UBS reported fourth quarter and full-year earnings.
Fabrice Coffrini | Afp | Getty Images
UBS beat market expectations with its latest results on the back of lower expenses and higher interest rates. But the lender’s revenues declined because of weaker client activity.
The bank reported $1.7 billion of net income for the fourth quarter of last year, bringing its total annual profit to $7.6 billion in 2022. Analysts had expected UBS would achieve a net income of $1.3 billion in the fourth quarter and of $7.3 billion for the year, according to Refinitiv data.
Looking ahead, the Swiss lender said that revenues for the first quarter of 2023 are set “to be positively influenced” by higher client activity and interest rates, as well as by the easing of Covid-19 restrictions in Asia.
“We delivered good full-year and solid fourth-quarter results in a difficult macroeconomic and geopolitical environment,” CEO Ralph Hamers said in a statement.
Here are a couple of highlights from the latest release:
CET 1 capital ratio, a measure of bank solvency, stood at 14.2%, down from 14.4% in the previous quarter;
Revenues dropped to $8.029 billion from $8.705 billion a year ago;
Return on tangible equity, a measure of bank’s performance, rose to 13.2% at the end of the quarter, up from 10% a year ago.
Among the bank’s units, Global Wealth Management posted a fourth-quarter net interest income increase of 35% on the year, given higher deposit margins off the back of higher interest rates. Personal and Corporate Banking also recorded a 21% year-on-year hike in net interest income over the same period, as a result of higher interest rates and loan revenues.
But market uncertainty hit the investment banking and asset management arms of the business. The former saw a 24% yearly drop in revenues, whereas asset management revenues fell by 31% year-on-year due to the “negative market performance and foreign currency effects.”
“The rate environment is helping the business on one side, and that offsets some of the lower activity that we see on the investment side,” Hamers told CNBC’s Geoff Cutmore on Tuesday.
He added that, following the first half of last year, there was a shift in the markets that put pressure on the investment side of the bank.
“We saw a move from what we would call micro focus, which is equity focused, to macro focus, which is rates focused,” he said, noting that the Swiss bank was not able to benefit from that transition as much as some of its peers, given its smaller presence in the U.S.
‘Uncertain’ Outlook
UBS said it will be purchasing more shares this year.
“We remain committed to a progressive dividend and expect to repurchase more than $5 billion of shares in 2023,” Hamers said in a statement.
However, the Swiss bank is cautious about the economic outlook, citing central bank activity as a potential catalyst for market volatility.
“While inflation may have peaked in the second half of 2022, and an energy crisis in Europe seems likely to be averted, the outlook for economic growth, asset valuations and market volatility remains highly uncertain, and central bank tightening may have an impact on market liquidity,” the bank said in its latest results.
UBS shares are up by about 15% over the last 12 months.
The IMF has revised its global economic outlook upwards.
Norberto Duarte | Afp | Getty Images
The International Monetary Fund on Monday revised upward its global growth projections for the year, but warned that higher interest rates and Russia’s invasion of Ukraine would likely still weigh on activity.
In its latest economic update, the IMF said the global economy will grow 2.9% this year — which represents a 0.2 percentage point improvement from its previous forecast in October. However, that number would still mean a fall from an expansion of 3.4% in 2022.
It also revised its projection for 2024 down to 3.1%.
“Growth will remain weak by historical standards, as the fight against inflation and Russia’s war in Ukraine weigh on activity,” Pierre-Olivier Gourinchas, director of the research department at the IMF, said in a blog post.
The outlook turned more positive on the global economy due to better-than-expected domestic factors in several countries, such as the United States.
“Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe,” Gourinchas said, also noting that inflationary pressures have come down.
In addition, China announced the reopening of its economy after strict Covid lockdowns, which is expected to contribute to higher global growth. A weaker U.S. dollar has also brightened the prospects for emerging market countries that hold debt in foreign currency.
However, the picture isn’t totally positive. IMF Managing Director Kristalina Georgieva warned earlier this month that the economy was not as bad as some feared “but less bad doesn’t quite yet mean good.”
“We have to be cautious,” Georgieva said during a CNBC-moderated panel at the World Economic Forum in Davos, Switzerland.
The IMF on Monday warned of several factors that could deteriorate the outlook in the coming months. These included the fact that China’s Covid reopening could stall; inflation could remain high; Russia’s protracted invasion of Ukraine could shake energy and food costs even further; and markets could turn sour on worse-than-expected inflation prints.
IMF calculations say that about 84% of nations will face lower headline inflation this year compared to 2022, but they still forecast an annual average rate of 6.6% in 2023 and of 4.3% the following year.
As such, the Washington, D.C.-based institution said one of the main policy priorities is that central banks keep addressing the surge in consumer prices.
“Clear central bank communication and appropriate reactions to shifts in the data will help keep inflation expectations anchored and lessen wage and price pressures,” the IMF said in its latest report.
“Central banks’ balance sheets will need to be unwound carefully, amid market liquidity risks,” it added.
Paramount Global is further joining its streaming and cable TV business by combining its Showtime TV network and streaming service, Paramount+.
The company said Monday it plans to integrate Showtime’s streaming service fully into Paramount+, its marquee standalone streaming platform and response to the streaming wars.
But the union doesn’t stop there. As part of this integration, the premium cable TV network, known for shows like “Yellowjackets,” “Billions,” and “Dexter,” will be rebranded as Paramount+ with Showtime. The TV channel will also feature content from Paramount+, which has produced original series that spun off from the popular “Yellowstone” and “Criminal Minds” franchises. People can subscribe to Showtime for an extra fee on their pay-TV bundle,
Pricing for the combined streaming platform and other details will be announced in coming weeks, a Paramount spokesperson said Monday. Paramount+ starts at $4.99 a month, and Showtime’s streaming service is $10.99 a month. A bundled offering of the two already exists, beginning at $11.99 a month.
In November, Paramount reported that Paramount+ had 46 million customers. The company reports fourth quarter earnings Feb. 16.
The move comes as media companies work to make their streaming businesses profitable. Competition is at an all-time high following a pandemic-fueled streaming boom, slowing the addition of subscribers. Stock prices have suffered, in part, due to this, and these companies have been experimenting to grow their streaming businesses.
Last year Netflix introduced a cheaper, ad-supported tier. While Disney was early to bundling its streaming options – Disney+, Hulu and ESPN+ – it also debuted an ad-supported option and increased prices last year. Warner Bros. Discovery has been pulling back on content for its HBO Max, as it looks to cut costs, and also plans to debut a combined HBO Max and Discovery streaming app in the spring.
“This new combined offering demonstrates how we can leverage our entire collection of content to drive deeper connections with consumers and greater value for our distribution partners,” Paramount CEO Bob Bakish said in a memo to employees Monday.
During the fall, Paramount restructured its Showtime business. Executive David Nevins, who’d been running the network since 2016, departed and Chris McCarthy and Tom Ryan took over. McCarthy also runs Paramount’s cable-TV networks like MTV and Comedy Central. Ryan runs Paramount’s streaming segment.
While McCarthy and Ryan will remain in place, Bakish acknowledged that the integration “brings uncertainty to the teams” that work on each brand.
–CNBC’s Stephen Desaulniers contributed to this report.
The world’s biggest iPhone factory, located in China and run by Foxconn, faced disruptions in 2022. That is likely to filter through to Apple’s December quarter results. Meanwhile, analysts questioned demand for the iPhone 14 from Chinese consumers.
Nic Coury | Bloomberg | Getty Images
Apple will slow the pace of iPad releases for the rest of 2023, with an eye towards releasing a foldable iPad by 2024, noted Apple analyst Ming-Chi Kuo wrote on Monday.
“I’m positive about the foldable iPad in 2024 and expect this new model will boost shipments and improve the product mix,” Kuo wrote on Twitter. Kuo’s prediction aligns with a report from analyst firm CCS Insight, which wrote in Oct. 2022 that the Cupertino company would launch a foldable iPad before a foldable iPhone.
Several other manufacturers, including Lenovo and Samsung, make laptops or phones with full-size foldable displays. Apple has so far shied away from taking advantage of OLED technology in the same way. Rival Samsung has released multiple foldable phones but Apple has maintained the rectangular shape of the iPhone since its launch.
“Right now it doesn’t make sense for Apple to make a foldable iPhone. We think they will shun that trend and probably dip a toe in the water with a foldable iPad,” Ben Wood, chief of research at CCS Insight told CNBC in a 2022 interview.
In 2021, Kuo had predicted the release of a foldable iPhone in 2024, the same year he now predicts a foldable iPad to launch instead.
Kuo expects that a foldable iPad to feature a carbon fiber kickstand sourced from Chinese manufacturer Anjie Technology.
A representative for Apple did not immediately respond to a request for comment.
Kuo is one of the most prolific and respected Apple analysts. The analyst has predicted multiple details on the iPhone SE 3, the 2021 MacBook Pro, and on numerous iPad releases which have been substantiated at launch. Most recently, Kuo predicted a delayed launch for Apple’s highly-anticipated mixed reality headset.
Erdogan suggests Turkey could accept Finland into NATO — without Sweden
Turkish President Tayyip Erdogan declaring a three-month state of emergency and vowing to hunt down the “terrorist” group behind the 2016 coup attempt during a news conference following the National Security Council and cabinet meetings at the Presidential Palace in Ankara, Turkey, July 20, 2016. Following the coup, a newsroom crackdown ensued and a series of trials against journalists were launched.
Adem Altan | Afp | Getty Images
Turkish President Recep Tayyip Erdogan handed another blow to Sweden’s NATO bid, suggesting that his government could approve Finland’s NATO membership application without its Nordic neighbor.
Finland and Sweden both formally applied to join the 73-year-old defense alliance in May of last year, reversing their long-held policy of nonalignment in the wake of Russia’s full-scale invasion of Ukraine. The two have vowed to take their steps forward in tandem.
Erdogan, angry at Sweden’s government for a number of reasons, is poised to make or break both countries’ NATO accession plans, as each state’s application requires unanimous approval from all 30 current members. Hungary is the only country besides Turkey that is yet to approve the Nordic countries’ bids, which the rest of the member states want to fast-track.
“We may deliver Finland a different message [on their application], and Sweden would be shocked when they see our message. But Finland should not make the same mistake Sweden did,” Erdogan said during a speech on Sunday.
Read the whole story here
Russia will soon issue new history text books to students
A schoolgirl looks at a computer screen showing a map of Russia including annexed Ukrainian territories in Moscow on October 12, 2022.
Alexander Nemenov | Afp | Getty Images
Russia will roll out a new history textbook to high schools in the coming months, with students to be taught about the “special military operation,” as Russia calls its invasion of Ukraine, according to a report by news agency Interfax
The history textbooks will cover Russia’s version of events in Ukraine, including “the entry into Russia” of the Donetsk and Luhansk “People’s Republics” as well as Zaporizhzhia and Kherson, four regions that Russia claimed to have annexed last September following spurious referendums.
Russian Minister of Education Sergei Kravtsov said Monday that the new textbooks are expected to be ready in March and could appear in schools from the new academic year, Interfax said, in a report translated by Google.
The history books are being created at break-neck speed as Russia looks to promote its version of events in Ukraine to students. In December, Education Minister Kravtsov said a working group would be formed in order to create “unified textbooks on the history of Russia” and world history.
Ukraine and its Western allies do not recognize Russia’s illegal annexation of Ukrainian territory and see Russia’s attempts to disseminate Russian culture and language in those areas and to “Russify” them as another abuse of Ukraine’s sovereignty.
— Holly Ellyatt
Kremlin dismisses Boris Johnson’s missile strike accusation
The Kremlin dismissed Boris Johnson’s claim that Russian President Vladimir Putin threatened him with a missile strike.
The former U.K. prime minister claimed in a BBC documentary that he’d had a phone call with Putin before Russia’s invasion of Ukraine. Johnson said in the show that Putin “threatened me at one point, and he said, ‘Boris, I don’t want to hurt you but, with a missile, it would only take a minute’ or something like that.”
“But I think from the very relaxed tone that he was taking, the sort of air of detachment that he seemed to have, he was just playing along with my attempts to get him to negotiate,” Johnson said.
Kremlin Spokesman Dmitry Peskov described the claim as a “lie” Monday, telling reporters “What Mr. Johnson said is not true. More precisely, it is a lie,” he said according to an NBC News translation of the comments.
“This may either be a deliberate lie by Mr. Johnson, and then the question arises as to the reasons for his presentation of such a version of events. Or he actually did not understand what President Putin was talking about with him. And in this case it becomes a little worrying for the interlocutors of our President,” Peskov said.
“But once again I officially repeat: this is a lie, there were no threats with missiles.”
— Holly Ellyatt
Ukraine’s prime minister says Kyiv wants to join the European Union within two years
Ukraine has made no secret of its wish to join the EU and has already applied to join the bloc.
Nurphoto | Nurphoto | Getty Images
Ukrainian Prime Minister Denys Shmyhal said Kyiv wants to join the European Union within two years, setting a very ambitious timetable for joining the bloc.
Speaking to Politico, Shmyhal said “we have a very ambitious plan to join the European Union within the next two years … So we expect that this year, in 2023, we can already have this pre-entry stage of negotiations,” he said.
Ukraine has made no secret of its wish to join the EU and has already applied to join the bloc. It is not the only candidate country. Others, such as North Macedonia and Montenegro have waited over ten years for any progress in their own respective membership applications. French President Emmanuel Macron has said EU membership for Ukraine is likely to be a process that will take “decades.”
EU commissioners are heading to Kyiv on Friday to meet Ukrainian President Volodymyr Zelenskyy. Politco noted that their task will likely be “managing expectations” regarding such a tight timetable for entry into the EU.
— Holly Ellyatt
Russia warns United States: the end of nuclear arms control may be nigh
Russia told the United States on Monday that the last remaining pillar of bilateral nuclear arms control could expire in 2026 without a replacement due to what it said were U.S. efforts to inflict “strategic defeat” on Moscow in Ukraine.
Both Russia and the United States still have vast arsenals of nuclear weapons which are currently partially limited by the 2011 New START Treaty, which in 2021 was extended until 2026.
What comes after Feb. 4, 2026, however, is unclear, though Washington has indicated it wants to reach a follow-on agreement with Russia.
Asked if Moscow could envisage there being no nuclear arms control treaty after 2026, Deputy Foreign Minister Sergei Ryabkov told the RIA state new agency: “This is quite a possible scenario.”
Russian Deputy Foreign Minister Sergei Ryabkov says the risk of direct clashes between Moscow and Washington have increased after the U.S. decision to supply more advanced rocket systems to Ukraine.
Fabrice Coffrini | Afp | Getty Images
Ryabkov, Russia’s top arms control diplomat, said the United States had in recent years ignored Russia’s interests and dismantled most of the architecture of arms control.
“New START may well fall victim to this,” Ryabkov told RIA. “We are ready for such a scenario.”
His remarks constitute a warning to Washington that its continued military support for Ukraine could scupper the final major post-Cold War bilateral arms control treaty with Russia.
The United States has supplied more than $27 billion in security assistance to Ukraine since Russia invaded the country on Feb. 24, including over 1,600 Stinger anti-aircraft rocket systems, 8,500 Javelin anti-tank missile systems and over 1 million 155mm artillery rounds.
“The entire situation in the sphere of security, including arms control, has been held hostage by the U.S. line of inflicting strategic defeat on Russia,” Ryabkov said.
“We will resist this in the strongest possible way using all the methods and means at our disposal.”
— Reuters
Boris Johnson claims Putin threatened him with a missile attack
Russia welcomed Boris Johnson’s departure from office.
Justin Tallis | Afp | Getty Images
Former British Prime Minister Boris Johnson said Russian President Vladimir Putin seemed to threaten him with a missile strike in what he described as an “extraordinary” phone call before Russia’s invasion of Ukraine.
In an excerpt of a BBC documentary called “Putin vs the West,” Johnson says he spoke to Putin in February 2022, shortly before Russia’s invasion of Ukraine. During that call, he said he told Putin that war would be an “utter catastrophe” and would entail sanctions on Moscow and likely more NATO troops on Russia’s borders.
Johnson said that after making those points during the call, in which he said Putin had been “very familiar,” Putin appeared to threaten him.
“He threatened me at one point, and he said, ‘Boris, I don’t want to hurt you but, with a missile, it would only take a minute’ or something like that,” Johnson said in the documentary, the BBC reported.
“But I think from the very relaxed tone that he was taking, the sort of air of detachment that he seemed to have, he was just playing along with my attempts to get him to negotiate.”
It’s impossible to ascertain whether Putin was serious in his comment but relations between the U.K. and Russia were already strained before the war, particularly after a Russian nerve agent attack carried out in the U.K. in 2018. The U.K.’s staunch support of Kyiv has heightened tensions.
— Holly Ellyatt
Russia keeping options open over further mobilization, UK says
Russian authorities are likely keeping open the option of another round of call-ups under its “partial mobilisation” program, according to Britain’s Ministry of Defense.
In an intelligence update on Twitter, the ministry cited media reports last week suggesting Russian border guards were preventing dual passport-holding Kyrgyz migrant workers from leaving Russia, telling the men that their names were on mobilization lists.
Russian citizens drafted during the partial mobilization being dispatched to combat coordination areas after a military call-up for the Russia-Ukraine war in Moscow, Russia, on Oct. 10, 2022.
Anadolu Agency | Anadolu Agency | Getty Images
Separately, on Jan. 23, the ministry noted that Kremlin spokesperson Dmitry Peskov said that the decree on the partial mobilization, announced by Russian President Vladimir Putin last September, “continues to remain in force, claiming the decree remained necessary for supporting the work of the Armed Forces.”
“Observers had questioned why the measure had not been formally rescinded,” the British ministry stated, adding that “the Russian leadership highly likely continues to search for ways to meet the high number of personnel required to resource any future major offensive in Ukraine, while minimising domestic dissent.”
There has been mounting speculation that Putin could announce another mobilization wave, given the Russian defense ministry’s recent announcement that it plans to beef up its combat personnel to 1.5 million people, from a current reported level of around 1.1 million.
— Holly Ellyatt
Zelenksyy presses Western allies for faster weapons supplies
“The situation is very tough. Bakhmut, Vuhledar and other areas in the Donetsk region are under constant Russian attacks. There are constant attempts to break through our defense,” Zelenskyy said in his nightly video address Sunday.
Yan Dobronosov | Getty Images News | Getty Images
Ukraine’s President Volodymyr Zelenskyy pressed allies for faster weapons supplies as fighting in eastern Ukraine, particularly in the Donetsk region, continues to be intense.
“The situation is very tough. Bakhmut, Vuhledar and other areas in the Donetsk region are under constant Russian attacks. There are constant attempts to break through our defense,” Zelenskyy said in his nightly video address Sunday.
“We are doing everything to ensure that our pressure outweighs the occupiers’ assault capabilities. And it is very important to maintain the dynamics of defense support from our partners,” he said, adding that “the speed of supply has been and will be one of the key factors in this war.”
“Russia hopes to drag out the war, to exhaust our forces. So we have to make time our weapon. We must speed up the events, speed up the supply and opening of new necessary weaponry options for Ukraine,” he said.
Ukraine’s allies Germany and the U.S. agreed last week to send Kyiv dozens of tanks, with other allies in Europe pledging to send their own German-made tanks as well, and the U.K. sending British tanks to Ukraine. Ukraine’s ambassador to France, Vadym Omelchenko, said on Friday that 321 Western tanks are set to be delivered to Ukraine.
— Holly Ellyatt
Germany’s Scholz adamant Berlin will not send fighter jets to Ukraine
German Chancellor Olaf Scholz addresses the lower house of parliament Bundestag in Berlin on Jan. 25, 2023.
Fabrizio Bensch | Reuters
Germany’s Chancellor Olaf Scholz insisted at the weekend that fighter jets would not be provided to Ukraine, telling a German newspaper that there should not be a “bidding war” over weaponry and that Germany “will not allow a war between Russia and NATO.”
Scholz reiterated Germany’s objections to sending fighter jets to Ukraine, telling the Tagesspiegel newspaper Sunday that there is no question of doing so.
“The question of combat aircraft does not arise at all,” Scholz said, according to Politico’s translation of the original story.
“I can only advise against entering into a constant competition to outbid each other when it comes to weapons systems,” he added.
Germany last week agreed to send 14 Leopard 2 tanks to Ukraine after months of resisting pressure to do so. Berlin also said it would allow other allies to send their own German-made tanks to Kyiv. The U.S. also agreed to send a number of M1 Abrams tanks.
A Belgian F-16 jet fighter takes part in the NATO Air Nuclear drill “Steadfast Noon” at the Kleine-Brogel air base in Belgium on October 18, 2022.
Kenzo Tribouillard | Afp | Getty Images
Ukraine expressed gratitude for the decision to send tanks but immediately said it needed more firepower to counter Russia’s invasion, asking for fighter jets from its allies. One defense ministry advisor told CNBC he was sure Kyiv would receive F-16 fighter jets from its allies and that there should be no delay over the decision, as there was over tanks.
Over the weekend, another Ukrainian official said negotiations over the possible sending of attack aircraft to Ukraine were “ongoing.”
“Our partners understand how the war develops. They understand that attack aircraft are absolutely necessary to cover the manpower and armoured vehicles that they give us,” advisor to the head of the Office of the President Mykhailo Podolyak told the Freedom TV channel Saturday.
“In the same way, in order to drastically reduce the key tool of the Russian army – artillery, we need missiles. That’s why negotiations are already underway, negotiations are accelerating,” Podolyak said in comments translated by NBC News.
— Holly Ellyatt
Ukrainian tank crews arrive in UK to begin training on Challenger 2s
A Challenger 2 main battle tank on display for The Royal Tank Regiment Regimental Parade, on Sept. 24, 2022, in Bulford, England.
Stock futures traded lower on Monday morning as investors geared up for a week of key corporate earnings and a possible interest rate hike from the Federal Reserve.
Futures tied to the Dow Jones Industrial Average slipped 178 points, or about 0.52%. S&P 500 futures ticked down 0.76%, and Nasdaq 100 futures dropped by 1.1%.
Wall Street is coming off a winning week as the stock market’s January rally continued. The Nasdaq Composite gained 4.3% for the week, while the S&P 500 and Dow added 2.5% and 1.8%, respectively.
There are several tests this week for this 2023 rally. A busy stretch of corporate earnings season includes reports from McDonald’s and General Motors on Tuesday followed by tech giants Apple, Meta Platforms, Amazon and Alphabet later in the week.
The Federal Open Market Committee meets on Tuesday and Wednesday, when the Fed is expected to hike rates by one-quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will take rates in the fight against inflation.
“Inflation has shocked the Fed to the upside; they need to be cautious not to inadvertently lower rates too early. Don’t buy into this gobbledygook about a couple of rate cuts being priced into December. For now, the Fed is only around to help in the very unlikely event of a crash landing,” David Zervos, chief market strategist at Jefferies, said in a note to clients.
Renault and Nissan automobile logos are pictured during the Brussels Motor Show on January 9, 2020 in Brussels. (Photo by KENZO TRIBOUILLARD/AFP via Getty Images)
Kenzo Tribouillard | Afp | Getty Images
Automobile giants Renault and Nissan on Monday agreed to restructure their decades-long alliance, in a move that would see Renault’s shareholdings in Nissan reduced from around 43% to 15%.
The deal, which still pends board approvals, would equalize the companies’ cross-shareholdings, with the carmakers now able to “freely exercise the voting rights attached to their 15% direct shareholdings, with a 15% cap,” the companies said.
The new structure would also see Renault transfer 28.4% of Nissan shares into a French trust.
Voting rights in the trust would be “‘neutralized’ for most of the decisions, but the economic rights (dividends and shares’ sale proceeds) would still entirely benefit to Renault until such shares are sold,” according to the Monday announcement.
Renault would instruct the trustee to sell those shares if “commercially reasonable” and as part of a “coordinated and orderly process.”
The carmakers first signed their coalition in March 1999, expanding it to include junior partner Mitsubishi Motors in 2016. The Monday deal comes after months of intense discussions over the restructure of the Franco-Japanese alliance.
As part of the agreement, Nissan would also invest in Ampere, Renault’s electric vehicle arm, while the two companies will embark on “high-value-creation operational projects” in Latin America, India and Europe.
Renault announced in November that it had signed a non-binding framework agreement with China’s Geely to establish a new company producing hybrid powertrains and “highly efficient ICE [internal combustion engine] powertrains.”
The French giant has also entered into a long-term strategic cooperation with U.S. chipmaker Qualcomm.
Renault shares dropped 1.4% in early trade in Europe, while Nissan shares were down by around 0.7% during Asian trading hours overnight.
Visitors on Central Street of the Taipa Village in Macau, China, on Wednesday, Jan. 25, 2023. Tourism and spending are reviving in Macau as the Lunar New Year holiday spurred a jump in visitors after pandemic travel restrictions were eased between the territory and mainland China.
Bloomberg | Bloomberg | Getty Images
Stocks in the Asia-Pacific traded mixed on Monday as mainland Chinese markets jumped on resuming trade after a week-long New Year break.
Chinese onshore equities are headed for a bull market — the CSI 300, which tracks the largest mainland-listed stocks, have gained more than 20% from its recent lows seen at the end of October last year.
The Shenzhen Component rose more than 2%, leading gains in the wider region. The Shanghai Composite rose 1.36% in its first hour of trade. Hong Kong’s Hang Seng index traded 0.6% lower.
In Japan, the Nikkei 225 rose 0.12% while the Topix also gained 0.03%. South Korea’s Kospi fell 0.24% while the Kosdaq rose 0.28%.
The S&P/ASX 200 in Australia shed 0.12%. Investors also digested trade data from New Zealand.
Stocks on Wall Street ended the week last Friday higher, fueled by gains in Tesla shares and a better-than-expected GDP report on Thursday. All major averages posted a positive week and are on pace for a month of gains.
— CNBC’s Samantha Subin, Carmen Reinicke contributed to this report
People said the pandemic made them want to travel more responsibly in the future.
Now new data indicates they’re actually doing it.
According to a report published in January by the World Travel & Tourism Council and Trip.com Group:
Nearly 60% of travelers have chosen more sustainable travel options in the last couple of years.
Nearly 70% are actively seeking sustainable travel options.
But finding companies that are serious about sustainability isn’t easy, said James Thornton, CEO of tour company Intrepid Travel.
“You see hotels saying they’re sustainable, and then you’re using these little travel bottles for shampoos and shower gels,” he said.
It’s all just “greenwashing,” he said, referencing the term that describes companies’ efforts to appear more environmentally sound than they are.
For a company to say they’re “100% sustainable” or they’re “eco-conscious” … doesn’t mean anything.
James Thornton
CEO, Intrepid Travel
The term has risen in popularity alongside the increase in demand for sustainable products and services.
The result is a mix of those who are truly dedicated to the cause — and those who sprinkle eco-buzzwords and photographs of seedlings, forests and other “green” imagery in their marketing materials, with no real action to back up their claims.
Finding companies that are sustainable
Be wary of these tactics, said Thornton.
“For a company to say they’re ‘100% sustainable’ or they’re ‘eco-conscious’ … doesn’t mean anything,” he said. “I would urge travelers to be very cautious when they’re seeing these words, and to really dig in and look in a bit more detail.”
Consumer interest in sustainable travel has changed considerably in the past two decades, said Thornton. He said when he joined Intrepid travel 18 years ago, “people would look at us like we’re a bit crazy” when the company talked about sustainability.
Now, many companies are doing it, whether they are serious, or not.
Thornton said he believes the travel industry is currently divided into three categories. One third have “incredibly good intentions, and [are] working very actively on addressing the climate crisis … and they’re making good progress.”
Another third have “good intentions but [aren’t] actually taking action yet. And often … they’re not quite sure how to take action.”
The final third “is just utterly burying its head in the sand and hoping that this thing is going to go away, and the truth of the matter is — it isn’t.”
To identify companies in the first category, Thornton recommends travelers look for three critical things.
1. A history of sustainability
To ascertain whether a company may be jumping on the eco-bandwagon, examine its history, said Thornton.
He advises looking for “a long history of association with issues of sustainability, or is this something that only just appeared?”
Intrepid Travel CEO James Thornton.
Source: Intrepid Travel
If the messaging is new for the company, that’s not a deal breaker, he said.
“But that would then encourage the customer to probably want to look in a bit more detail to see if what a company actually does has rigor behind it,” he said, “Or whether it’s something that’s just being done for marketing sake — and therefore greenwashing.”
2. Check for measurements
Next, travelers should see if the company measures its greenhouse gas emissions, said Thornton.
“The honest truth is that every travel company is ultimately contributing towards the climate crisis,” he said. “So the best thing any travel company can start to do is measure the greenhouse gas emissions it creates.”
To do this, Thornton advised travelers to check the Glasgow Declaration on Climate Action in Tourism.
“The Glasgow Declaration website lists the organizations that have agreed to actively reduce their emissions … and actually have a climate plan that shows how they’re doing that,” he said.
Signatories must publish their climate plan, which is monitored by the United Nations World Tourism Organization, he said.
“Consumers can use this as a way to check if the company they’re booking with is serious about decarbonization,” he said, adding that more than 700 organizations are on the list.
Thornton said travelers can also check the Science Based Targets Initiative, which is a partnership between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature.
Its website has a dashboard that details emission-reducing commitments made by more than 4,500 companies worldwide, including American Express Global Business Travel, the United Kingdom’s Reed & Mackay Travel and Australia’s Flight Centre Travel Group.
3. Look for accreditations
Finally, travelers can check for independent accreditations, said Thornton.
One of the most rigorous and impressive is the B Corp Certification, he said.
“It took Intrepid three years to become a B Corp,” he said.
Other companies with B Corp status include Seventh Generation, Ben & Jerry’s, Aesop —and Patagonia, which Thornton called “arguably the most famous B Corp in the world.”
To get it, companies are reviewed by the non-profit B Lab and a certification lasts for three years, said Thornton.
Kristen Graff, director of sales and marketing at Indonesia’s Bawah Reserve resort, agreed that B Corp is the “most widely respected” certification.
“The other one is the Global Sustainable Tourism Council,” she said. “These actually do an audit and are legit.”
Bawah Reserve, a resort in Indonesia’s Anambas Islands, is applying for B Corp certification. The resort uses solar power and desalinates drinking water on the island.
Source: Bawah Reserve
Other travel eco-certifications are less exacting, said Graff.
“Many of them are just a racket to make money,” she said.
Bawah Reserve started the process to become B Corp certified in November of 2021, said Graff. “We anticipate it will take about a year to complete,” she said.
B Corp uses a sliding scale for its certifications fees, which start at $1,000 for companies with less than $1 million in annual revenue.
“The cost is fairly minimal,” said Thornton, especially “if you’re serious about sustainability.”
He said Intrepid pays about $25,000 a year for the certification.
Other advice
Thornton also advised travelers to ask questions like:
Are you using renewable energy sources?
Is the food locally sourced?
Are employees from local communities?
Who owns the hotel?
He saidthere are places that are perceived to be sustainable but that are “actually owned by a casino.”
Lastly, Thornton recommends travelers look to online reviews.
“Often a little bit of research on Google … can give you a really good indication around whether a hotel or a travel experience is doing what it says it’s doing — or whether they’re actually greenwashing.”
Customers wearing protective masks looks at the interior of a vehicle for sale at a Ford Motor Co. dealership in Colma, California, Feb. 1, 2021.
David Paul Morris | Bloomberg | Getty Images
DETROIT — As automakers chase Tesla-like profits on new electric vehicles, they face an existential question: how best to bring franchised auto dealers along with them as they transition to EVs.
Some, such as General Motors, are asking luxury dealers to go all-in on EVs or get out of the business. Others like Ford Motor are offering dealers different “EV-certification” levels, while most other carmakers, or OEMs, know they need to change the sales process to fit the evolving industry, but are still try to figure out how to do it.
“I think we’re all building this airplane as we fly,” Michael Alford, president of the National Auto Dealers Association, a trade association that represents more than 16,000 U.S. new franchised dealers, told CNBC. “Depending on the OEM, the level of engagement or the intensity of the engagement varies.”
Automakers and franchised dealers have a complex relationship that is backed, in many states, by laws that make it difficult, if not illegal, to bypass franchised dealers and sell new vehicles directly to consumers. (Tesla and other newer EV startups have worked around such regulations to cut costs.)
Both automakers and franchised dealers want to maximize profits, but they’re separate businesses that heavily rely on one another to succeed. Dealers rely on automakers for product to fill and move off lots, and the carmakers in turn rely on dealers to sell and service vehicles as well as serve as concierges for customers.
How that historical relationship fits into an all-electric future is expected to be at the forefront of discussions between automakers and dealers at the National Auto Dealers Association Show occurring through Sunday in Dallas. The event attracts thousands of franchise dealers annually to hear from their respective automotive brands.
For dealers — from mom-and-pop shops to large publicly traded chains — EVs will mean new employee training, infrastructure and substantial investments in their stores to be able to service, sell and charge the vehicles. Depending on the size of the dealer, those upgrades could easily cost hundreds of thousands, or millions, of dollars. Of course, they want to make sure their investments will pay off.
“The tone and tenor of this subject matter has evolved, and I think it’s very, very clear this year that our legacy OEMs absolutely realize that we are essential going forward,” said Alford, who runs Chevrolet and Cadillac dealerships in North Carolina.
Competing with Tesla
As more automakers introduce EVs, they’re rethinking the sales process, including selling new vehicles largely, if not fully, online. Tesla was among the first automakers to embrace online sales for a large portion of its business, though it still has physical dealerships, information sites and service shops.
A greater shift online may limit the role of dealers to strictly processing, maintenance and as delivery centers going forward and eliminate the need for large lots of cars that they then sell to consumers.
“By and large, the franchise system remains in place even for EVs by traditional automakers, although they all seem to be looking at ways to tweak it to be more competitive, so they say, with the Teslas of the world,” said Michelle Krebs, Cox Automotive executive analyst.
Automakers believe doing so will provide consumers a more streamlined and cohesive sales process, but they also consider the dealers to be their partners and to offer “strategic advantages” when it comes to other sales and maintenance issues.
A Tesla dealership in Colma, California, on Wednesday, Jan. 26, 2022.
David Paul Morris | Bloomberg | Getty Images
Honda Motor has said it plans to move more sales online, including 100% online sales for its luxury Acura brand for EVs. Mamadou Diallo, American Honda vice president of sales, said the plan is to facilitate the ordering process online, but with the vehicle being picked up or delivered by dealers. Those procedures are still being worked out, though, he said.
“We want to proceed with ensuring that we provide convenience with what customers are looking for, with no intention of bypassing our dealer body,” Mamadou said Tuesday during a media call.
Jay Vijayan, who assisted in building out Tesla’s digital and IT systems, doesn’t believe selling EVs exclusively online will pan out. He said a mix of sales points is best, which is why Tesla and newer EV startups are selling online as well as opening new showrooms and service centers.
“Apple still opens new stores, right? And every company you think is going to go direct is also opening new stores in the automotive space,” said Vijayan, founder and CEO of Tekion, a cloud-based dealer service provider.
Wall Street analysts have largely viewed direct-to-consumer sales as a means to optimize profit. However, there have been growing pains for Tesla when it comes to servicing its vehicles.
Ford CEO Jim Farley has said he wants the automaker’s dealers to cut selling and distribution costs by $2,000 per vehicle to be competitive with Tesla’s direct-to-consumer model.
Automaker approaches
Ford is among the automakers receiving the most pushback from dealers for its EV push, which includes EV-certification tiers that could cost more than $1 million per store, depending on the size of the dealership.
The Detroit automaker is facing legal challenges to the certification program from dealers who argue that the plan violates franchise laws. A group of 27 dealerships in Illinois filed a protest with the state’s motor vehicle review board, and four dealers in New York filed suit against the automaker last month, according to Automotive News.
Ford dealer Marc McEver said he signed on for the highest EV-certification tier at his dealership near Kansas City, Kansas, but he worries about the cost and timing of the program.
“I think we’re all concerned that what they’re having us put in now, by the time we really get some vehicles, will be outdated and need to be upgraded or replaced,” McEver, who also owns a Lincoln dealership, said.
Aside from the investments, dealers who opt into selling Ford EVs will need to abide by five standards to stay within good standing: clear and nonnegotiable pricing; charging investment; employee training; and improved vehicle purchasing and ownership experience for customer, both digitally and in person.
Ford on Saturday plans to outline some changes to its EV-certification tiers, according to two people familiar with the plans. The changes, as first reported by Automotive News, would narrow the differences between the program’s two tiers. The bottom tier comes with lower capital investment but also a smaller allocation of EVs from Ford.
Ford, though, unlike archrival General Motors, is allowing dealers to opt out of selling EVs and continue to sell the company’s gas-powered cars.
GM has offered buyouts to its Buick and Cadillac dealers that don’t want to shell out to sell EVs. About 320 of Cadillac’s 880 retailers took buyouts. Buick’s buyouts are ongoing, according to a spokesman.
Toyota Motor, for its part, has no plans to overhaul its franchised dealership network as it invests in electrified vehicles, CEO Akio Toyoda told dealers to resounding applause in September.
“I know you are anxious about the future. I know you are worried about how this business will change. While I can’t predict the future, I can promise you this: You, me, us, this business, this franchised model is not going anywhere. It’s staying just as it is,” said Toyoda, who will step down as CEO to become chairman in April.