! Understanding the problem is the first essential step toward overcoming it. Here are some practical tips—no magic formulas, just genuinely helpful advice:

  1. Give yourself clear rules and follow them:
  • Set clear financial goals: what do you want from your investments? A quiet retirement? Buying a house? Having defined goals and a defined time horizon helps you keep a straight tiller when the seas get rough;
  • Create a written investment plan: do not navigate by sight. Decide on your risk profile first, how to diversify your portfolio, and set clear rules for buying, selling and rebalancing. Write it down in black and white! And, above all, stick to the plan, even when instinct (or a damn bias!) screams at you to do the exact opposite.
  • Automate as much as possible: accumulation plans are a blessing. Regular, automatic deposits and purchases save you the agony of deciding ‘when is the right time to enter’ (spoiler: nobody knows for sure) and protect you from impulsive decisions dictated by the emotionality of the moment.
  1. Scepticism, in finance, is a virtue:
  • Actively seek divergent opinions: Are you overwhelmingly convinced you want to invest in a specific crypto, e.g. SOL? Perfect. Now go and look up all the reasons why it might be a bad idea. Read analyses from those who think differently and compare your thoughts.
  • Draw up a ‘pre-mortem’: before making a significant financial decision, imagine for a moment that it went wrong, a complete disaster. What could have been the causes? This mental exercise can help you identify risks and flaws in your reasoning that you might otherwise overlook.
  1. Keep an investment diary:
  • Write down why you made a specific investment decision, what you expected at the time, and how you felt (euphoric? worried?). Rereading the diary after a while is a powerful way to recognise your ‘favourite’ behavioural patterns and biases, the ones you fall into most often.
  1. Think long term:
  • The financial and cryptocurrency markets are generally considered risky and volatile in the short term. If you stand there every day checking the charts and getting anxious about every little change, the bias will have an easy time. Take a deep breath, remember your long-term goals and don’t get overwhelmed by the panic or euphoria of the moment. As Warren Buffett says, “The stock market is a mechanism for transferring money from the impatient to the patient.” 

Cognitive bias in finance: Frequently asked questions

After all this immersion in the somewhat convoluted world of bias, it is normal to have a few doubts or curiosities. Let’s try to anticipate a few, see if we get it right:

  • Is it possible to eliminate cognitive bias? 

The honest answer is that cognitive biases likely cannot be eliminated. They are a fundamental part of being human, much like our shadows or our regional accents. Instead of trying to eradicate these biases—an unrealistic goal akin to never feeling hungry—the more realistic approach is to recognise and understand them. By developing strategies to manage and mitigate their effects, we can work toward a better understanding of ourselves. This is an ongoing process, much like constant mental maintenance..

  • How important is the psychological factor in finance?

It’s crucial to remember that knowledge alone isn’t enough. You might have read every finance book available, but when it comes time to click ‘buy’ or ‘sell’, letting emotions and biases influence your decisions can jeopardise all your analytical insights. Many experts and successful investors argue that a significant portion of successful investing—possibly as much as 50% or more—depends on managing one’s psychology. Therefore, analysis and psychology must work together in a seamless manner.

  • Are there biases that are more ‘dangerous’ than others for beginning investors?

For beginners in the market, certain biases can be particularly dangerous. For instance, overconfidence following initial gains can create a false sense of security, leading to unnecessary risks. Additionally, confirmation bias is often prevalent among individuals with limited trading experience.

  • How can I identify the biases I am more susceptible to?

The most effective approach to self-improvement is through honest and consistent self-observation. One helpful technique is to maintain a diary of your investment decisions. In this diary, record not only what you buy or sell but also the reasons behind your choices and how you felt at the time (were you euphoric, worried, or feeling pressured?). Over time, when you reread your entries, you may notice recurring patterns in your behaviour. For example, did you make impulsive decisions during a market crash? Did you hold onto a stock ‘out of principle’ even as its value continued to decline?

  • Are financial professionals (traders, fund managers) immune?

Not! Cognitive biases are universal; they affect everyone because they are rooted in the way the human brain processes information and makes decisions. It is often overconfidence that can mislead those who consider themselves exceptionally knowledgeable. The key difference is that a good professional should be trained to recognise these biases and develop strategies to mitigate their impact. However, nobody is perfect—not even those who work on Wall Street!

We have reached the end of our journey to explore cognitive biases in the realm of finance. If you have made it this far, you have already taken a significant and crucial step: you have become aware that these “mental biases,” or “deceptive shortcuts,” truly exist. They impact you, just as they affect every single person on this planet.

Biases are not just a product of psychologists trying to sell more books; they are fundamental mechanisms that are deeply ingrained in our way of thinking, stemming from our evolutionary history. These biases serve as shortcuts that our brains, which prefer efficiency over effort, use to navigate an incredibly complex world filled with vast amounts of information. Sometimes, these shortcuts help us reach our goals quickly and safely. However, other times—especially when it comes to our hard-earned savings and the unpredictable nature of financial markets—these biases can lead us to make significant mistakes.

The good news is that we are not bound to be mere puppets of our biases! Awareness is our most powerful tool. By understanding how these mechanisms work, recognising the warning signs in our behaviour and thoughts, and adopting effective strategies to ‘defuse’ them or at least reduce their impact, we can make a significant difference in our lives.

The next time you hear that little voice inside urging you to make an impulsive financial decision, —making you think, “What the heck, I’m going to jump!”—pause for a moment. Take a deep breath and ask yourself, “Am I being influenced by some cognitive bias that might lead me astray?”

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Supply chain and open finance: the integration that could revolutionise the supply chain concept

Supply chain and open finance: revolution?

The integration of open finance could transform the supply chain by making financial flows more efficient and transparent. How can this be achieved?

The supply chain is prepared to collaborate with open finance, creating a synergy that promises significant advancements. Thanks to APIs, stakeholders at various stages of the supply chain can greatly enhance financial flows. In this article, we will explore how this can be achieved. Let’s get started!

Supply chain: meaning and how it works

The supply chain refers to all the elements involved in the journey from product creation to delivery to the end consumer. The term “chain” is intentional, as it conveys the idea of a series of interconnected stages where each link depends on the proper functioning of the previous and subsequent ones.

While the supply chain manages the physical flow of goods and services, supply chain finance (SCF) oversees the financial flow. SCF is defined as a collection of solutions aimed at optimising financial transactions between supplier and buyer companies within the supply chain. It includes various strategies designed to enhance collaboration and trust between these parties, providing mutual benefits to both producers and buyers.

This collaborative approach is essential because the supply chain is exposed to various risks. Common issues include situations where the buyer pays, but the supplier fails to ship, or where the supplier ships, but the buyer does not make payment. Such problems can significantly disrupt the stability and efficiency of the supply chain, resulting in substantial economic consequences.

Supply chain finance (SCF) includes key features such as reverse factoring and dynamic discounting. Reverse factoring, which can be inaccurately translated into Italian as “reverse invoice advance,” is the primary solution offered by SCF. But what does “reverse” mean in this context? Unlike direct factoring, where a supplier sells their outstanding invoices to a third party for immediate liquidity (often paying a commission to the intermediary), reverse factoring flips the roles. In this scenario, it’s the buyer—a large company—that approaches the third party for the advance, enabling the supplier to access capital under more favourable terms to fulfil their order. Essentially, the purchasing company reassures the supplier, saying, “Don’t worry, I’ve got your back; this way, you can get paid sooner and pay less for the loan.” The purchasing company then repays the advance at a significantly lower interest rate than what the financing company would charge in a direct factoring arrangement. Consequently, the purchasing company benefits from a lower final price.

Dynamic discounting operates on the same principle, with the purchasing company advancing liquidity without any intermediaries. In this case, the supplier issues an invoice with a due date, and the buyer collects it and provides the advance directly. What does the purchasing company gain? They receive an invoice discount, termed “dynamic” because it varies depending on when the payment is made: the sooner the payment is made, the less is paid, and vice versa.

In summary, the solutions offered by SCF aim to enhance capital management and reduce payment times by providing suppliers with early access to liquidity. Additionally, they enable small and medium-sized enterprises (SMEs) to obtain financing on more favourable terms by leveraging the creditworthiness of their buyers, who effectively support them in this process.

Open Finance: what it is and how it works   

Open Finance refers to a system that enables the secure and consensual sharing of customer financial data among various participants to develop innovative products and services. The term “consensual” emphasises​​ the necessity of obtaining permission from the data owner before sharing their information. Open Finance is rooted in the concept of Open Innovation, which views innovation not as a product of competitive secrecy but rather as a result of collaboration, sharing, and transparency. 

Open Finance is seen as an evolution of Open Banking. While Open Banking primarily focuses on banking data, Open Finance broadens this scope to encompass the entire financial sector. As a result, Open Finance aims to create an interconnected financial ecosystem that encompasses not only banking services but also mortgages, insurance policies, investment portfolios, pension funds, and other financial products.

Open Finance is fundamentally built on the interactions between three key actors: customers, financial institutions, and Third Party Providers (TPPs). TPPs are external companies that exchange, process, and utilise financial data. In essence, customers decide whether to grant TPPs access to their financial data held by various institutions. 

Once permission is granted, APIs (Application Programming Interfaces) serve as the technological backbone of Open Finance, acting as a ‘bridge’ between different IT systems. This enables efficient and secure communication of financial information. As a result, an ecosystem emerges where various entities share knowledge and collaborate to generate innovative solutions, ultimately aiming to enhance the economic structure as a whole.

To grasp the significance of this new paradigm, let’s use an example of organising an Easter Monday gathering. Imagine you want to arrange a traditional lunch with friends. You assign tasks, such as who will handle the barbecuing, who will cook the vegetables, who will bring the drinks, and who will buy the plates and glasses. As the organiser, you receive countless messages: the person in charge of the barbecue asks if the vegetable cook would like to grill, the drinks coordinator is unsure if they should also bring glasses, and the plate buyer wants to know how many courses are planned. It quickly becomes chaotic. You are the organiser, not the switchboard operator.

To streamline communication, you create a WhatsApp group titled ‘Easter Monday 2025.’ This innovation enables all participants to interact directly with one another without going through you. Similarly, Open Finance can be compared to this WhatsApp group, facilitating direct communication among various stakeholders. 

We have previously explored the concepts of supply chains and Open Finance, as well as their operational aspects. Now, it’s time to examine how these two concepts could work together and the benefits this synergy could bring to the infrastructure.

If Supply Chain and Open Finance Integrate

The supply chain is a network of interconnected units that are constantly communicating with one another. However, the main challenge is that this communication often follows a linear and fragmented approach. Integrating Open Finance into the supply chain can make processes more fluid and enhance the overall infrastructure by increasing efficiency and operational efficiency.

So, how does this work? It’s through APIs (Application Programming Interfaces), which enable the continuous exchange of data and the execution of transactions among various participants, such as banking institutions, third-party companies (TPPs), supply chain finance (SCF) intermediaries, and different business management systems (ERPs). 

The result is an ecosystem that enables the secure and rapid transfer of information, where processes are automated and optimised. The more efficient, transparent, and collaborative the communication is, the smoother and more stable the supply chain becomes.

The processes, the higher the productivity and, consequently, the turnover. 

The Open Finance API specifically facilitates access to account information services (AIS) and payment initiation services (PIS). AIS allows for the retrieval of account balances and transaction details, while PIS enables the automatic authorisation of payments under certain conditions. This functionality provides a current and comprehensive view of a company’s financial status, allowing the assessment of its liquidity and spending capacity. Additionally, it streamlines and speeds up transactions within the supply chain. Let’s explore a practical example.

As the owner of GiardiNani S.r.l., a company that manufactures garden figurines, you receive a large order from a purchasing company in the UK. This is the first time you’ve had to produce such a significant quantity of garden figurines, and you lack the funds to begin production. Fortunately, the purchasing company introduces you to reverse factoring, which you find promising.

You issue an invoice with a 60-day due date to the purchasing company, which approves it through its ERP management system. Via an API, the ERP automatically sends the invoice data to a third-party reverse factoring company, which determines whether to provide financing. This financing company can access the financial information (AIS) of both the purchasing company and GiardiNani to assess their financial situations and develop loan terms.

Due to the purchasing company’s high credit rating, it offers a loan with excellent terms, which GiardiNani gladly accepts. After this, the reverse factoring company issues the payment automatically (PIS). With the cash received, your factory can begin producing garden figurines.Finally, the purchasing company is responsible for repaying the loan to the reverse factoring company at the end of the 60 days. Their management systems, connected via an API, communicate seamlessly to facilitate the transaction.

What happened? Almost automatically, GiardiNani gained access to liquidity at much more favourable costs and conditions than it would have obtained through traditional financing. Open Finance enables quicker transactions by providing access to financial data (Account Information Services – AIS) and facilitating automatic payments (Payment Initiation Services – PIS). 

The exchange of information and communication between management systems reduces human error and accelerates the entire process. Transparent data allows for a more accurate, timely, and efficient assessment of credit risk. 

Overall, the supply chain benefits from these improvements because the processes run smoothly, without any lost time. And as we know, time is money.

A consideration for the future 

The integration of supply chain management with Open Finance currently focuses on enhancing system responsiveness and improving process efficiency. The next phase involves implementing artificial intelligence and machine learning to develop systems capable of predicting liquidity crises and insolvency risks. These advancements will enable the dynamic optimisation of services based on market conditions, as well as the creation of risk-balancing models and other benefits.

Given that transparency is a key principle of Open Finance, blockchain technology is likely to play a significant role in this new approach to managing and optimising financial flows. In the cryptocurrency sector, we can already see examples of initiatives aimed at improving supply chain processes, such as VeChain. We are still in the early stages of this development and will continue to closely monitor this trend. 

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ESG and sustainability: ethical investment towards an uncertain future?

ESG and sustainability: ethical investment towards an uncertain future?

ESG and sustainability were once fashionable terms in traditional finance. Recently, however, the climate has shifted, leaving the future uncertain. What has happened?

Sustainable ESG (Environmental, Social, and Governance) investment has been a hot topic for several years. A Google search for ‘ESG’ in 2022 yielded over 200 million results. This aligns with a historical period marked by heightened awareness of climate change risks and the implementation of green policies by various institutions. However, recent data suggests that we may be experiencing a shift in this trend. In this article, we will explore what ESG investments are and examine why their popularity might be waning. Enjoy your reading!

ESG: meaning, criteria and ratings

ESG stands for Environmental, Social, and Governance, representing the key pillars used to evaluate a company’s or investment’s sustainability, Corporate Social Responsibility (CSR), and ethical impact. ESG is part of the broader concept of sustainable and responsible investing (SRI). The emergence of ESG can be traced back to a historical moment characterised by a heightened focus on environmental issues. In essence, ESG investing involves selecting and supporting companies that actively protect the environment and uphold human and workers’ rights. This selection is based on specific criteria.

ESG (Environmental, Social, and Governance) criteria are categorised into three main areas and are essential for assessing the sustainability and social responsibility of a company or investment. If you were the manager of a sustainable mega hedge fund tasked with evaluating a company for potential investment, you would begin by examining the environmental criteria. This involves assessing the impact of the company’s activities on the environment and its willingness to mitigate any harm. Key factors in the Environmental section include the use of natural resources, waste management, pollution, and overall environmental compliance.

Next, you would analyse the social criteria, part of the Social pillar, to evaluate the company’s relationships with its stakeholders, which include employees, suppliers, customers, and the local community. The goal of this assessment is to gauge the implications of the company’s operations and its demonstrated accountability toward the various stakeholders mentioned above.

Specifically, you should check employees’ working conditions, respect for human rights, product quality and commitment to local communities.

In conclusion, it’s essential to study the corporate governance model, specifically the governance criteria. This section examines the company’s corporate structure, decision-making processes, and policies to ensure they align with ethical principles and best practices. Key aspects to focus on include transparency, anti-corruption measures, the independence of board members, respect for minority interests, and gender diversity. You can conduct these assessments yourself or delegate the task to specialised agencies that provide ESG ratings.

ESG ratings are evaluations presented as numerical scores or alphabetical scales that aim to assess the overall sustainability of corporations. Their primary function is to provide investors with additional information to aid in their investment decisions. Globally, some of the most well-known ESG rating agencies include MSCI ESG Research, Sustainalytics, S&P Global ESG scores, and Moody’s ESG Solutions. Additionally, there are specialised providers like Standard Ethics, which focuses specifically on compliance with international standards.

However, there is often a significant gap between intentions and actions. Let’s examine some major defects associated with this financial trend, which contribute to the ongoing shift in its momentum.

ESG and contradictions: scandals and greenwashing

Sustainable ESG investing is a commendable effort that merges the pursuit of profit with an awareness of the real impact that economic and financial decisions have on our planet. However, some large companies and investment funds have taken advantage of the growing popularity of this ethical approach to enhance their image in front of investors and consumers, without genuinely fulfilling their promises. Their ultimate goal? To boost their revenues.

An example of corporate misconduct is the Dieselgate scandal of 2015 involving Volkswagen. Investigations revealed that the car manufacturer had been rigging emissions tests for its diesel vehicles to make them appear more environmentally friendly. This was part of an effort to position Volkswagen as a leader in green technology. Ultimately, the class action lawsuit was settled, with Volkswagen agreeing to pay $14.7 billion to affected owners.

Another case is that of Wirecard, a German digital payment services company. This scandal is particularly noteworthy because it also implicated ESG (Environmental, Social, and Governance) rating agencies. Despite receiving average ratings—considered neither outstanding nor poor compared to its competitors—Wirecard declared bankruptcy in June 2020 due to a $1.9 billion hole in its balance sheet. This situation recalls the 2008 financial crisis, when rating agencies incorrectly assigned triple-A ratings to subprime financial products.

On the investment fund side, a report by the European Securities and Markets Authority (ESMA) highlights that simply adopting ESG (Environmental, Social, and Governance) designations can lead to significant increases in investment. On average, there is an 8.9% increase in capital during the first year following the name change, with terms related to the environment—particularly those associated with the Environmental pillar—showing the most pronounced effects. However, the report also identifies a key risk: the potential for greenwashing, a marketing strategy that promotes an image of environmental sustainability while downplaying or concealing its negative impacts. To address this issue, the report provides guidelines for best practices.

One important factor that remains to be examined in understanding the decline in popularity of ESG sustainable investing is the election of Donald Trump.

ESG sustainability and Donald Trump don’t mix: ‘Drill, baby, drill!’

Last November, Donald J. Trump became the President of the United States of America thanks to an election campaign based on American isolationism and the desire to put an end to the ‘woke‘ ideology. This umbrella term also includes climate and environmental issues. At his inauguration speech on 20 January, The Donald immediately made things clear: ‘with my actions today, we will end the Green New Deal‘ – a plan of economic and social reforms focused on climate change and inequality. Suddenly, the scenario has changed, or, to stay on topic, the climate has undergone a change.

Global ESG sustainable funds, according to a Morningstar report, suffered record outflows of $8.6 billion in Q1 2025, compared to $18.1 billion in inflows in the previous quarter. The same report also tells us that investors in the US withdrew money from these funds for the tenth consecutive quarter. At the same time, Europe recorded its first net outflows since 2018, with $1.2 billion withdrawn, compared to $20.4 billion in inflows in Q4 2024. It is also worth noting that, despite this, ESG funds globally manage more than $3 trillion in assets. 

Another interesting statistic, again from Morningstar, concerns the closing and rebranding activity of ESG funds: as of 2024, 94 sustainable funds were closed in Q4, for a total of 351 in the year, while 213 European funds changed their names, according to the guidelines of the ESMA report we saw earlier. Of these, 50 introduced ESG references, 115 removed them, and 48 changed them. 

Finally, we get a survey from Stanford University that could provide helpful information for understanding the direction of the ESG trend. In 2022, 44% of young investors thought it was essential for investment funds to use their influence on the companies they invest in to prioritise environmental issues. In 2023, 27% thought so, while the latest survey, covering 2024, reveals that only 11% of the sample surveyed held the same opinion. When asked the same question about improving social and governance practices, the drop was even more pronounced: for social practices, from 47% to 10%, and for governance practices, from 46% to 7%. 

Sustainability and Bitcoin: an open challenge

When it comes to sustainability and Bitcoin, the primary challenge is the energy consumption required for mining, which we covered in depth in this article on Proof-of-Work from 2021. Considerable progress has been made since then, so much so that the CCAF (Cambridge Center for Alternative Finance) of the University of Cambridge, in a report published in April 2025, estimated that to date 52.4% of the energy used for mining comes from sustainable sources – of which 23.4% from hydroelectricity, 15.4% from wind power and 9.8% from nuclear power. 

There are also other innovative ideas, such as in the case of El Salvador, which is implementing a mining system based on the integration of geothermal energy from the volcanic region and solar and wind energy. In addition to production, there is also talk of energy recovery. MARA, one of the world’s largest mining companies, is mining Bitcoin by converting Associated Petroleum Gas (APG) into electricity. APG, put simply, is a gas that is discarded during the extraction of oil and then burned or dispersed into the atmosphere. Here, instead, it is recovered and converted into electricity through combustion to power mining centres, saving costs.

ESG in the future: What’s the point?

And so, as is often said, nobody has the glass ball. The dilemma is always the same: is this the end of ESG funds, or is it just a time of readjustment? What idea did you get from reading the article? If in doubt, subscribe to Young Platform and stay up-to-date on what’s important!

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Skyrocketing gold price: what’s happening?

Skyrocketing gold price: what's happening?

The gold price continues its upward journey, having broken the $3,500/ounce mark and now hovering around $3,300. What is happening? 

Over the past year, the price of gold has increased from approximately $2,300 to $3,300 per ounce, representing a 42% rise. This surge has broken through the psychological threshold of $3,500. Factors such as the pandemic and ongoing wars have created a volatile environment, prompting investors to seek safer options. But what exactly has led to this situation? And most importantly, is the bullish trend likely to continue?

Understanding gold prices: A premise that might help you

Understanding gold price movements requires an appreciation of the historical significance and characteristics that make this metal precious. Gold is a unique commodity that has been a part of human culture for thousands of years. The earliest evidence of its use as a medium of exchange dates back to ancient Egyptian and Sumerian civilisations, with the first gold coins minted as early as the eighth century BC. This lasting presence is due to its intrinsic physical properties, such as malleability, durability, divisibility, and rarity, which make it highly sought after. Additionally, with the rise of the electronics industry, gold’s capabilities in thermal and electrical conduction are increasingly being utilised.

Throughout history, gold has been consistently recognised as a reliable store of value, serving as a means to preserve wealth over time. Major events, such as the collapse of monarchies and empires, wars, pandemics, and financial crises, have led to significant changes in historical epochs and economic systems. However, these events have not diminished the collective perception of gold. Its association with security, stability, and wealth preservation is deeply embedded in the ordinary consciousness, which contributes to high investor confidence.

This combination of factors ensures that gold remains in high demand. However, this demand must contend with the limited supply available on our planet. As a result, the price of gold in the markets is determined by the balance of supply and demand.

Once we grasp how gold operates, we can analyse the factors influencing its market performance.

What is driving the gold price upwards?

As we have mentioned, the price of gold is influenced by the law of supply and demand, along with a complex set of underlying dynamics that involve numerous variables. However, we prefer to keep things simple. Essentially, the price of gold is directly proportional to the level of instability, whether perceived or real, in various situations, such as economic, geopolitical, or health-related issues. The greater the instability, the higher the demand for gold, which in turn increases its price. Conversely, when the situation is more stable, the price tends to be more consistent and less affected by sudden fluctuations in demand.

Remember the frantic rush at supermarkets when the lockdown was announced? In that moment of panic, people rushed to buy staples like pulses, which are considered essential survival foods due to their long shelf life, ease of storage, and nutritional value. In normal circumstances, how often do you keep borlotti beans stocked at home? Not very likely. Similarly, gold acts like legumes—it’s not something you consume, but rather the ultimate haven during times of significant stress. 

So, why has gold reached record highs this time around?

Pandemics, wars and inflation: the perfect storm

Since March 2024, the price of gold has surged from EUR 2,000 to EUR 3,300 per ounce—an impressive 63% increase—breaking through the psychological threshold of EUR 3,500. It’s remarkable to consider that just twenty years ago, the price of gold ranged between $400 and $500 per ounce. 

This trend is not surprising when we examine individual adverse macroeconomic events that correlate with gold’s price increases. For instance, during the 2008 financial crisis, the price of gold rose from $711 an ounce to $1,820 within three years. Similarly, from January 2020 to July 2020, the COVID-19 pandemic and associated lockdowns drove the price up by 30%. More recently, from February 2022 to the present, factors such as the Russian invasion of Ukraine, the escalation of the Israeli-Palestinian conflict, and the election of Donald Trump have contributed to a nearly 85% increase in gold prices.

Black clouds gather on the horizon: Covid-19 breaks out.

During the COVID-19 years, governments and central banks around the world implemented unprecedented expansionary fiscal measures to support their economies, businesses, and citizens. For instance, in Europe, the NextGenerationEU initiative amounts to EUR 806 billion, which is part of a larger EUR 2 trillion aid package. In the United States, the total fiscal stimulus approved during this period reached approximately USD 6.9 trillion. Throughout all of this, interest rates remained near zero. 

What happens when the amount of money in circulation increases so dramatically? The answer is that inflation rises. So, how do major investors typically respond to rising inflation? They tend to turn to gold to protect their capital from devaluation.

It’s starting to pour: Russia invades Ukraine.e

Despite various challenges, the economy began to recover, allowing central banks to finally address the issue of inflation. In 2022, the Federal Reserve started raising interest rates, followed by the European Central Bank and other central banks and financial institutions. However, at that time, Vladimir Putin decided to invade Ukraine, leading to a significant shock in the supply of energy and raw materials, particularly food. Russia is a major exporter of gas and oil, while Ukraine, often referred to as the “Granary of Europe,” is a vital supplier of grain. 

This situation led to​​ another spike in prices, further increasing the cost of living. Do you remember how much gasoline cost in the summer of 2022? It was around €2 per litre. Setting aside the discussion about energy-intensive businesses, the rise in road transport costs alone contributed to price increases across various sectors. We know that rising prices lead to a decrease in purchasing power, which in turn fuels inflation. And when inflation rises, a “gold rush” begins, reminiscent of Scrooge McDuck’s Klondike adventures.

Lightning and thunderbolts: the Middle East catches fire

The geopolitical situation is precarious; however, overall, economies are managing to hold up, partly due to the expansive policies implemented during the COVID-19 era. Yet, less than a year after the invasion, another front of conflict emerges: the Israeli-Palestinian conflict escalates once again, igniting tensions in the Middle East. Among the events that unfold, the Houthi terrorist group begins launching missiles in retaliation near the Bab-el-Mandeb Strait, a crucial maritime chokepoint between Yemen and the Horn of Africa that leads to the Suez Canal, through which approximately 15% of global maritime trade passes. Commercial cargo ships, the primary targets of Houthi attacks, are now compelled to avoid the Suez Canal and instead sail around Africa to reach Europe, resulting in an additional 10 to 15 days of travel time. This diversion has inevitably led to a widespread increase in prices. And when prices rise, inflation follows, prompting many to rush to check the gold price in hopes of purchasing a few ounces.

The storm is now perfect: Donald Trump announces customs duties 

Just when you thought the situation couldn’t get any worse, Donald Trump won the election. He decides to create panic in the world’s economic and financial institutions by mentioning one key term: tariffs and duties. In a highly globalised and interconnected market like that of the 21st century, if the leading economy imposes significant tariffs, suspended until Jul, the situation becomes quite serious. This not only increases the risk of inflation, as the barriers to entry drive up the final prices of imported goods, but also raises fears of a recession due to a substantial slowdown in economic activity.

Since April 9, the day Trump announced the tariffs, the price of gold has surpassed the psychological barrier of $3,500 an ounce, marking a 15% increase, before retracing and stabilising around $3,300.

Gold prices in the future: Will the trend continue?

A report by Goldman Sachs highlights an intriguing fact regarding central banks’ interest in gold. Since the freezing of the Russian central bank’s assets in 2022, following the invasion of Ukraine, the average monthly demand for gold has surged from 17 to 108 tonnes. Goldman Sachs predicts that by the end of 2025, the price of gold could reach between $3,650 and $3,950 per ounce, while JP Morgan estimates it may exceed $4,000 per ounce in 2026. In summary, many authoritative sources believe that the combination of pandemics, wars, and tariffs will continue to drive gold prices upward.

Now that you’re familiar with gold, its history, and its characteristics as an anti-inflation safe-haven asset, you might be interested in learning about ‘digital gold,’ which is Bitcoin. A good starting point is our article explaining how to protect yourself from inflation using Bitcoin. Don’t forget to subscribe below to stay updated!

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Nintendo shares: Switch 2 drives the stock

Actions Nintendo : Switch 2 relance le titre en Bourse

Nintendo’s shares, listed on the Tokyo Stock Exchange (TSE), have doubled in value over the past two years, representing a 93% increase. Will the trend continue?

Nearly eight years after the original launch of the Switch, Nintendo has officially announced the release of the Switch 2, scheduled for June 5. Fueled by speculation regarding the new console, the stock has surged by 93% over the past two years, climbing from approximately 5,600 yen ($38.60) to its current price of 10,040 yen ($70.50). What are the future forecasts for the stock?

Nintendo shares: the rally begins with Switch

With the launch of the first Nintendo Switch in 2017, Nintendo successfully overcame the challenges that had caused many iconic companies from the 1990s to 2010s to fail, such as Blockbuster, which struggled to adapt to change. After the disappointing performance of the Wii U, Nintendo found itself at a crossroads, as the gaming landscape was undergoing a significant transformation. The market seemed to have little room left for the ‘old-fashioned‘ consoles that had defined the childhood of entire generations.

Recognizing the need for a clear change—a ‘switch’—the company’s top management initiated work on the new product. As rumors began to circulate, Nintendo’s share price soared by 74% in July 2016. By March 2017, when the Switch was launched, the share price jumped from 2,300 yen to around 7,800 yen by June 2021, marking a remarkable increase of 190%. However, as innovation continued to accelerate, the Switch began to feel outdated, and the demand for an upgraded model started to grow.

Nintendo and Switch 2 shares: the stock’s resurgence

Nintendo shares experienced a decline, losing up to 25 percent between 2021 and 2023, reaching a low of 5,000 yen ($33.80). While the Nintendo Switch performed well, selling more than 120 million units by the end of 2022 and ranking among the top three best-selling consoles of all time, following the Nintendo DS and the PlayStation 2, it had been six years since its launch, leading fans to desire something new. 

As rumors about the next product began to circulate, the share price rose by 30% from April to July 2023, stabilizing between 6,000 and 6,500 yen (between $40 and $45). This rally was fueled by excitement surrounding various statements, leaks, and significant news, such as the reduction of the Saudi sovereign wealth fund’s (PIF) stake in the company, which enhanced the perception of Nintendo’s financial stability and reduced exposure to speculation. 

The long-awaited Switch 2 was finally revealed on YouTube on January 21, 2025. Following this announcement, Nintendo shares reached an all-time high (ATH) on February 19, hitting a peak of 11,800 yen ($78.70).

Nintendo shares and the future: duties could complicate the situation

Since reaching an all-time high (ATH) of 19,000 yen on February 19, Nintendo shares have declined by just over 12% and are currently hovering around 10,000 yen. This decline can be attributed to several factors. Firstly, there has been negative news, including the postponement of the sale date to June 5 (originally scheduled for early spring) and concerns that the price of €469/$530 is too high. Secondly, the economic policies and tariffs associated with the Trump administration could further increase prices, particularly in China, which is one of the most important and profitable gaming markets in the world. Looking ahead, TradingView surveyed 23 analysts for their one-year projections on Nintendo’s stock performance. The highest price estimate is 16,000 yen (+59%), while the lowest is 6,000 yen (-39%), with an average estimate of 11,530 yen (+14%). Will Nintendo manage to defy expectations once more? Sign up to stay updated!