Hey guys, it's sasha, the stock market is crashing hard. This morning asian and european indices are down. The ftse 100 in london is down 2.6 in early trading, and the s p 500 is falling sharply in early pre-market trading down 1.8. So far as i'm recording this video - and there are two major reasons - really big ones - why this is happening - that i wanted to go through.

These two reasons are both very major and very important, but they are also very, very different and will have very different impacts. So, let's cover them one by one. The first reason why the stock market is crashing today is the news that has come out in the last 24 hours about the new strain of coronavirus that is emanating from southern africa, nicknamed the botswana variant. So far, the world health organization is probably going to give it a greek letter of some point at some point later today and like they did with the delta and the beta versions beforehand.

The world is reacting very, very fast to this one much faster than we have seen previously, and we have already had a flurry of announcements in just the last few hours. The uk has already banned immediately all flights coming from south africa, botswana and some other southern african countries, and anyone arriving from those countries, indirectly or via other means, will have to go into a mandatory quarantine. Germany and italy have already done exactly the same, and the whole of eu is apparently planning to put in a blanket travel ban later today, sajid javid, the uk health secretary, has said that this strain is the most serious one. Yet, with an abnormally large number of mutations, which might make it more difficult to battle, and naturally enough, all of this has sent the markets crashing.

The markets hit the panic button cruise lines. Airlines and oil companies are getting completely smashed to pieces with many trading at 10 down in pre-market so far and grow stocks are also getting hit very hard as well. The likes of tesla, palancy and many others are trading at three to five percent down, and if you look at the early witness today that really completes the picture. It is really quite a deja vu as well.

Zoom is leading the way, predictably, as people are concerned about another winter and spring of lockdowns not being able to go to work and all of that zuma's 9.3. Up at the moment, peloton is making a miraculous comeback, as investors are putting money into the world's most expensive coat hanger company and look at the rest of the list of the big winners we have modena, teledog, novavax, pfizer, etc, etc, etc. So far, it is very very early days and it is impossible to tell what the actual impact from this will be. How long will this impact will be? How serious will it be? We know next to nothing about any data of the sneeze train.

It is very, very new or how it may impact the stock market. In the long term. We have already seen an increase in case numbers around the world and in europe before this news came out, but the markets are panicking in case. This makes the situation worse and it could make things worse, but it's also important to remember that the situation now is very different to when all of this started.

This whole episode started in the spring of 2020.. We know and understand far more about the medical side of things now and the world has moved on a huge amount with both managing outbreaks and the preventative measures that are being taken. The travel industry is definitely not going to have a good time with this. For sure, then, the next few months are probably going to be pretty bleak, but i do feel that potentially some of the impact we are seeing is spilling over into some other stocks as well, possibly without as much merit as a sort of collateral damage.

Due to overreaction, potentially by the way, if you are interested in understanding a bit more about what the stocks are doing, maybe buying into the dip while so many stocks are on discount and you live in the uk, australia, new zealand, you can go and grab yourself A free share from steak, if you use my link in the description to create an investing account and make an initial deposit of 50 or 50 pounds or more. If i personally use stake for my man versus the market portfolio - and it is a great platform for investing in u.s stocks without having to pay any fees for every transaction, this may be the best one for lower amounts. In my opinion, with stake, you only pay a 0.5 for an exchange fee when you put money in or take money out of the platform, but all trades once the money is inside are completely free. No commission, no foreign exchange fee, unlike almost all of the other popular investing apps in the uk.

So if you want to go black friday shopping on the stock market or you just want to get that free share, feel free to use that stake link in the description below. I also get a small commission for referring you their way as well as you getting the free share. So thank you very much. If you choose to do that, the second big factor causing the market to crash is the news that is coming out of china.

Bloomberg has just published a report based on insider information that says that in the last few hours, china, the chinese communist party, has instructed dd to delete from the new york stock exchange. This is a really really big important news. A lot of people might be surprised by this. It certainly seems so based on the media, attention and the type of coverage it's getting, but i talked about this risk quite a few times in the past and we're only just now seeing that risk that if you paid attention is playing out, because here is the Thing you can't actually buy dd shares on the new york stock exchange because didi as any chinese company trades in china on a stock market in china.

The thing that you can buy in the new york stock exchange. That kind of looks like you're buying dd shares is an adr instrument. It is an american depository receipt or an american repository deceit if you mispronounce it. This is not the same as owning actual shares.

It is not even a roughly the same, no matter how many times other people will tell you that it is an adr. Is a shareholding in a completely separate entity that has nothing to do. Has no ownership, direct or even indirect, or even part, ownership of the company, like dd, that you think you are investing in, and this is really important to be aware of these completely separate companies completely separate entities are based in tax havens like the cayman islands, not Based in china or the us, and they have a contractual agreement with the chinese company that you think you're investing in for things like distribution of profits, but that contract means relatively little it's a piece of paper. It's just a business deal deedee or any other chinese company could theoretically go and break that deal if you choose to, and you as a shareholder of this third party, have absolutely no rights to anything and you could maybe, if that was to happen, go and wait.

Several years for some kind of a court case to play out, but good luck on waiting for a court case to play out between a large chinese company based in china and a random shell company in a small tax haven country in the caribbean. Based on how strong or how fixed their contractual arrangements, were, you don't even have to listen to me on this. Go and read the prospectus that dd themselves published when they went public on the new york stock exchange on page 10. They themselves because they legally have to list some of the risks relating to their corporate structure.

Specifically, it says that the chinese government could intervene at any point and make your adrs effectively worthless. The second point is that, because you are not a shareholder, you have no actual rights like, for example, the ability to vote on important matters as a shareholder. Also, the contractual agreement is not the same as earning shares. They are telling you that themselves and they could renege on that contractual agreement and you would be left holding your worthless bags.

I did paraphrase it slightly, but that is pretty much literally what it says and that's because chinese companies are not legally allowed to have foreign ownership. If you are not chinese, you can't actually go and own shares in a chinese company, so they have come up with this weird workaround that attracts investment and has become very popular, and i have highlighted these exact risks before and they are the reason that i personally Do not hold any of these chinese company ideas. I love some of the companies. I love lots of the stuff, that's happening in china and i'm a big fan of some of these companies, but i don't like holding random bits of paper that have very questionable benefits.

It's not clear what the specific d-listing instruction is going to actually do just yet, maybe the shares will be relisted on the hong kong stock exchange. Maybe it's going to take some time. Maybe shareholders will get their money back, maybe even at a premium. Maybe it's going to be paid out on the amounts when the company went public, which is far higher than where they're trading today.

But this could also turn very ugly very quickly, because this is the first case that i'm aware of where china is actively actually instructing a company to quit the adr structure to stop being listed in the us a few months ago. They blocked ant from listing in the first place. We've had other similar precedents, but this is a step further and this is very much confirming what i've been saying for a little while now - and this is sending massive shockwaves through the investing world, because there is a lot of investing exposure to chinese companies like alibaba Alibaba is also five percent down today, by the way taking them over 50 down in the last 12 months. It's going to be for sure a rocky day today, maybe we're going to see a big bounce bag, but it is not looking pretty so far uh and it may even result in a few weeks or possibly even a few months, so strap in.

If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later.