IBTimes: What is your professional background?
Alastair McCaig: I first worked for the Royal Bank of Scotland in Glasgow before coming down to London in 1997 to join Williams De Broe working as part of an Investment Management team dealing with clients in an advisory and discretionary capacity. As part of this team I regularly dealt in Equities, Currencies, Bonds and Derivatives. After 6 years I then moved into specializing in derivatives specifically CFD's, Spreadbets & Options. Over the last 4 years at WorldSpreads in my capacity as the firms Market Analyst I have regularly appeared on CNBC, Sky News & Bloomberg along with frequently being quoted in CityAM, The Financial Times, Scotland on Sunday, The Independent, The Glasgow Herald and Sky along with Radio commentary for the BBC.
IBTimes: Can you tell more about WorldSpreads? We saw, that you have offices around the world, like in Dublin, Paris, Frankfurt, Stockholm, Copenhagen, Madrid, Kuala Lumpur and Malaysia.
Alastair McCaig: WorldSpreads group was founded in 2000 in Dublin and it pioneered the introduction of spread trading in Ireland. It expanded into the UK in 2005 and now offers a full range of prices on the world's equity, currency, interest rate and commodity markets in a low cost and tax efficient manner across a number of different markets and jurisdictions. WorldSpreads has offices in Dublin, London, Frankfurt, Paris, Madrid, Stockholm, Copenhagen, Lisbon, Cape Town & Kuala Lumpur. It operates in 14 languages with 3rd party relationships in Greece, Hungary and Slovenia. WorldSpreads are an AIM quoted company on the London Stock Exchange (WSPR:LN) and the ESM Irish stock exchange and the ESM Irish stock exchange
IBTimes: On which kind of clients is WorldSpreads focusing?
Alastair McCaig: It would be difficult to bracket WorldSpread's client base into one single section as they have a diverse base. It would be fair to say that the largest cross section of their clients are retail. However with three different online spreadbetting accounts available for clients to choose from offering varying levels of complexity there is a product designed to suit any level of experience. With the leverage and tax benefits to be derived from SpreadBetting it should be considered as a part of any investor's portfolio of market exposure.
IBTimes: Could you please explain to us, what the fundamental difference between Spread Betting and CFD or Forex is?
Alastair McCaig: Fundamentally Spreadbets and CFD's are very similar; they both offer the underlying client the ability to utilize leverage on their investment. From the investment point of view any profit made on a CFD will be subject to Capital Gains Tax (CGT) in correlation to the clients Tax bracket. Any profit made from a SpreadBet will not be subject to CGT. Neither CFD's or SpreadBets are required to pay stamp duty saving both 1% as opposed to equity trades. CFD's are traded in a similar style to equity trading as all trades are based on the number of shares a client wishes to deal in. SpreadBets are based around how many pounds per point the client wants to bet on.
IBTimes: What do you think about the stability of the Euro? We already had the bailout of Greece. Last week we saw the Irish bailout. How many further bailouts does the Euro zone needs to have?
Alastair McCaig: Both Greece and Ireland have received assistance from the European Union to help cover their sovereign debt issues, certainly at the beginning of the summer the major fear in the market was that Greece would only be the tip of the iceberg and a flood of requests from all of the (P, I, G, S) would be received by the EU Monitory Fund. As the year has progressed an almost continuous flow of positive commentary from the European Union has helped reduce the nervousness of the markets to a manageable extent and the ability of almost all of the European based banks to pass the Basel I test has also assisted in calming the market, however on the recent news that in March 2011 banks will be testing themselves against a new more stringent test in Basel II requirements means the markets will keep a close eye out to see which banks are going to struggle to meet these levels. It will undoubtedly be banks from Spain and Portugal that are most closely scrutinized.
IBTimes: Another currency in the spot lights is the US Dollar. It seems like the Fed began to print money endlessly. They seem to have two reasons for this, one is to reduce the value of their debts; the other is to strengthen their exports. What do you think will be the consequences in the long run for the global economy?
Alastair McCaig: The continuing policy of the US to employ Quantative Easing as a means to stimulate the economy ultimately means that they will continue to print US Dollars, there by devaluing the green back. As the US Dollar continues to be the global currency of choice the USA are in a better position to treat their currency like this, than any other country. Fundamentally this Quantative Easing should lead to a devaluing of the US$. Another aspect to consider is the US debt issues that could come into focus over the coming year. The US sovereign debt should be fine however several States in the US have substantial debt that will need to be covered. However at some point in time all the foreign nationals who hold US Dollars will look for alternative currencies to hold. Arguably the inability of the European Union to maintain growth for EU countries has failed to improve the Euro's ability to become the Global currency of choice. Although Gold is not a currency it has long been viewed as a defacto currency and as such it helps explain why it has continued to reach new record highs.
IBTimes: Which markets would you recommend our readers invest in now?
Alastair McCaig: The two major influences that have assisted the equity markets in the last six to nine months have been the Quantative Easing from Western Governments and the continuing growth of the Chinese economy that has created the demand for commodities. As long as the major Western countries continue to pump cash into the market equities will continue to benefit from the ongoing flow of capital to be invested in the markets. Monitoring inflation in China and therefore the possibility of the Chinese government raising interest rates could curb the demand from Asia. However if market conditions remain we could see both UK equity and commodity prices continue to rise and setting new highs.