Regulatory Diclosure

July 30, 2023

Regulatory Disclosures

1. Regulatory status

52 Seconds Capital Limited is authorised and regulated by the Financial Services Regulatory Authority (FSRA) and the Abu Dhabi Global Market (ADGM) (000009106). The firm is permitted to conduct the regulated activities of: Arranging Credit, Arranging Deals in Investments, Advising on Investments or Credit, Arranging Custody, subject to the conditions of its licence.

The ADGM register can be consulted at adgm.com/operating-in-adgm/fsra.

2. Firm details

• Legal name: 52 SECONDS CAPITAL LIMITED

• Jurisdiction: Abu Dhabi Global Market (ADGM), United Arab Emirates

• FSRA Licence No.: 000009106

• Founded: 20th January 2023

• Regulated since: 05th June 2023

• Registered office: 511, 15th Floor, Al Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi, United Arab Emirates

3. Client categorisation

52 Seconds Capital Limited categorises clients in accordance with the FSRA Conduct of Business Rulebook (COBS) as Retail Clients, Professional Clients, or Market Counterparties. The categorisation determines the regulatory protections that apply.

4. Conflicts of interest

52 Seconds Capital Limited maintains and implements a Conflicts of Interest Policy designed to identify and manage actual and potential conflicts between the firm, its staff and clients, and between clients themselves. A summary of the policy is available to clients on request.

5. Safe custody

52 Seconds Capital Limited does not directly hold client money or securities. All client assets are placed with independent custodians in fully segregated accounts. The firm complies with the FSRA Safe Custody Provisions applicable to firms arranging custody on behalf of clients.

6. Best execution

Where 52 Seconds Capital Limited arranges or transmits orders, it takes all sufficient steps to achieve the best possible outcome for clients having regard to price, costs, speed, likelihood of execution, settlement, size and nature of the order. A summary of the Best Execution Policy is available on request.

7. Complaints handling

52 Seconds Capital Limited is committed to handling client complaints fairly and promptly in accordance with FSRA requirements. Complaints should be submitted in writing to info@52scapital.com. All complaints are acknowledged, investigated independently of those involved in the matter, and a written response is provided within the timelines set out in the firm’s Complaints Handling Procedure.

8. Anti-money laundering

52 Seconds Capital Limited operates a risk-based AML/CFT programme in line with FSRA rules and applicable UAE law, including customer due diligence, ongoing monitoring, screening, and reporting of suspicious activity.

9. Risk warning

The value of investments and the income derived from them can fall as well as rise. Past performance is not a reliable indicator of future results. Investing in financial instruments involves risk, including the possible loss of capital. Where appropriate, additional product-specific risk disclosures will be provided in client documentation.

10. No investment advice on this website

The content of this website is for general information only and does not constitute investment advice, an offer or solicitation to buy or sell any security or financial instrument, or a personal recommendation. Investment services are provided pursuant to a written engagement with 52 Seconds Capital Limited and subject to client suitability assessment where applicable.

July 30, 2023

Regulatory Disclosures

1. Regulatory status

The ADGM register can be consulted at adgm.com/operating-in-adgm/fsra.

2. Firm details

• Legal name: 52 SECONDS CAPITAL LIMITED

• Jurisdiction: Abu Dhabi Global Market (ADGM), United Arab Emirates

• FSRA Licence No.: 000009106

• Founded: 20th January 2023

• Regulated since: 05th June 2023

• Registered office: 511, 15th Floor, Al Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi, United Arab Emirates

3. Client categorisation

4. Conflicts of interest

5. Safe custody

6. Best execution

7. Complaints handling

8. Anti-money laundering

9. Risk warning

10. No investment advice on this website

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 23, 2023

I first met Barbie, three decades ago, during an inter-school quiz event. My team-mate and I passed on this question: How do we better know Barbara Millicent Rogers?

We froze in horror as the question moved onto an all-girls team and they chimed: Barbie Doll! This must have been 1992 or thereabouts. The quizmaster (someone I knew well) promptly awarded the winning points to the all-girls team and volunteered some more information: Barbie was born on March 9, 1959 (well, the date marks her first appearance and so that makes it her birthday). My team-mate looked at me, eyes smouldering with rage, and in a tone that held both mockery and disgust said: Hey, that’s your birthday!

Holly Molly! So, I share my birthdate with Barbie (and that’s all there is to it!)

My childhood favourites were largely from the DC and the Marvel universe : you know that motley group comprising of Batman, Superman, Flash, Shazam, Wonder Woman, Joker, Penguin, Riddler from DC; and Hulk, Spiderman and Thor from Marvel.

The initial reports around Warner Bros’ and Mattel’s plans to bring Barbie to life on screen puzzled me. Surely, they had to be joking.

But as this weekend showed, the movie is a reality!

While Mattel owns the IP and has taken a risk with this movie, Warner Bros’ has perhaps made its most audacious bet yet in backing the movie (even more so since it comes in the aftermath of box-office duds, Flash and Shazam).

One of the toughest things to do is to jilt an idea that you have fallen in love with.

Warner Bros, after repeatedly flogging the dead horse idea of an ‘expanded DC universe’ (with cringeworthy movies around the Justice League and Batman Vs. Superman to counter Disney’s Avengers), has flipped its movie production playbook with Barbie.

And that’s how, three decades after I first met her ─ thanks to Warner Bros ─ Barbie’s and my world collide again!

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 20, 2023

There is a crowded trade, and it is in the most innocuous corner of the market : The Money Market.

The total financial assets held in Money Market Funds (MMFs) has doubled during the last decade and is at a record $5.45 trillion now.

MMFs, especially Govt MMFs (GMMFs), usually hold short-term debt securities such as T-Bills, T-Notes or T-Bonds. But that staid mix of T’s changed to include a few R’s after the Fed created the overnight reverse repo purchase (ON RRP) in 2013 and widened the scope of the participants to include MMFs; and since then MMF participation in ON RRPs, especially since last year, are on a tear (indeed why lend to a commercial bank for a lower interest rate when you could lend to the Fed for a higher rate!) On the ON RRP, the Fed is obligated to pay 5 bps more than the lower end of the Fed Funds Rate (with the Fed Funds Rate currently at 5% to 5.25%, the ON RRP yields 5.05%!)

When you look at any GMMF factsheet today, you will notice a heavy tilt towards Repo Purchases (You could think of the Fed here as a seller of the repo and the MMF – and effectively you as the investor – as the purchaser of the repo)

This heavy skew towards UST repos among MMFs is a recent phenomenon and has a couple of catalysts:

(1) the rapid interest rate liftoff last year may have led to a rotation out of T-Bills and Notes, which with increased price risks were skating on thin ice, into Repo Purchases which in contrast provided terra firma.

(2) The SVB debacle earlier this year fuelled an exodus of investors from bank deposits into MMFs, and from there on into Repo Purchases.

MMFs usually attract record inflows when there are spells of de-stability as investors flock to the safety of USTs (check out the 3 peaks in Q1 2002, Q4 2008 and Q2 2023). But this time around the crowding into MMFs is due to the allure of the Repo Purchases. And the Fed is enabling this by keeping the ON RRP policy active for longer than required (creating another horseman, in its inflation fight, to choke bank credit).

Recent data indicates two trends:

(1) that the ON RRP liabilities on the Fed’s balance-sheet has now declined every week since Mar 22, 2023. This is possibly due to MMFs rotating out from ON RRPs and back into T-Bills.

(2) GMMFs are seeing retail outflows since May 2023.

Are GMMFs risky investments? Not really. The usual risks exist but in mild forms: there was a sliver of a credit risk this year when the US ran another season of the Debt Ceiling drama.

But those retail outflows will eventually find their way into commercial banks and could boost lending. In that context, it will be interesting to see how long the Fed will keep the ON RRP window open to MMFs. Some restrictions were introduced by the Fed Bank of New York in April 2023; but in the absence of any clear signals of a policy roll-back, the MMF gravy train chugs along merrily. On shiny rails that are the Fed-sponsored ON RRPs.

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 13, 2023

There is always a sense of unease when the US and China tiptoe towards the edge of a circle and face-off over what lies within. The bones of contention within that circle have taken on many forms: from the Taiwan Straits crisis of 1953; to the Tiananmmen Square massacre in 1989; to Trump’s trade war in 2018; to COVID in 2020; and to Taiwan resurfacing in 2022.

So, it’s with that same sense of trepidation that market participants now watch a new bone of contention appear within that circle: a US-China face-off over Fentanyl.

I have followed the Opioid Crisis in the US on and off over the last decade (much in the same manner that I follow the school shootings in the US, with a sense of despair and wondering why is it so difficult to prohibit, especially when the policies and enforcement around anything that could potentially harm a life are so weak), but I remember first reading up Fentanyl early last year after Johnson & Johnson and major distributors like AmerisourceBergen, Cardinal Health and McKesson finalized nationwide settlements amounting to a mammoth $26 billion settlement for their role in the opioid addiction crisis.

But wasn’t the J&J settlement bandied by mainstream media as an opioid crisis? What does that have to do with Fentanyl? Turns out that there is a direct connection: Fentanyl is an opioid. And so are the widely used Methadone and Demerol.

Key point: Opioids are not Opiates (and there in exists the possibility of how the rise of Opioids could be a nasty side effect ─ forgive the dark humor ─ of the FDA being captured by Big Pharma. A classic example of a Regulatory Capture?)

Opiates, like Morphine and Codeine, are directly derived from the plant source ─ Opium; whereas an Opioid is synthetic or entirely man-made and Fentanyl, an Opioid, is approximately 100 times more potent than morphine and 50 times more potent than heroin as an analgesic.

Read that again in super slow-motion: Fentanyl is approximately 100 times more potent that morphine. Where did I get that hellish statistic? From the official website of the US Drug Enforcement Administration (The DEA)!

The US, as it heads into an election next year and facing a growing backlash at home over the opioid crisis, is possibly trying to redirect this issue to an old bogeyman, by indicating that China hasn’t done enough to stem the inflow of Fentanyl into the US.

What give this story an unusual twist is this: China banned all variants of Fentanyl in 2019.

Drugs are as bleak as it gets for any society and yet there is a silver lining in all this: the US has created a coalition of at least 80 countries to combat opioid trafficking and that by itself may lead to an immediate increase in societal awareness around opioid addiction.

The 80+ governments that have formed the coalition would do well to remember that: it is easier to stay off drugs than to get off drugs. Policy matters. Enforcement matters even more. And Zero Tolerance matters most.

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 8, 2023

The word ‘cusp’ has different connotations in the fields of astrology and mathematics. In astrology it indicates overlaps ─ like a little overlap between two zodiac signs. The mathematical definition of a cusp is, however, different: it is defined as a point on a curve where a moving point must reverse direction. And that point of reversal is called the cusp of change.

Thailand is at that cusp of change ─ a cusp that is precise to the mathematical definition and perhaps of the kind that only happens when the planets are aligned favourably ─ after the Move Forward Party (MFP) swept to a stunning election win in May this year.

Going into the elections as the underdog, the MFP, punching well above its weight, edged out the more favoured Pheu Thai Party (PTT). Both, the MFP and the Shinawatra-led PTT, ran their campaigns on a common anti-establishment plank: the Thais have had enough of the military-controlled rule under Prime Minister Prayuth (who first seized power in a 2014 coup and then held on to power as Prime Minister after winning the 2019 general election).

Momentum in politics, for an opposition party, is often due to the incumbent party shooting itself in its foot, and so perhaps this result was always on the cards after General Prayuth in the universal tradition of all military-controlled governments ‘rewrote the constitution’ in 2017, but very often the difference between a win and a landslide win is: how clearly has the opposition signalled its stance.

And this is where it could sometimes get difficult for parties that win after initially signalling a strong centrist-progressive stance.

Usually, voters perceive a party moving from an initial far-right pre-election stance to a somewhat centrist post-election position as ‘moderating’; but even a minimal shift from a pre-election centrist stance towards the far-right or the left is viewed as a letdown (Contrast Macron’s ‘extreme centrism’ win in his first term with his ‘left-leaning’ win in the second term and you get the picture).

If (‘if’ and not ‘when’ because even nearly two months after the elections, thanks to the junta-heavy structure of the Senate, the MFP, despite their resounding election win, may not get a shot at the Premiership) Pita Limjaroenrat, MFP’s leader and a radical pro-democracy proponent, does indeed get the Prime Ministerial role, it could well be a moment of reversal for a country that has seen about 20 coups since becoming a constitutional monarchy in 1932.

Any dilution in the pre-election progressive stance of the two key opposition parties, from hereon, could result in Thailand adding further to its count of lost decades.

The next couple of weeks will see all the political parties involved ratchet up the rhetoric as the race for the Thai premiership heats up and enters its final stretch; but the Thais can sit back and celebrate this moment in their country’s narrative. When a moving point could reverse direction – at the cusp.

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 7, 2023

After the Joe Biden government did an Ethan Hunt and pulled off a Mission Impossible-style share buyback tax on US Corporates last year, there has been a lot of chatter around the potential fallout from the tax. All kinds of outcomes have been plotted: increased tailwinds for dividends; a marked slowdown in the buyback activities of index juggernauts like Apple, Meta and Exxon; or the (more benign) ‘a 1% tax wouldn’t really throw a spanner in the works of Corporate America’.

Corporates appeared to have accepted the 1% tax in their stride last year. There wasn’t too much fuss about it (despite this being the first ever tax on share buybacks in the US).

The muted corporate reaction has perhaps encouraged the Democrats to go bigger. Afterall, the most difficult step in taxation is the introduction; raising it from thereon is ─ to borrow a phrase from Ethan Hunt ─ ‘a walk in the park’.

Or so appears to be the line of thought of the Biden Government with recent whispers from the White House indicating that a quadrupling of the Share Buyback Tax is on the cards.

So as the Q2 earnings season gets underway in the US, apart from the usual mix of earnings surprise’s and forward guidance’s, it will be interesting to observe management tone around one more specific area: Share Buybacks.

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 4, 2023

The origins of the term ‘Emerging Markets’, invented in 1981, are somewhat cringeworthy: Antoine van Agtmael, the World Bank Economist, who is credited with the coinage, wanted a term that sounded less despairing than ‘Third World’ (The man was trying to start a Third-World Equity Fund and found the door repeatedly getting slammed in his face as soon as he said the name of the intended fund to prospective investors), eventually settling for a more invigorating term: Emerging Markets.

That was in 1981; and 4 decades later, there is still no uniform standard in place for classifying a country as an Emerging Market. (MSCI classifies 26 countries as EMs; Russel, 19; and, the IMF, 23). The lack of a clear-cut definition is not without a reason: the space is fraught with uncertainty, lost decades are a reality and the capital markets are generally inefficient, making it easier for Index-owners to create broader definitions and even broader benchmarks. (And you thought only investors sought solace in Diversification). What the EM space lacked in uniform specifications and standards, was made up for with a torrent of monikers.

After the Goldman Sachs coinage of BRIC in 2001, a slew of monikers followed: BRICS, CIVET, MINT, MIST, EAGLEs and the very Enid Blyton-like Fragile Five. The underlying (flawed) narrative was always that with EMs an investor must seek strength from the pack.

While the star of H1 2023 – broken and on the ropes last year – is undoubtedly the NASDAQ 100 with a 40% YTD return, it’s equally incredible to see key EMs hold dollar-adjusted returns in the face of the fastest rate hikes from the US Fed in four decades.

Yeah, monikers happen in four decades and so do a lot of other things. Mostly nice things.

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

July 2, 2023

It’s a momentous day for the Indian Equity Markets tomorrow: the SGX Nifty will be renamed as the Gift Nifty and will be traded entirely from the NSE IFSC-SGX Connect at GIFT City, Gandhinagar. The event, a grand exercise in collaboration between the exchanges of two EM powerhouses, SGX and NSE, will see orders from SGX members being routed to NSE IFSC (a fully owned subsidiary company of National Stock Exchange of India Limited) for trading and execution, with clearing and settlement through NSE IX Clearing Corporation Ltd. and SGX Group’s Derivatives Clearing as the central counterparty.

This new avatar of the SGX NIFTY is the end game to a series of court wrangles that started from around 2018 relating to SGX’s trading of Indian stock related derivatives in Singapore.

The key point

Thanks to this ‘exchange connect’ and the transformation of Indian Equities into a standalone asset class over the last decade, GIFT will see a larger build-up of NSE IFSC members over time.

The loudest cheers on this development have come from the retail investors, which is puzzling because: while the contract volumes have now been brought ‘onshore India’ (well, the GIFT City is physically located in India; but it’s not onshore in the legal parlance of a ‘International Financial Center’, think of an International Financial Center as a Country within a Country) from ‘offshore Singapore’, the GIFT NIFTY will still be out of bounds for the Retail Investor who is a Resident Indian.

Avinash Menon, CFA

Founder and CEO,

52 Seconds Capital Limited

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The key point

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