Signage at the Alibaba Group Holding Ltd. booth at the Smart China Expo in Chongqing, China, on Monday, Sept. 4, 2023.
Qilai Shen | Bloomberg | Getty Images
Alibaba needs to be “user first” and “AI-driven,” new CEO Eddie Wu told employees on Tuesday, as he laid out the strategic priorities for the Chinese tech giant.
Wu, who is just three days into the job as Alibaba chief executive, called for the e-commerce firm to “adopt a start-up mindset” as he looks to steer the company back to growth following one of the most tumultuous times in its 24-year history.
“Times are changing, and so must Alibaba! As the world progresses, Alibaba needs to evolve even faster!,” Wu said in a letter to employees that was seen by CNBC.
Wu said Alibaba’s two main strategic focuses will be “user first” and “AI-driven.” The company will “reinforce” its strategic investments in three areas.
The first it calls “technology-driven internet platforms.” Wu said that Alibaba’s business should “seek out the most open and collaborative relationships,” even with competitors. This is a different approach from Alibaba which has tended to try to keep users within its ecosystem of products.
Wu also touted the need to invest in artificial intelligence. Alibaba’s cloud unit has tried to position itself as a leader in AI inside China as it looks to reignite growth in the business.
“Each of our businesses generates massive numbers of use cases; therefore, we must transform these use cases into applications for AI technology, driving breakthrough user experience and business models through technology innovation,” Wu said.
“If we don’t keep up with the changes of the AI era, we will be displaced.”
Alibaba Cloud has its large language model called Tongyi Qianwen, released earlier this year. An LLM is an AI model trained on huge amounts of data and underpins chatbot applications. It’s the same type of model that OpenAI’s ChatGPT is based on.
Wu also said Alibaba needs to continue to invest in “globalization.”
Alibaba will also look to promote younger talent. Within the next four years, the company will promote those born after 1985 and the 1990s “to form the core of our business management teams,” Wu said.
Tencent sign is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 6, 2023.
Aly Song | Reuters
BEIJING — Corporate earnings releases are picking up on a few bright spots for China’s consumer in a competitive market where people are less willing to open their wallets.
JD.com, Tencent and Alibaba this month reported results for the three months ended June that pointed to a steady pick-up in consumer spending that quarter, but with less clarity on whether that growth has continued.
Here’s where companies said they saw consumer-related growth, according to public disclosures and FactSet transcripts of earnings calls:
Livestreaming e-commerce saw 150% year-on-year growth in gross merchandise value in the second quarter to an unspecified number. GMV measures total sales value over a certain period of time.
On an annualized basis, that livestreaming GMV “is in the tens of billions” yuan.
WeChat Mini program e-commerce has GMV “in the trillions” of yuan on an annualized basis. GMV for physical products has exceeded 1 trillion yuan on an annualized basis.
Advertising revenue across all categories — except automotive — is up double-digits from a year ago in recent weeks. Ad sales rose by 34% to 25 billion yuan in the quarter ended June.
Overall, Tencent reported earnings for the quarter that missed expectations, but showed a third-straight quarter of revenue growth.
Direct China commerce sales, primarily from Tmall Supermarket and Tmall Global, grew by 21% year-on-year to 30.17 billion yuan.
The overall Taobao and Tmall Group saw revenue grow by 12% to 114.95 billion yuan.
A recovery in offline shows and the movie theater box office boosted Alibaba’s ticketing and movie studio units. Video platform Youku also saw subscription revenue rise. In all, digital media and entertainment revenue surged by 36% year-on-year to 5.38 billion yuan — and its first profitable quarter.
Local services revenue rose by 30% to 14.5 billion yuan. That was driven by orders on food delivery app Ele.me and growth in Alibaba’s map app Amap, which sells services such as ride-hailing and hotel booking.
Alibaba management did not provide much detail on the state of the consumer since the end of June.
Data for July have pointed to a slowdown in China’s economy, including a modest 2.5% year-on-year increase in retail sales.
Theme parks, however, have done well as tourism has picked up domestically.
Shanghai Disney saw record high revenue, operating income and margin during the latest quarter, the company said.
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Universal Studios Beijing “enjoyed its most profitable quarter,” Comcast said. The park opened in September 2021, during the pandemic.
Listed companies don’t capture all major channels for online spending in China. ByteDance, which is not publicly listed, has become another e-commerce platform through its Douyin app, the local version of TikTok.
Consumers in China spent 1.41 trillion yuan in purchases from merchants on Douyin, up 76% from the previous year, according to The Information. ByteDance did not immediately respond to a request for comment.
ByteDance’s smaller rival Kuaishou is set to release earnings Tuesday, as are Chinese tech giant Baidu and video content platform iQiyi. E-commerce giant Pinduoduo has yet to announce when it’s scheduled to release earnings.
Other companies in China, or those with exposure to China, have showed some pockets of growth, albeit compared to a low base in 2022 when the metropolis of Shanghai was locked down for two of the three months in the second quarter.
The Chinese sportswear company said its Anta brand retail sales value rose by high single digits in the second quarter from a year ago. Its Fila brand saw high teens growth year-over-year. The company’s Descente, Kolon Sport and other brands saw growth of 70% to 75% year-on-year.
Apple CEO Tim Cook said the iPhone maker saw “an acceleration‘’ in China, with 8% year-on-year quarterly sales growth to $15.76 billion. That’s a reversal of a 3% year-on-year drop in the prior quarter.
The company said it saw “a June quarter record in Greater China” in the wearables, home and accessories category, as overall product group saw sales increase by 2% year-on-year to $8.3 billion.
From across the globe, spanning a diverse range of applications in finance — these are the world’s top 200 fintech companies.
Together, CNBC and independent market research firm Statista worked to compile a comprehensive list of companies building innovative, tech-enabled and finance-related products and services.
The partnership set out to list the top fintech companies using a clearly defined methodology identifying how various different companies performed against a set of key performance indicators, including total number of users, volumes, and revenues.
The chosen companies have been divided up into nine categories: neobanking, digital payments, digital assets, digital financial planning, digital wealth management, alternate financing, alternate lending, digital banking solutions, and digital business solutions.
This was done to account for the fact that business performance of fintechs in different fields of finance can’t be compared like-for-like.
The fintech space has gone through a tumultuous period. Companies have seen their valuations slashed, funding is scarce, and businesses are cutting back on staffing and other costs in a bid to keep investors happy.
At the same time, innovation is continuing to happen. Several firms are developing tools to help customers budget in more effective ways and predict what their future financial situation might look like.
In the digital assets space, meanwhile, there’s been a greater focus on building technology to help improve some of the financial services industry’s biggest challenges, from moving money across borders to real-time settlement.
CNBC has broken the list up category by category — from neobanking all the way down to digital business solutions.
Quicklinks:
For the full list and the methodology, click here.
Digital banks, or neobanks, are continuing to grow and develop new products. These are companies, typically with their own bank license, that have been set up with the aim of challenging large established lenders.
Neobanks have been among the hardest hit by a souring of investors on fintech, particularly as their business model — spending lots to attain large numbers of customers and make money on card payments — has come under scrutiny with consumer spending slowing.
Still, several neobanks have performed surprisingly well out of the rise in interest rates. Many have gotten into lending. In Europe, for example, Monzo recorded its first monthly profit after a jump in lending volume.
There are many expected names present in the neobanks category, including Revolut, Monzo, and Starling. However, there are also less established players represented from emerging markets, like Nigeria-based fintech Kuda and Indian foreign exchange startup Niyo.
The worldwide digital payments industry is currently estimated to be worth over $54 trillion, according to data from JPMorgan — and that’s only set to grow as more of the world starts to see digital adoption.
It’s a colossal market, with many different players fighting it out for their slice of the hyper-competitive pie. But that has meant there’s been room for other industry players to innovate and compete with their own offerings as well.
Statista identified 40 firms as top digital payments companies. These include major players such as Chinese mobile wallet Alipay and tech giant Tencent, which operates the WeChat Pay payment services, and U.S. online payments powerhouse Stripe.
Klarna, Affirm, and Afterpay also feature. The buy now, pay later space has been under huge pressure amid fears of a drop in consumer spending — but it has equally become a lifeline for many as rising inflation forces people to search for flexible payment methods.
Lesser-known firms, including French telecoms firm Orange and payments compliance startup Signifyd, were also selected. Orange operates Orange Money, a mobile money service. It is highly popular in Africa and counts more than 80 million accounts worldwide.
Digital assets is a market that has faced huge pressure recently, not least because the regulatory environment for firms has become much tougher following major collapses of notable names such as FTX, Terra, and Celsius.
It’s also incredibly sensitive to movements in prices of digital currencies, which have depreciated considerably since the peak of the most recent crypto rally in November 2021. Exchanges in particular saw their revenues dry up as trading volumes evaporated.
Valuations of companies in the digital assets space have taken major haircuts. And this pain has filtered through to the private markets, too.
Binance, which features as one of the top digital asset companies, is under heightened scrutiny from regulators around the world.
In the U.S., Binance is accused by the U.S. SEC of mishandling customer funds and knowingly offering investors unregistered securities while publicly saying that it doesn’t operate there.
For its part, Binance denies the allegations.
It was important that the company be included, given it remains the largest crypto exchange around and is a prolific backer of ventures focusing on so-called Web3.
Efforts are underway globally to bring digital assets into the regulatory fold. In the U.K., the government has made a play to become a “crypto hub.” And the European Union is making rapid strides with landmark .
Alongside crypto heavyweights Binance and Coinbase, Statista also identified Cayman Islands-based crypto exchange BitMart and nonfungible token marketplace OpenSea as top fintech companies operating in the digital assets category.
Financial planning is another big area of finance that’s being reshaped by technology, as people have turned to online tools to manage their financial lives in favor of more cumbersome paper-based options.
There are now plenty of online platforms that enable users to get better visibility over their finances. Education has become a big focus for many players, too — particularly in light of the rising cost of living, which has put significant pressure on household budgets.
In this field, Statista identified 20 names that fit the bill as companies leading the pack globally when it comes to innovating in financial planning.
They range from those changing the way people select and educate themselves about financial products, like NerdWallet, to services seeking to help people build up their credit scores, like Credit Karma.
A plethora of tech startups have rocked the wealth management space over the past several years with lower fees, smoother onboarding, and more accessible asset picking and trading experiences.
The likes of Robinhood and eToro lowered the barrier to entry for people wanting to own stocks and other assets, build up their portfolios, and acquire the kind of knowledge about financial markets that has previously been the privilege of only a few wealthy pros.
In the Covid-19 era, people built up a glut of savings thanks to fiscal stimulus designed to stem the impacts of lockdowns on world economies. That was a boon to fintechs in the wealth management space, as consumers were more willing to part with their cash for riskier investments.
These companies have been under strain more recently, though. Interest from amateur traders has slipped from the heyday of the 2020 and 2021 retail investing boom. And, as with other areas of fintech, there’s been a greater focus on profitability and building a sustainable business.
In response, platforms sought to prioritize product development and longer-term investing experiences to continue attracting customers. In the context of high interest rates, several companies launched the ability to invest in government bonds and other high-yield savings options.
In the wealth management category, Statista identified 20 names. They include Robinhood, eToro, and Wealthfront, among others.
Small and medium-sized businesses, which are often turned away by established banks, have increasingly turned to new forms of financing to get the necessary funds to grow their business, meet their overheads, and pay off outstanding debts.
Equity crowdfunding has given companies a chance to give early customers the ability to own part of the services they’re using.
Meanwhile, revenue-based financing, or borrowing against a percentage of future ongoing revenues in exchange for money invested, became a more popular way for firms typically turned away by banks and venture capitalists alike to get access to funding.
Higher interest rates arguably make these forms of financing more attractive versus seeking loans, which are now far more costly — though it does pose challenges for these businesses, as their own ability to raise capital themselves becomes more difficult.
In the alternate financing category, 20 firms were awarded. They range from Patreon, the popular membership service for online content creators, to crowdfunding companies Kickstarter and Republic.
Non-bank lending has been a rising trend in the financial services industry over the last several years.
Tech startups looked to provide a better experience than banking incumbents, using cloud computing and artificial intelligence to improve service quality and ensure faster decisioning on loan applications.
The global digital lending platforms market is forecast to be worth $11.5 billion in 2023, according to GlobalData, and this is expected to grow to $46.5 billion by 2030.
Over the last year or so, a number of fintechs pivoted to lending as the primary driver of their business, looking to benefit from rising interest rates — the Federal Reserve, Bank of England and numerous other central banks have rapidly raised rates to combat inflation.
Lending also tends to be the more lucrative part of finance, more generally.
While digital payments is often the area that draws most investor buzz, lending generates more money in financial services. Payments, by contrast, is a notoriously low-margin business since companies tend to make money by taking a small cut of the value of each transaction.
Statista identified 25 fintech companies that fall into the category of top alternate lending firms.
They include American small business lending firm Biz2Credit, Irish e-commerce lending company Wayflyer, and Latvian loan refinancing startup Mintos.
An emerging category of fintech companies takes a different approach to disrupting financial incumbents — giving other companies the ability to offer their own digital banking offerings rather than being the face of those services themselves.
Banking-as-a-service has been a buzzword in fintech for some time now. It’s not exactly a well-known term, but it refers to the ability for non-financial companies to provide their customers a range of financial products including checking accounts, cards, and loans.
Embedded finance, where third-party financial services like bank accounts, brokerage accounts and insurance policies are integrated into other businesses’ platforms, has also gained traction.
Another theme that falls within this world is open banking, or the ability for non-bank firms to launch new financial services using customers’ account data.
Digital banking solutions has become a more closely-watched aspect of fintech, as attention has turned away from consumer-oriented services to business-focused ones. However, it hasn’t been without its own challenges.
Like other areas of fintech, the space has been vulnerable to a funding crunch as hawkish central bank actions have made capital more expensive. Railsr, formerly a U.K. fintech darling, entered liquidation in March after reports that it was struggling to find a buyer.
“Not all programs were created equal,” Peter Hazlehurst, CEO of Synctera, one of the top 200 awardees, told CNBC. “As a result, a number of folks were unable to raise their next round or continue to grow or to continue to get customers.”
In the digital banking solutions category, 15 firms were awarded, including Airwallex, ClearBank, and Solaris.
Digital business solutions might not be the most attractive part of fintech, but it’s the one gaining much of the love from investors at the moment.
These are companies selling a range of financial solutions to businesses, ranging from accounting and finance, to human resources and anti-fraud solutions.
As the economic outlook has darkened for many businesses, the need for products that help firms deal with their own costs and operate in a compliant manner has become critical.
In the digital business solutions category, Statista identified 25 companies.
They include tax and accounting software firm Intuit, human resources platform Deel, and fraud prevention startup Seon.
A Nanjing Road pedestrian street on October 1, 2022 in Shanghai, China.
Yan Daming | Visual China Group | Getty Images
Chinese stocks soared Tuesday as Beijing pledged to ramp up measures to bolster China’s sputtering economy.
Hong Kong’s Hang Seng Index surged more than 3%, China’s tech-heavy ChiNext rose 1.8% and the Shanghai Composite Index increased 1.81% on Tuesday morning in Asia.
A day earlier, Chinese real estate stocks tumbled on renewed debt fears. The Chinese government cracked down on the property sector’s debt levels in August 2020.
The stock rebound comes after China’s top leaders pledged on Monday to ramp up policy support to boost domestic consumption as the post Covid rebound has been slower than expected.
China’s top leaders met Monday for the much-anticipated Politburo meeting and hinted at moves to “adjust and optimize” property policy in what the leadership called a “torturous” economic recovery.
State news agency Xinhua quoted the 24-member Politburo as saying “the economy is facing new difficulties and challenges.” That’s mainly due to weak domestic demand, operational challenges for companies as well as “a grim and complex external environment,” it said.
“The meeting emphasized that it is necessary to actively expand domestic demand, give full play to the basic role of consumption in driving economic growth, expand consumption by increasing residents’ income,” according to Xinhua.
“It is necessary to boost the consumption of automobiles, electronic products, and home furnishing, and promote the consumption of services such as sports, leisure, and cultural tourism,” said the report.
Hong Kong-listed shares of internet giants rose on Tuesday. Alibaba shares soared 4.7%, while Tencent was up nearly 4%. Meituan and Baidu shares were higher by 5.7% and 6.8% respectively.
In the electric vehicle space, Xpeng soared 11%, Li Auto was up 4.15% and BYD rose 2%.
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“This is a reconfirmation that the [Chinese] policymakers have heard the market concern on more support needed for the domestic economy,” said Xiaolin Chen, head of international at KraneShares, on CNBC’s “Street Signs Asia” Tuesday.
“They want to achieve the 5% GDP target of this year. The first job they need to do is to create jobs for the labor force in China,” said Chen.
“I do certainly see some encouraging language released from the statement that removed a lot of the concerns of people having a high focus on real estate market, employment, private investment, and so on. So far, the language has been encouraging.”
A look at Goldman Sachs’ “conviction buy” stocks in recent weeks has revealed a number of names that its analysts say have serious potential. The Wall Street bank’s Conviction List comprises its top buy-rated stocks that it expects to outperform. Here are five of them: Baidu Goldman in a July 16 note said it has added Chinese Internet search giant Baidu to its regional conviction list. “We view Baidu as one of the best positioned China Internet names pivoting to the secular Generative AI theme,” it said. The bank’s analysts said that Baidu is on track for steady search advertising recovery amid its high exposure to offline small and medium enterprises. They added that they expect key catalysts in the second half of the year, such as regulatory approval for large language models (articifical intelligence programs trained with extensive amounts of data). “The market is now pricing in limited value for Baidu’s AI initiative: the stock outperformed BABA / Tencent by 10-15% YTD,” Goldman analysts wrote. “We are turning more constructive than before on Baidu’s positioning for the secular AI trend, and we expect the market will begin to more appreciate its AI business once it starts to generate user traffic and then achieve revenue scale.” Goldman gave Baidu’s U.S.-listed shares a 12-month price target of $197, and its Hong Kong-listed shares a price target of 193 Hong Kong dollars. Both price targets imply upside of around 37%. Shift4 Payments American payment processing company Shift4 Payments is also on Goldman’s conviction list. The company appeared on a screen of stocks set for growth at a reasonable price, in a July 13 note by the bank. Goldman’s analysts identified stocks they say have at least 10% sales CAGR (compound annual growth rate) from 2022 to 2025, and where the price-earnings-growth ratio is below 1.0. They said Shift4 Payments is well positioned to compete with new entrants to the small and medium businesses payments landscape. “Its refreshed, modern restaurant POS [point of sale] platform and new verticals should drive market share growth,” Goldman analysts wrote. Johnson Controls International Goldman also likes American building products company Johnson Controls International, which appeared on its July 13 screen of stocks set for growth with underappreciated margin expansion. The bank identified stocks that its analysts expect to deliver at least 5% sales growth in 2023 and 2024, positive incremental operating margins in each year, and operating margin expansion of at least 150 basis points between 2022 and the end of 2024. “Favorable end-market exposure to education and ‘clean’ buildings, along with cost savings initiatives should drive both growth and margin expansion,” the bank said of Johnson Controls. In the longer term, Goldman said the firm’s service business offers the potential to create more growth and margin expansion opportunities — ultimately contributing to “solid” free cash flow. Warner Bros Discovery Goldman said in a July 18 note that it sees the risk/reward skew for Warner Bros Discovery as the most attractive versus its peers, saying the stock is its top pick in the media sector. It highlighted that the firm repaid more than $1 billion of debt in the second quarter, funded by its free cash flow. “This implies that despite the challenging operating environment WBD is pacing ahead of its 1H23 FCF target,” Goldman wrote. “As such, we maintain our outlook for WBD to achieve material balance sheet delevering in 2023 and support material upside to the equity.” Goldman gave Warner Bros Discovery, which is on its conviction list, a price target of $20, or potentially more than 50% upside. First Solar Goldman named First Solar in its screen of buy-rated stocks where its analysts are out-of-consensus and the majority of Wall Street is neutral or sell-rated on. “These names appear underappreciated by the market and could generate alpha for investors with a contrarian view,” it said in the July 13 note. First Solar is on the bank’s conviction list, with a potential upside to price target of 40% from its price of $194.96 as of July 12, according to the analysts. — CNBC’s Michael Bloom contributed to this report.
HONG KONG, CHINA – JUNE 05: A pedestrian walks by an electronic screen displaying the numbers for the Hang Seng Index on June 5, 2023 in Hong Kong, China. (Photo by Chen Yongnuo/China News Service/VCG via Getty Images)
China News Service | China News Service | Getty Images
Investors will now be able to trade selected Hong Kong stocks in both the Hong Kong dollar and Chinese yuan in the so-called dual counter scheme that launched Monday.
The newly launched “HKD-RMB Dual Counter Model” will see an initial 24 companies start offering yuan counters to allow investors in Hong Kong to trade in the yuan, in addition to the Hong Kong currency. Companies on the list include tech heavyweights like Tencent, Alibaba and Baidu.
The dual counter model covers securities listed in both Hong Kong dollar and renminbi counters only. The Hong Kong Exchange said all shares of the same securities in the two different trading counters will be “fully interchangeable between counters.”
In an exclusive interview on CNBC’s “Squawk Box Asia,” Hong Kong Exchanges and Clearing CEO Nicolas Aguzin said the move was aimed at giving investors more options for investments, as well as more diversification possibilities.
“This program is aimed at number one, making sure that we give more options to investors. Number two, that we continue helping on the internationalization of the renminbi.” Thirdly, he said it “solidifies” Hong Kong’s role as a yuan trading hub.
The HKEX CEO noted that the initial batch of 24 companies make up about 40% of the average daily trading volume in the Hong Kong.
“We would expect that to continue expanding,” he added. “And over time, I think a great majority of the stocks in our markets will be participating in this program.”
With trading volumes in Hong Kong at a four year low, Aguzin said he expects an increase in turnover from the new dual connect model, noting there are “a lot” of yuan deposits in Hong Kong. As such, “you’re tapping a liquidity pool that is in renminbi that will now be able to invest directly,” he pointed out.
The key objective is to simplify the southbound flow of investments from the mainland, Aguzin said.
Investments from the mainland are currently carried out via the Southbound Stock Connect, which allows mainland investors to purchase Hong Kong stocks in Hong Kong dollars.
Stock Connect is a mutual market access program that allows investors in mainland China to trade and settle shares in Hong Kong via exchanges and clearing house in their home market, and vice versa.
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Aguzin highlighted that it’s “very inconvenient for the mainland investors, [and] the fact that they will 1687155004 be able to transact in an instant basis in renminbi, that’s a huge difference.”
He foresees more investment flow from the mainland, especially from retail investors.
“One of the challenges of Hong Kong is it’s only 7 million people. So it’s very limited in terms of retail. But the mainland, 1.4 billion people, that’s a lot. And a lot of that can come through Stock Connect and help liquidity in our market.”
The dual counter model will initially target the offerings at investors holding offshore yuan, and eventually, enable mainland investors to trade yuan stocks listed in Hong Kong using onshore yuan, Reuters reported.
While there is no firm date for when investments via Stock Connect will be able to access the dual counter model, Aguzin said this will take a little bit of time, and the HKEX is working closely with regulators and other stakeholders to make sure everything will be in place before making an announcement.
This is not the first time that such a scheme is being introduced in Hong Kong.
In 2012, the Hong Kong exchange launched a similar scheme called the “dual tranche, dual counter” model, which allowed the issuer to offer and list two tranches of shares in both the Hong Kong dollar and Chinese yuan.
As with today’s dual counter model, shares of both RMB tranche and the HKD tranche were of the same class, and shareholders under these two tranches are expected to be treated equally.
According to Bloomberg, that scheme failed to take off when only one company took it up.
The difference this time is that there is a “dual counter market maker program” — aimed at providing liquidity to the yuan counter and minimizing price discrepancies between the Hong Kong dollar and yuan counters.
Aguzin said there are currently nine of these market makers that have signed up, and he thinks this “should encourage a lot of activity and [make] sure that the markets are really stabilized in both markets.”
China’s pandemic-battered economy is starting to see consumers open their wallets wider, according to KraneShares’ Brendan Ahern.
“We’re seeing the incremental rebound from the Chinese consumer,” the firm’s chief investment officer told “ETF Edge” this week. “[But] it’s not like turning on a light switch.”
Ahern, who’s involved with the firm’s China-focused ETFs, expects quarterly earnings for Chinese companies to improve with each consecutive quarter — a forecast that may already be unfolding.
“We’re actually hearing that for many of the companies … in the management calls, they’re speaking to how Q2 already is outpacing Q1, which outpaced Q4 of last year,” Ahern said.
China’s reopening is also anticipated to have a positive impact on the airline industry.
Singapore Airlines, Japan’s All Nippon Airways and Japan Airlines all noted demand from China as a factor in future earnings while reporting net profits earlier this month for the financial year ended March 2023.
GraniteShares’ Will Rhind sees a similar growth trajectory.
“Domestic travel [is] rebounding … but we’ve yet to see that from the international sector,” the ETF provider’s CEO said. “It will come, but maybe just not yet.”
Rhind told CNBC in a special interview later in the week that international travel from China could start to rebound this summer following a sluggish start.
His forecast comes as a government-backed epidemiologist said the country’s new Covid wave could infect 65 million a week by the end of next month.
Rhind believes the recent Covid surge won’t affect the reopening’s trajectory, adding past lockdowns seen across China are “very, very much unlikely to be repeated.”
Pictured here is a shopping street in Shenzhen, China, on Thursday, March 30, 2023.
Bloomberg | Bloomberg | Getty Images
BEIJING — China’s economic recovery is taking longer than expected, prompting Citi analysts to push back their forecasts for a stock market rebound by three months.
Instead of June, Citi now expects it will now take until the end of September for the Hang Seng Index to reach 24,000, analysts said in a report Thursday. That’s about 18% above current levels.
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The Hang Seng Index closed at 20,331.20 on Thursday, up about 2.8% for the year so far.
“We expect [first-quarter 2023 corporate] results to be on the weaker side as post COVID recovery seems slower than expected,” the Citi report said. It said analysis of 2022 results of 316 Chinese companies found more misses than beats.
China has reported a modest recovery in economic growth for the first two months of the year. The country ended its stringent Covid controls in December.
The analysts also delayed by three months — to the end of September — their expectations for a rebound in two other Chinese stock indexes.
For the CSI 300, Citi has a target of 4,500, or about 9% above Friday’s level of near 4,125.
For the MSCI China index, Citi has a forecast of 78. That’s about 18% above current levels near 66.
Falling exports from slower growth in the U.S. and Europe is weighing on China’s economy, along with a slump in the massive real estate sector.
Goldman Sachs credit strategy analysts said in a report Thursday they expect Chinese property developers’ high-yield default rate will be 19% this year.
That’s better than the 46.4% last year, but “still at an elevated level, reflecting the uncertain pace of recovery for the physical property market,” the report said.
However, a quarterly People’s Bank of China survey released this week indicated more people in China want to buy houses again, along with greater expectations that home prices will rise.
China’s movie box office has also started to show some signs of recovery.
Animated film “Suzume” this month became the highest-grossing Japanese film in China with a box office of more than 650 million yuan ($94.49 million), surpassing that of prior first-place title “Your Name,” according to movie ticketing site Maoyan. Both films were made by the same director.
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The data showed “The Super Mario Bros. Movie” grossed 32.3 million yuan on its opening day in China on Wednesday, a local holiday. That marked the biggest opening for a Hollywood animation since the pandemic began in 2020, Deadline pointed out.
More foreign movies are now being allowed in China after authorities only allowed a handful of overseas titles to screen during the pandemic.
China is set to release first-quarter GDP and other economic data on April 18.
For 2023, Citi expects consumer discretionary and utilities companies to post the greatest growth in earnings per share among Hang Seng Index sectors, while energy and industrials will likely see declines.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “The Super Mario Bros. Movie.”
Chinese technology stocks led gains in Asia-Pacific on Wednesday’s as Hong Kong listed shares of Alibaba jumped, one day after the company announced a major revamp to split the tech giant into six entities.
The Hang Seng Tech index gained nearly 3% in the afternoon, its highest in more than a month — as shares of Alibaba and its peers such as Meituan, JD.com and Tencent pushed up the index.
Alibaba owns 33% of Ant, which operates AliPay, one of China’s two dominant mobile pay apps.
“I truly believe [Alibaba is] aiming for a bigger target,” said Kingston Securities Executive Director Dickie Wong. “In terms of the bigger picture, obviously would be Ant Group [being] re-introduced into the equity market,” he told CNBC’s “Street Signs Asia” on Wednesday.
“This is probably the biggest goal for Alibaba Group itself,” Wong said of Alibaba’s revamp plans, adding that the expected listing in Hong Kong will not happen anytime soon “but there’s big hope” for a sooner-than-later deal.
HANGZHOU, CHINA – OCTOBER 27: A logo of Ant Group is seen at the company’s headquarters on October 27, 2020 in Hangzhou, Zhejiang Province of China.
Vcg | Visual China Group | Getty Images
Ant received approval from the China Banking and Insurance Regulatory Commission earlier this year to expand its consumer finance business, a sign the company could be moving one step closer to resolving regulators’ concerns.
To be clear, there was no mention of Ant in Alibaba’s announcement for its overhaul overnight.
KraneShares’ CIO Brendan Ahern said investors it’s likely investors will be focusing Ant’s IPO.
“The one part about the press release that I think the investors will be asking for is the lack of talk about Ant Group,” Ahern said.
“But certainty the renewed relationship or the good graces of Alibaba along with the government and its regulators is really driven by China’s necessity for domestic consumption in 2023,” he added.
— CNBC’s Evelyn Cheng, Arjun Kharpal contributed to this report.
Signage at the Alibaba Group Holding Ltd. offices in Beijing, China, on Tuesday, Jan. 17, 2023.
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Hong Kong-listed shares of Alibaba surged 15% at the open on Wednesday after the company announced a significant overhaul to split the tech giant into six business groups.
On Wall Street overnight, Alibaba stocks soared to close 14.26% higher. They were 0.71% higher in after-hours trading.
The decision to split into different units means each will be managed by its own leadership and executive board, and can pursue independent fundraising and IPOs when they’re ready.
The company said the move aims to “unlock shareholder value.”
The six business groups are:
Cloud Intelligence Group: includes company’s cloud and artificial intelligence activities;
Taobao Tmall Commerce Group: online shopping platforms including Taobao and Tmall;
Local Services Group: covers Alibaba’s food delivery service Ele.me as well as its mapping;
Global Digital Commerce Group: includes Alibaba’s international e-commerce businesses including AliExpress and Lazada;
Digital Media and Entertainment Group: includes Alibaba’s streaming and movie business.
The overhaul of the Chinese technology giant comes at the back of the company facing continued struggles with growth over the past few quarters – the company erased roughly $600 billion from its peak seen in October 2020 as it continued to grapple with the Chinese government’s crackdown on technology companies.
The stock moves are more reflective of a sense of relief, rather than investors’ hopes in the business, value investor and Warren Buffett disciple Guy Spier told CNBC’s Tanvir Gill.
“The rally in the shares is not so much because the market expects greater profitability, rather than relief that tensions with the regulator seem to have been resolved,” Spier said, adding that the company will face less pressure going forward.
He added that Chinese consumers – not investors – would be the beneficiary of Alibaba’s overhaul.
“This sets the stage for a more innovative Chinese tech sector and far more competition – so very good for Chinese consumers,” he said, adding that it “reduces concentration and the power of one business within China – which was making Chinese regulators uncomfortable.”
Tech stocks in Hong Kong climbed in morning trade: Shares of Tencent rose 3%, JD.com gained nearly 5%, and Baidu rose more than 3%. The Hang Seng Tech index soared 3.3% in its first hour of trade, leading gains in the Asia-Pacific region.
The moves seen in the stock prices of Alibaba’s peers on Wall Street indicated that other Chinese technology companies could turn to similar measures for their business.
“I think investors are saying what we saw in Alibaba, really the leader in China tech, that their plans might be utilized by others,” said Brendan Ahern, CIO of KraneShares, pointing to the ADR moves seen in Tencent, JD.com, and Baidu.
He noted the company’s announcement showed that Alibaba founder Jack Ma, who was recently spotted in China after spending months abroad, was involved in the process.
“It’s very clear he played a role in this new structure that is really around what the company said in the press release, it’s about unleashing the shareholder value,” said Ahern.
– CNBC’s Arjun Kharpal contributed to this report.
Correction: This story has been updated to reflect that Alibaba shares in Hong Kong surged on Wednesday.
Federal Reserve Board Chairman Jerome Powell holds a news conference following a Federal Open Market Committee meeting at the Federal Reserve on March 22, 2023 in Washington, DC.
Alex Wong | Getty Images News | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Markets had expected the Fed’s quarter-point hike. Powell’s warnings on the economy caught them off guard.
Fed officials unanimously agreed to increase rates. But at the post-meeting press conference, Fed Chair Jerome Powell admitted the committee considered pausing hikes because “events in the banking system over the past two weeks are likely to result in tighter credit conditions.”
Asked by a senator if Treasury is considering guaranteeing all bank deposits without congressional approval, Treasury Secretary Janet Yellen said it is not.
PRO GameStop surged 35.24% on the news that the company’s had its first profitable quarter in two years. But analysts are warning investors not to jump into the stock because it’s still facing longer-term headwinds.
The last few Federal Open Markets Committee meetings have followed a pattern. The central bank would take a hawkish stance and hike rates aggressively, spooking markets. Then Powell’s comments at the press conference would soothe investors, who’d focus on his dovish remarks (probably unintentional and to his chagrin, I’d imagine).
This time, Powell flipped the script.
Markets had expected a hike of 25 basis points, and that’s what they got. Being right contributes to a sense of certainty, so all three major indexes actually rose after the Fed’s announcement. Indeed, Quincy Krosby, chief global strategist of LPL Financial, noted “markets are responding well to the expected 25 basis points rate hike.”
Then Powell started speaking. At first, his reassurances that the “banking system is sound and resilient” continued soothing markets. Then Powell started talking about “tighter credit conditions for households and businesses” that could “easily have a significant macroeconomic effect.” Worse, these conditions were not reflected in stock indexes since they “don’t necessarily capture lending conditions.” This signaled that the economy could be in a worse place than many had thought, wrote CNBC’s Patti Domm.
As if trying to prove Powell wrong, markets began sliding about an hour after Powell’s speech and couldn’t arrest their decline. By the end of the day, the Dow Jones Industrial Average lost 1.63%, the S&P 500 fell 1.65% and the Nasdaq Composite sank 1.6%.
They were certainly not helped by Treasury Secretary Janet Yellen’s clarification that, contrary to how markets took her Tuesday comments, the Federal Deposit Insurance Corporation was not considering “blanket insurance” for banking deposits — as I’d warned in this newsletter yesterday.
The good news is that the Fed forecast it’ll hike interest rates only one more time — probably by another 25 basis points — before pausing. A cut, however, is not on the table, if Powell is to be believed. Amid the ongoing banking turmoil, coupled with the Fed’s warning about the broader economy, it might be better for investors not to fight the Fed.
Subscribe here to get this report sent directly to your inbox each morning before markets open.
A display at the World Artificial Intelligence Conference (WAIC) in Shanghai, China, on Friday, Sept. 2, 2022.
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BEIJING — The business story of ChatGPT right now is more about what isn’t known.
Big tech companies in the U.S. and China rushed this month to announce they are working on similar AI tools. Their announcements often referenced Microsoft-backed ChatGPT, while disclosing few details on what they themselves were working on.
The artificial intelligence-powered chatbot ChatGPT has taken the tech world by storm in the last few months with its ability to generate everything from poems to business strategies in a human-like conversation.
Still, analysts say the tech is transformative, something that’s also been said about blockchain and the metaverse.
Here’s what companies — including those in China — are doing in this specialized area of AI:
U.S. startup OpenAI raced to beat rivals by launching ChatGPT in November, according to The New York Times, citing sources. The public interface skyrocketed in popularity for everything from homework help to strategy development.
Database software startup PingCap already has a ChatGPT-based product on the market. The company has offices in Beijing and San Mateo, California.
PingCap launched “Chat2Query” for customers outside China in January that uses a publicly available application programming interface from OpenAI.
The product lets clients analyze in seconds their companies’ operating data — such as best-selling car models — without needing to know a computer programming language, said Liu Song, vice president of PingCap. He said Chat2Query is free for clients processing up to 5 gigabytes of data.
“We think the revolution may not be in AI search but in every business,” he said in Mandarin, translated by CNBC. However, he noted that those data need to be organized in a standardized way.
We think the revolution may not be in AI search but in every business
Liu Song
PingCap, vice president
Baidu, the Chinese search engine and tech giant, said Wednesday its AI chatbot project will be embedded into search first, and opened to the public in March.
The product is named “Ernie bot” in English or “Wenxin Yiyan” in Chinese, the company said previously.
Chinese e-commerce rival JD.com did not have a launch date either, but said its “ChatJD” will focus on retail and finance. It will assist with tasks such as generating product summaries on shopping sites and financial analysis, the company said.
Tencent, which operates the ubiquitous Chinese messaging app WeChat, said in a statement it continues to research natural language processing. That’s the field within artificial intelligence on which ChatGPT is based.
While ChatGPT this month became a trendy topic in China, even for state media, analysts note the country’s censorship and data regulations may affect how similar tech develops in the country. Beijing has emphasized building up its own technological abilities.
Nikkei Asia on Wednesday reported, citing sources, that regulators told Tencent and Alibaba-affiliate Ant Group not to offer access to ChatGPT services on their platforms, either directly or via third parties.
The report did not specify which regulators. China’s cybersecurity regulator, Tencent and Ant did not immediately respond to requests for comment.
In terms of technical ability, however, the U.S. is only months — not years — ahead of China in that AI research, a Microsoft executive told journalists this month. ChatGPT isn’t available in China, although Microsoft operates in the country.
The executive said that state-backed Beijing Academy of Artificial Intelligence is one of three global leaders in artificial intelligence research, along with Google’s DeepMind and Microsoft’s partnership with OpenAI.
Kunlun Tech expects to release an open source Chinese version of ChatGPT, as early as the middle of this year, its president Han Fang told CNBC last week. Open source software is available to the public and allows anyone to see, change or distribute the code.
The company, which generates most of its revenue outside China, previously said its niche web browser Opera is planning to incorporate ChatGPT into its products, although it’s unclear when or with what functions.
Kunlun Tech is already working in the field of AI-generated content, such as music.
Fang said his commercialization plan is to first develop those AI tools. Creators can then use the tools to make their own work and publish them on designated platforms for public viewing, following which the company can then sell ads, he said. He expects to launch the platforms later this year.
Fang said he was directly inspired by OpenAI’s early version of ChatGPT tech in 2020.
“We all talk about the metaverse, but who is in it?” he said in Mandarin, translated by CNBC. “It only changed our news. It didn’t change our lives.”
In contrast, he said generative AI tech can immediately provide value since it operates where users are already producing and consuming content. Generative AI can also lower production costs, allowing animators and speakers of minority languages to easily create their own content, Fang said.
The implications for jobs and industries remain significant.
The arrival of AI such as ChatGPT means many “cognitive tasks” look easier to automate than manual work such as in factories — a surprise to many economists, said Anton Korinek, professor at the Department of Economics and Darden School of Business, University of Virginia.
“The impressive but also little bit scary part is that the power of these systems has been progressing steadily over the past couple of years,” he said, adding that he expects more powerful AI tech this year alone.
“That will really imply that these models will have a revolutionary impact on our economy, on productivity, on labor markets and ultimately on society in general.”
— CNBC’s Arjun Kharpal and Lauren Feiner contributed to this report.
Microsoft-backed OpenAI has kept its hit ChatGPT app off-limits to users in China, but the app is attracting huge interest in the country, with firms rushing to integrate the technology into their products and launch rival solutions.
While residents in the country are unable to create OpenAI accounts to access the artificial intelligence-powered (AI) chatbot, virtual private networks and foreign phone numbers are helping some bypass those restrictions.
At the same time, the OpenAI models behind the ChatGPT programme, which can write essays, recipes and complex computer code, are relatively accessible in China and increasingly being incorporated into Chinese consumer technology applications from social networks to online shopping.
The tool’s surging popularity is rapidly raising awareness in China about how advanced U.S. AI is and, according to analysts, just how far behind tech firms in the world’s second-largest economy are as they scramble to catch up.
“There is huge excitement around ChatGPT. Unlike the metaverse which faces huge difficulty in finding real-life application, ChatGPT has suddenly helped us achieve human-computer interaction,” said Ding Daoshi, director of Beijing-based internet consultancy Sootoo. “The changes it will bring about are more immediate, more direct and way quicker.”
OpenAI or ChatGPT itself is not blocked by Chinese authorities but OpenAI does not allow users in mainland China, Hong Kong, Iran, Russia and parts of Africa to sign up.
OpenAI told Reuters it is working to make its services more widely available.
“While we would like to make our technology available everywhere, conditions in certain countries make it difficult or impossible for us to do so in a way that is consistent with our mission,” the San Francisco-based firm said in an emailed statement. “We are currently working to increase the number of locations where we can provide safe and beneficial access to our tools.”
In December, Tencent Holdings’ WeChat, China’s biggest messaging app, shut several ChatGPT-related programmes that had appeared on the network, according to local media reports, but they have continued to spring up.
Dozens of bots rigged to ChatGPT technology have emerged on WeChat, with hobbyists using it to make programmes or automated accounts that can interact with users. At least one account charges users a fee of 9.99 yuan ($1.47) to ask 20 questions.
Tencent did not respond to Reuters’ request for comments.
ChatGPT supports Chinese language interaction and is highly capable of conversing in Chinese, which has helped drive its unofficial adoption in the country.
Chinese firms also use proxy tools or existing partnerships with Microsoft, which is investing billions of dollars in its OpenAI, to access tools that allow them to embed AI technology into their products.
Shenzhen-based Proximai in December introduced a virtual character into its 3D game-like social app who used ChatGPT’s underlying tech to converse.
Beijing-based entertainment software company Kunlun Tech plans to incorporate ChatGPT in its web browser Opera.
SleekFlow, a Tiger Global-backed startup in Hong Kong, said it was integrating the AI into its customer relations messaging tools.
“We have clients all over the world,” Henson Tsai, SleekFlow’s founder said. “Among other things, ChatGPT does excellent translations, sometimes better than other solutions available on the market.”
Reuters’ tests of ChatGPT indicate that the chatbot is not averse to questions that would be sensitive in mainland China. Asked for its thoughts on Chinese President Xi Jinping, for instance, it responded it does not have personal opinions and presented a range of views.
But some of its proxy bots on WeChat have blacklisted such terms, according to other Reuters checks, complying with China’s heavy censorship of its cyberspace. When asked the same question about Xi on one ChatGPT proxy bot, it responded by saying that the conversation violated rules.
To comply with Chinese rules, Proximai’s founder Will Duan said his platform would filter information presented to users during their interaction with ChatGPT.
Chinese regulators, which last year introduced rules to strengthen governance of “deepfake” technology, have not commented on ChatGPT, however, state media this week warned about stock market risks amid a frenzy over local ChatGPT-concept stocks.
The Cyberspace Administration of China, the internet regulator, did not respond to Reuters’ request for comment.
“With the regulations released last year, the Chinese government is saying: we already see this technology coming and we want to be ahead of the curve,” said Rogier Creemers, an assistant professor at Leiden University. “I fully expect the great majority of the AI-generated content to be non-political.”
Joining the buzz have been some of the country’s largest tech giants such as Baidu and Alibaba who gave updates this week on AI models they have been working on, prompting their shares to zoom.
Baidu said this week it would complete internal testing of its “Ernie Bot” in March, a big AI model the search firm has been working on since 2019.
On Wednesday, Alibaba said that its research institute Damo Academy was also testing a ChatGPT-style tool.
Duan, whose company has been using a Baidu AI chatbot named Plato for natural language processing, said ChatGPT was at least a generation more powerful than China’s current NLP solutions, though it was weaker in some areas, such as understanding conversation context.
Baidu did not reply to Reuters’ request for comments.
Access to OpenAI’s GPT-3, or Generative Pre-trained Transformer, was first launched in 2020, an update of which is the backbone of ChatGPT.
Duan said potential long-term compliance risks mean Chinese companies would most likely replace ChatGPT with a local alternative, if they could match the U.S.-developed product’s functionality.
“So we actually hope that there can be alternative solutions in China which we can directly use… it may handle Chinese even better, and it can also better comply with regulations,” he said.
Shoppers walk through a street market in Hong Kong, China, on Sunday, Jan. 30, 2022. Photographer: Chan Long Hei/Bloomberg via Getty Images
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Hong Kong stocks kicked off 2023 with the most gains they’ve seen in the first trading session of a year since 2018.
The Hang Seng index on Tuesday gained 1.84%, or 363.88 points — its biggest first-day gain since January 2018, when the index rose nearly 2%.
related investing news
That signaled an improved outlook as China continues to reopen despite a nationwide surge in Covid infections.
“While it is inevitable to see further surges and more widespread in inflection at the initial stage of opening, the outlook for the Chinese economy has brightened for 2023,” Redmond Wong, Saxo Capital Markets greater China market strategist, said in a note.
“In addition to the reopening, China has intensified its effort to support the distressed property sector and given property developers access to credits and equity financing which had been denied to them for the most part of 2022,” Wong wrote.
Property and technology stocks continued to lift the Hang Seng index, which rose more than 3% in Wednesday’s session. The index exceeded 20,600, the highest level it’s seen since July 29, according to Refinitiv data.
The moves followed reports of Chinese officials planning to provide further policy support for ailing real estate developers.
Technology stocks also rallied, with shares of Alibaba rising 8% after Chinese regulators approved Ant Group‘s plan to more than double its registered capital, a sign of progress in resolving regulators’ concerns.
Electric vehicle maker Baidu rose more than 8%; Chinese video and gaming app Bilibili gained nearly 9%; Netease rose more than 5%; JD.com climbed 7%; and Tencent also rose around 4%.
The Hang Seng rally came after Chinese Finance Minister Liu Kun told Xinhua in an interview that there will be more fiscal policy support.
Shoppers purchase festive sweets ahead of Lunar New Year at a street stall in Hong Kong, China, on Sunday, Jan. 30, 2022. Photographer: Chan Long Hei/Bloomberg via Getty Images
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The government will work on expanding and improving the “effectiveness of the proactive fiscal policy to cope with multiple challenges ahead,” the minister was quoted as saying.
Chinese investment bank Guotai Junan Securities said the performance of Hong Kong stocks will affect the wider global market.
“The Hang Seng Index may lead other major global stock indices in 2023, with around 30% expected return,” analysts at the firm said in a Wednesday note.
“The index valuation may see further rerates, and we expect the HSI to recover to its previous level before Jun. 2022,” they said in the note.
China’s reopening is a positive sign for Asian stocks and global economic growth in 2023, but it carries also inflationary risks, thanks to China’s role in driving demand for the global commodities market, analysts at Raymond James said in a note.
Weaker growth in the Chinese economy will likely increase the chances of a more dovish Federal Reserve, while stronger growth will raise the possibility of a “stubbornly hawkish Fed,” equity strategist Tavis McCourt wrote.
“Volatility seems certain with equities finishing either modestly higher or modestly lower depending on the rate path,” McCourt said in the note.
Nio is trying to stand out from a wave of Chinese electric vehicle competitors through its technology. The company is hoping its partnership with Tencent can help it boost its tech prowess in areas from mapping to autonomous driving.
Anadolu Agency | Getty Images
Chinese electric vehicle maker Nio and tech giant Tencent agreed to work together on areas including autonomous driving and high-definition mapping.
Tencent — a gaming, social media and cloud computing titan — has signed a cooperation agreement with Nio, one of Tesla’s rivals in China, as the firms look to cash in on Beijing’s focus on so-called new energy cars.
The partnership could allow Tencent to do this, while also giving Nio the technology backing of one of China’s biggest firms. Tencent is already a major investor in Nio, which is striving to differentiate itself from a sea of electric car start-ups.
Nio and Tencent said on Monday they will work together on high-precision mapping systems for drivers. Nio will also be using Tencent’s cloud computing infrastructure for data storage and training for autonomous driving. Driverless cars require huge amounts of real-time data to be processed in order to train algorithms.
Tencent’s partnership with Nio gives the company another opportunity to push into new business areas as its core video gaming business, which has been battered by strict domestic regulation, continues to face headwinds.
Still, the company delivered 31,607 vehicles in the third quarter, marking a quarterly delivery record for the start-up.
However, China’s once high-flying EV start-ups have seen their share prices hammered this year as investors turned away from growth stocks and China’s economy faced a slew of problems.
Chinese regulators have increased scrutiny on the domestic game sector over the past year and a half. But new batches of game approvals and positive steps on improving gaming addiction among kids under 18 years old, could be positive signs that the crackdown is easing.
Xing Yun | Costfoto | Barcroft Media | Getty Images
Beijing is showing signs that its intense crackdown on the domestic video games sector could be easing which may be bullish for Chinese tech giants including Tencent and NetEase.
On Tuesday, research firm CNG alongside the China Game Industry Group Committee, which is affiliated with the gaming publishing regulator, published a report in which they praised the progress on reducing gaming addiction among people under the age of 18.
Regulators have been concerned for some time about gaming addiction among minors. Last year, China’s National Press and Publication Administration brought in rules that restricted kids under 18 years old from playing online games for more than 3 hours per week.
The CNG report holds weight because it has been published in conjunction with a key gaming industry body with links to the regulator. The report said more than 70% of minors play games for less than 3 hours a week, and the problem of minors’ game addiction has “achieved a step toward resolution,” according to a CNBC translation.
The positive report could signal a more bullish outlook toward the Chinese gaming sector.
“China’s strict regulatory approach over the past year has been a result of a lack of enforcement and compliance across key areas,” Daniel Ahmad, senior analyst at Niko Partners, told CNBC. “With game companies now fully compliant, we are seeing a more positive outlook start to develop.”
The CNG report also singles out major Chinese gaming companies including Tencent and NetEase for their positive moves enforcing the protection of minors.
For example, both Tencent and NetEase use facial recognition to see whether the person playing the game is an adult.
Another positive sign came last week when the regulators approved a batch of 70 new games for release. In China, video games need approval to be published and monetized. Among the approvals was a game titled Metal Slug: Awakening from Tencent, marking the company’s first commercial game license in a year and a half, according to Reuters.
Tencent management last week told analysts on its third-quarter earnings call that the company expects game licenses to be approved relatively quickly in the future, adding to further signs of regulatory scrutiny on the sector easing.
Martin Lau, president of Tencent, said the company is seeing “positive signals across the path of macro and regulatory normalization.”
As we head into the World Cup season, CNBC will be taking a look at some of the world’s biggest companies and pitting them against each other for the inaugural CNBC Stock World Cup 2022.
Starting with the initial stages on Nov. 7, we’ll ask experts from across the globe to rate each match-up based on one key question: If you invest today, which of the two companies going head-to-head will give you a greater total return over the next 12 months?
Thirty-two companies. One final champion.
Round of 32: Microsoft vs Visa – Visa wins | Naspers vs Softbank – Softbank wins
Elon Musk’s revived $44 billion deal to buy Twitter sparked fresh debate over what the billionaire will do with the service if he eventually owns it.
On Tuesday, Musk tweeted that buying Twitter is an “accelerant to creating X, the everything app.” He did not provide further details.
Musk may be hinting toward so-called “super apps” which are popular in China and other parts of Asia and pioneered by the likes of Chinese technology giant Tencent.
Super apps is a term to describe an app that often acts as a one-stop shop for all your mobile needs. For example, you might order a taxi or food via the app and at the same time do payments and messaging. This eliminates the need to have multiple apps for different functions.
Chinese app WeChat, run by Tencent, is the biggest super app in the world, with over a billion users.
In WeChat, users can message people, do mobile banking, pay for things online or in store by scanning a barcode, play games, post videos, do online shopping, hail a car and many other things.
When Musk talks about “the everything app,” he could be thinking about WeChat.
The Tesla CEO has previously expressed admiration for WeChat calling the app “great” during a town hall with Twitter employees in June. Musk said there is no WeChat equivalent outside of China.
“And I think that there’s a real opportunity to create that,” Musk told employees. “You basically live on WeChat in China because it’s so useful and so helpful to your daily life. And I think if we could achieve that, or even close to that with Twitter, it would be an immense success.”
Musk said that he wants at least a billion people using Twitter, up from 237.8 million at the end of the second quarter.
Tencent runs the ubiquitous Chinese messaging app WeChat. The company has a short form video feature with in the app and has began to monetize that through video ads in the feed. Tencent said such ads could become a “substantial” source of revenue in the future.
One of WeChat’s biggest features is WeChat Pay. This is a feature where users can scan a barcode in a store to pay via their mobile or they can send money to friends via the chat function. WeChat Pay can also be used for purchases online.
Musk said during the town hall that he thinks that payments within Twitter would be an “interesting thing to do.”
However, super apps like WeChat haven’t really taken off in a big way in Europe, the U.S. and other western markets.
WeChat meanwhile is heavily censored in China, something Musk is unlikely to do with Twitter, given his past criticisms of the platform’s content moderation strategy which the billionaire feels has stifled free speech.
Google pulled its search engine from China in 2010 because of heavy government internet censorship. Since then, Google has had a difficult relationship with the Chinese market. The end of Google Translate in China marks a further retreat by the U.S. technology giant from the world’s second-largest economy.
Alphabet’s Google on Monday said it shut down the Google Translate service in mainland China, citing low usage.
The move marks the end of one of its last remaining products in the world’s second-largest economy.
The dedicated mainland China website for Google Translate now redirects users to the Hong Kong version of the service. However, this is not accessible from mainland China.
“We are discontinuing Google Translate in mainland China due to low usage,” Google said in a statement.
Google has had a fraught relationship with the Chinese market. The U.S. technology giant pulled its search engine from China in 2010 because of strict government censorship online. Its other services — such as Google Maps and Gmail — are also effectively blocked by the Chinese government.
As a result, local competitors such as search engine Baidu and social media and gaming giant Tencent have come to dominate the Chinese internet landscape in areas from search to translation.
Google has a very limited presence in China these days. Some of its hardware including smartphones are made in China. But The New York Times reported last month that Google has shifted some production of its Pixel smartphones to Vietnam.
The company is also looking to try to get Chinese developers to make apps for its Android operating system globally that will then be available via the Google Play Store, even though that’s blocked in China.
American businesses have been caught in the middle of continued tensions in the technology sphere between the U.S. and China. Washington continues to fret over China’s potential access to sensitive technologies in areas such as artificial intelligence and semiconductors.
