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Business

GameStop, Koss Corp, Wayfair & more

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Take a look at some of the biggest movers in the premarket:

GameStop (GME) – GameStop remains on watch after another Reddit-fueled surge Wednesday in the video game retailer’s shares, as well as other so-called “Reddit stocks” like BlackBerry (BB), AMC Entertainment (AMC) and Koss Corp. (KOSS). GameStop surged 55.8% premarket, while AMC rose 12.9%, BlackBerry gained 4.3% and Koss soared 81.3%.

Best Buy (BBY) – The electronics retailer’s shares fell 5.3% in premarket trading after its revenue and comparable-store sales missed Wall Street forecasts for the holiday quarter as pandemic fueled demand for electronics lessened. Best Buy’s quarterly earnings of $3.48 per share beat estimates by 3 cents a share, however.

Moderna (MRNA) – The drugmaker’s shares rose 2.9% in premarket action as its quarterly revenue vastly exceeded estimates and it forecast $18.4 billion in Covid-19 vaccine sales this year. Moderna did, however, report a quarterly loss of 69 cents per share, wider than the 35 cents a share loss that analysts were anticipating.

Wayfair (W) – The furniture and home goods seller earned $1.24 per share for its latest quarter, above the consensus estimate of 86 cents a share. Revenue was slightly below Wall Street forecasts, as were the number of orders and the shares fell 9% premarket.

Norwegian Cruise Line (NCLH) – The cruise line operator’s shares rose 1.9% in the premarket after quarterly revenue came in well above estimates, despite the Covid-19 related shutdown of cruises. Its loss of $2.33 per share for its latest quarter was slightly wider than the consensus estimate of a $2.17 per share loss.

Anheuser-Busch InBev (BUD) – Anheuser-Busch reported better-than-expected profit and revenue for the fourth quarter. The company also forecast higher earnings for 2021, however the beer brewer said its profit margins would be hurt by higher commodity costs. Its shares fell 5.3% in premarket trading.

ViacomCBS (VIAC) – ViacomCBS came in 2 cents a share ahead of estimates, with quarterly profit of $1.04 per share. Revenue essentially was in line with Wall Street forecasts. The company also said it had 30 million streaming subscribers, ahead of its planned March 4 launch of Paramount+ service that will replace the current CBS All Access service. Its shares dropped 2.8% in premarket action.

Teladoc Health (TDOC) – Teladoc dropped 6.5% in premarket trading after it reported a loss of 27 cents per share for its latest quarter, 3 cents a share wider than Wall Street had expected. The provider of video medical visits’ revenue came in above estimates.

Nvidia (NVDA) – Nvidia reported quarterly earnings of $3.10 per share, compared to a $2.81 a share consensus estimate. The company best known for its gaming chips saw revenue beat estimates as well. Nvidia also predicted strong revenue for the current quarter, but the shares were down 2.6% in premarket action.

Fisker (FSR) – Fisker struck a deal with contract manufacturer Foxconn Technology to assemble cars for the electric vehicle startup. The agreement calls for the companies to jointly produce more than 250,000 vehicles annually. Shares fell 1% premarket.

Pfizer (PFE) – The Covid-19 vaccine developed by Pfizer and BioNTech (BNTX) works equally well across all age groups, according to an Israeli study. It provided 94% protection against developing coronavirus symptoms a week after the second dose of the vaccine, and 92% effective in preventing severe disease.

Verizon (VZ) – Verizon was the top bidder in a government auction of 5G airwaves, spending $45.5 billion, while AT&T (T) bid $23.4 billion and T-Mobile US (TMUS) bid $9.3 billion.

Pure Storage (PSTG) – Pure Storage came in 4 cents a share ahead of estimates, with quarterly profit of 13 cents per share. The provider of business memory storage systems also saw revenue beat Wall Street forecasts. Pure Storage gave a mixed forecast, but it was the first time it gave any forward guidance since the pandemic began. Shares gained 2.5% in the premarket.

L Brands (LB) – L Brands earned $3.30 per share for its latest quarter, 12 cents a share above estimates. The Victoria’s Secret parent’s revenue came in short of forecasts. L Brands, which also owns the Bath & Body Works chain, gave strong current-quarter earnings guidance. L Brands was up 2.7% in the premarket.

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World

A woman’s housework is worth $128 a month

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Clothing hangs from laundry lines as a woman walks past residential buildings in Wuhan, China, on June 14, 2017.

Qilai Shen | Bloomberg | Getty Images

BEIJING — A Chinese court ruled in a divorce case that a wife should get about 50,000 Chinese yuan ($7,700) from her husband in compensation for five years of housework.

The ruling sparked an online debate this week about whether that was a fair price.

That’s about $128 a month, or a little more than $1,500 a year. In Chinese currency terms, the payout is about 10,000 yuan a year.

China has said its poorest earned an average of 9,808 yuan per person a year in 2019. That figure is up from 3,416 yuan in 2015.

In this case, brought up in Beijing’s southwestern Fangshan district, the wife’s household work counted toward intangible property value, Judge Feng Miao told state media, according to a report Monday.

It was not immediately clear when the court ruling was made. But it was the first such decision that referenced new provisions in China’s civil code that took effect in January.

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World

US China strategy paper Longer Telegram stirs little debate in Beijing

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Flags of U.S. and China are displayed at American International Chamber of Commerce (AICC)’s booth during China International Fair for Trade in Services in Beijing, China, May 28, 2019.

Jason Lee | Reuters

BEIJING — A recent U.S. strategy paper on China that’s widely read in Washington, D.C., has drawn only a passing response in Beijing where limited public discussion has focused on one point: The author got China wrong.

“The Longer Telegram” released in late January proposed how the new U.S. administration should deal with a rising China by laying out a detailed critique of the Communist Party government under President Xi Jinping.

An effective U.S. approach on China requires the “same disciplined approach it applied to the defeat of the Soviet Union,” the paper said. “US strategy must remain laser focused on Xi, his inner circle, and the Chinese political context in which they rule.”

The anonymous author is a “former senior U.S. government official,” according to the D.C.-based think tank Atlantic Council that published the lengthy paper.

The piece attempts to echo a historic document that shaped Washington’s policy on the Soviet Union — named the “The Long Telegram,” it was sent from Moscow in February 1946 at the dawn of the Cold War.

So far in Beijing, major state media have not discussed the paper much, except for the vociferous state-backed tabloid Global Times, and even then, almost entirely in English. “‘Longer Telegram’ a late-stage hegemonic farce,” read the title of one op-ed.

On the official news website of China’s People’s Liberation Army, an article in Chinese portrayed the strategy piece as holding an outdated mentality, and contrasted its view of the country with a recent state media report about a Chinese woman’s ability to rise from poverty.

US strategy must remain laser focused on Xi, his inner circle, and the Chinese political context in which they rule

anonymous

The Longer Telegram

China’s foreign ministry — in response to a question from a Global Times reporter — criticized “The Longer Telegram” for its call to contain China.

The ministry said, according to an official translation, that such comments against the ruling Communist Party were “a collection of rumors and conspiracy theories” and attempts to drive U.S.-China relations toward conflict would result in “total failure.”

The sparse state-level comments come as tensions brew between the U.S. and China, the world’s two largest economies and run by vastly different government systems.

“The Longer Telegram” generated much controversy in the U.S. foreign policy world, with critics saying the paper mischaracterizes China and puts too much emphasis on the role of Xi. But many agree with the paper’s call for a more thought-out U.S. policy on China.

That growing cohesion around a tougher U.S. stance on China is a source of concern in Beijing.

“The Longer Telegram” doesn’t represent China’s reality and isn’t a good starting point for dialogue, said Shen Yamei, deputy director and associate research fellow at state-backed think tank China Institute of International Studies’ U.S. department.

According to Shen, the mistake the paper makes is that it isn’t applicable in this situation, since China didn’t say it wanted to replace the U.S. She added that it’s the U.S. that cares about whether it will lose its central position in the world.

Critics say China’s state-dominated system benefited from being allowed to join the World Trade Organization in 2001 without rapidly incorporating the sort of free-market and rules-based system that countries like the U.S. have advocated.

A history of the long telegram

To counter these developments, “The Longer Telegram” says the U.S. should set clear red lines and points of national security for Beijing that, if crossed, would induce a firm U.S. response.

Some of these red lines include a Chinese military attack or economic blockade on Taiwan, according to the report, which also said the U.S. should push back more firmly on any Chinese threats to U.S. global communications systems.

The author of the original “Long Telegram” in 1946 was American diplomat George Kennan, who responded from Moscow to a U.S. State Department query on Soviet foreign policy. Kennan published a related article the next year in the Foreign Affairs magazine under the pseudonym “X” and in 1952 began a brief term as U.S. ambassador to Moscow.

In his paper, Kennan held that the Russians were set on expanding the Soviet system worldwide and against coexistence with the West. He believed that rather than appeasement, the U.S. should use pressure to achieve cooperation with the Soviet government, or potentially even its internal collapse.

For more than 70 years — including the Soviet Union’s disintegration in 1991 — the U.S. led a so-called liberal world order in which international institutions set rules for a global system.

That’s begun to shift in the last decade or so, with China’s growing economic and technological clout, alongside former U.S. President Donald Trump’s single-handed approach to foreign policy.

The online response

It’s not yet clear what action President Joe Biden will take, but he is sticking to a tough stance on China, albeit with a calmer tone than the previous administration.

“The challenges with Russia may be different than ones with China, but they’re just as real,” Biden told European allies in a speech last week.

Biden held his first phone call as president with Xi earlier this month. The U.S. president and first lady also issued a video greeting for the Lunar New Year, which was shared widely on Chinese social media.

Scattered online commentary about “The Longer Telegram” have remained dismissive.

In a roughly 30-minute video from Feb. 5 that has more than 900,000 views, Fudan University professor Shen Yi dismissed as a joke the paper’s attempt to replicate Kennan’s efforts.

An online article from Feb. 7 by Zhongnan University of Economics and Law professor Qiao Xinsheng said in an online article the strategy paper fails to accurately analyze the Soviet Union’s own difficulties and that the U.S. should not expect China to “disintegrate.”

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US

China’s foreign minister calls for U.S. to remove tariffs sanctions

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Chinese Foreign Minister Wang Yi speaks at a news conference after restoring diplomatic ties with Kiribati on the sidelines of the United Nations General Assembly in New York, U.S. September 27, 2019.

Mark Kauzlarich | Reuters

BEIJING — China’s Foreign Minister Wang Yi on Monday called on the new U.S. administration to stop the “suppression” of Chinese technology companies, as he laid out conditions for U.S.-China cooperation going forward.

Citing national security concerns, former U.S. President Donald Trump sanctioned dozens of Chinese companies in the last three years.

Chinese telecommunications giant Huawei is one of the most prominent companies that suffered from those orders, falling from the number one smartphone vendor globally to sixth place last year as a result of the sanctions.

China would like the U.S. to remove tariffs and sanctions on companies, and “abandon irrational suppression of China’s technological progress, so as to create necessary conditions for China-U.S. cooperation,” Wang said, according to an official English translation shared by the foreign ministry.

Wang also called for the U.S. to support international Chinese students and remove restrictions on cultural groups and media outlets in America. He was speaking at a forum in Beijing with the theme “Bringing China-U.S. Relations Back to the Right Track.”

Tensions between the two countries accelerated under the Trump administration, which sought to use levies and blacklists to address longstanding business complaints about China’s lack of intellectual property protection, requirements for forced technology transfer and dominance of the state in markets.

While it remains unclear what exact action U.S. President Joe Biden might take, he has maintained a firm tone since taking office about a month ago.

Biden told European allies in a speech Friday that “we must prepare for long-term strategic competition with China.”

Last week, Treasury Secretary Janet Yellen said Trump-era tariffs would remain in place and that any changes would depend on China’s adherence to trade deal commitments.

Policy red lines, and areas for cooperation

Biden is expected to put greater emphasis on human rights-related issues such as Hong Kong, Xinjiang and Tibet.

Wang reiterated Monday that those regions are part of China’s “internal affairs” and that relations with the U.S. can only improve if Beijing’s position is respected.

Chinese Ambassador to the U.S., Cui Tiankai, also said Monday that Beijing and Washington must define the boundaries of their foreign policy, noting that China’s red line issues include Taiwan, Xinjiang and Tibet, according to Reuters.

Leaders of both countries remain open to cooperation in some areas, such as reducing carbon emissions.

Wang said the two nations can work together on tackling the coronavirus pandemic and supporting global economic recovery, and emphasized that Beijing remains supportive of American businesses in China.

Analysis released last week from the U.S. Chamber of Commerce, together with onsulting firm Rhodium Group, found that if the U.S. sells half its direct investment in China, American investors would lose $25 billion a year in capital gains. The report called for targeted, rather than sweeping, policy measures against China.

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Business

Stronger economic data could power stocks that thrive in a rebound in the week ahead

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The bull of Wall Street is seen during the pass of the snowstorm on January 31, 2021 in New York City.

Eduardo MunozAlvarez | VIEW press | Corbis News | Getty Images

A decline in new Covid infections, along with improving economic data and stimulus hopes, could boost stocks that flourish in a resurging economy in the week ahead.

In the past week, expectations for a strong economic rebound helped boost interest rates.

While the broader stock market was choppy, sectors that do well in a rebound – financials, airlines and industrials – stood out as leaders. This is known as the reflation trade.

Those stocks gained at the expense of growth and technology, down 2%. Strategists expect that reflation trade to continue as signs suggest that the economy could make a sharp comeback.

The S&P 500 was down 0.7% on the week to 3,906, while the Dow was up a tiny 0.1% at 31,494. The Nasdaq was off 1.57% for the week, to 13,874, with the decline in tech. Apple, for instance, gave up 4% on the week.

The big event in the week ahead is testimony from Federal Reserve Chairman Jerome Powell, who delivers his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday and the House Financial Services Committee Wednesday.

He is expected to discuss the increase in interest rates, as well as concerns that inflation could begin to take off.

“He’s going to have to acknowledge that the data is improving and the virus situation is improving quite materially,” said Mark Cabana, head of U.S. rates strategy at Bank of America. “It is going to be hard for him to sound as dovish as he has been.”

But Powell is expected to continue to emphasize that the Fed will keep rates low for a long time and maintain its easy policies to help the economy.

Improving forecasts

Economists this past week ratcheted up tracking forecasts for first quarter gross domestic product, fueled in part by an unexpectedly sharp jump of 5.3% in January retail sales.

Goldman upped first-quarter growth to 6%, and Morgan Stanley said it was tracking at 7.5% for the first quarter. Economists linked the surprise gain in retail sales to stimulus checks sent to individuals under the last $900 billion stimulus program approved by Congress in late December.

The Biden administration has proposed another $1.9 trillion Covid relief package. That could come before the House of Representatives in the coming week.

“[Powell’s] going to stick to the script. The script is lawmakers need to continue to provide support for the economy. He’s going to be supportive of the administration’s effort to get a big package through,” said Mark Zandi, chief economist at Moody’s Analytics.

Key data during the week

Earnings continue to be important. There are more than 60 companies reporting, including Home Depot, Macy’s and TJX.

Key economic reports dropping next week include durable goods on Thursday, along with personal income and spending data on Friday

The Friday report includes the personal consumption expenditure price index, which the Fed monitors. The market is on the lookout for signs of rising inflation.

“I think the boom is going to start sooner than most people think,” said Ed Keon, chief investment strategist at QMA.

He said the stronger economy is helping drive Treasury yields higher, with the 10-year hitting a one-year high of 1.36% on Friday. Keon said the vaccine rollout is helping the outlook, as is the slowing spread of the virus.

“I think people were expecting a second-half boom, but I think the second quarter is going to be very strong, as people change their behavior,” he said.

“The caution when it comes to savings and not going out, that’s going to go away sooner than we think,” Keon said. “Right now, you might see a 10% GDP number in the second or third quarter. That’s also due to the fact we’re likely to get a big stimulus package.”

He said investors are underestimating the surge in economic activity that should start in March and pick up steam in the second and third quarter as more people resume dining out and other activities.

“I think the world is going to look very different than it has over the past 12 months. We’re still bullish. We’re still overweight stocks,” Keon said.

He said a flood of money could hit the economy.

“The size of the U.S. economy last year was about $21 trillion,” Keon added. “Households now have excess savings of about $1.5 trillion and the stimulus package probably will be in the vicinity of $1.2, $1.6 trillion.”

He said the service sector should start to see a benefit that has been lifting the goods making side of the economy. “You’re going to see an incredible boom.”

Week ahead calendar

Monday 

Earnings: Dish Network, Royal Caribbean, Marathon Oil, Ingersoll-Rand, Occidental Petroleum, Transocean, Zoominfo, ONEOK, HSBC

10:00 a.m. Leading economic indicators

Tuesday

Earnings: Home Depot, Macy’s, Intuit, Thomson Reuters, Square, Toll Brothers, Jazz Pharmaceuticals, McAfee, Medtronic, Pioneer Natural Resources, Bank of Montreal

9:00 a.m. FHFA home prices

9:00 a.m. S&P/Case-Shiller home prices

10:00 a.m. Fed Chairman Jerome Powell semi-annual economic testimony Senate Banking Committee

Wednesday

Earnings: Lowe’s, NVIDIA, Viacom, Public Storage, Booking Holdings, TJX, Brookdale, Royal Bank of Canada, Apache, Petrobras, Pure Storage, L Brands, Casper Sleep

7:00 a.m. Mortgage applications

10:00 a.m. New home sales

10:00 a.m. Fed Chairman Powell semi-annual economic testimony at House Financial Services Committee

Thursday

Earnings: Salesforce.com, Norwegian Cruise Lines, Etsy, Best Buy, HP, Shake Shack, Beyond Meat, Anheuser-Busch Inbev, Dell Technologies, Virgin Galactic, American Tower, Cleveland Cliffs, Airbnb, Carvana, Door Dash

8:30 a.m. Atlanta Fed President Raphael Bostic

8:30 a.m. Jobless claims

8:30 a.m. Durable goods

8:30 a.m. Q4 GDP second reading

10:00 a.m. Pending home sales

10:00 a.m. Advanced economic indicators

10:00 a.m. St. Louis Fed President James Bullard

3:00 p.m. New York Fed President John Williams

Friday

Earnings: Fluor, Cinemark, Draft Kings, Foot Locker, AMC Networks

8:30 a.m. Personal income and spending

8:30 a.m. Advanced trade

9:45 a.m. Chicago PMI

10:00 a.m. Consumer sentiment

Saturday

Earnings: Berkshire Hathaway

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Business

PepsiCo, Generac, Tempur Sealy, others

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Check out the companies making headlines before the bell:

PepsiCo (PEP) – The beverage and snack giant beat estimates by a penny with adjusted quarterly earnings of $1.47 per share, and revenue was above estimates as well. The company said it expects to see organic revenue and adjusted profit growth this year, and also announced a 5% dividend increase.

Generac (GNRC) – Generac shares rose 3% in pre-market trading after the maker of backup generators beat estimates on the top and bottom lines for its latest quarter, and said it expected net sales growth of 25 to 30 percent this year.

Restaurant Brands (QSR) – The parent of Popeyes, Burger King and Tim Hortons missed estimates by 12 cents with adjusted quarterly earnings of 53 cents per share, while revenue was slightly above forecasts. Shares fell about 2% pre-market as comparable restaurant sales fell more than expected.

Tempur Sealy (TPX) – Shares of the mattress maker surged 12% pre-market after it beat forecasts by 15 cents with adjusted quarterly earnings of 67 cents per share. Revenue beat estimates as well, and Tempur Sealy said it expected 2021 sales growth of 15% to 20%.

LabCorp (LH) – The medical-laboratory operator reported adjusted quarterly earnings of $10.56 per share, well above the $8.11 consensus estimate, and revenue was above forecasts as well. Its results were boosted by Covid-19 testing, and shares were up 3.6% pre-market.

Molson Coors (TAP) – The beer brewer’s shares were down 4.5 % pre-market as it reported adjusted quarterly earnings of 40 cents per share, well below the 77-cent consensus estimate. Its results were hurt by ongoing Covid-19 restrictions for restaurants and bars.

Kraft Heinz (KHC) – Kraft Heinz shares rose 1.7% pre-market, as it beat estimates on the top and bottom lines for its latest quarter, and also announced the sale of its Planters snacks business to Hormel (HRL) for $3.35 billion in cash.

Uber Technologies (UBER) – Uber reported a quarterly loss of 54 cents per share, 2 cents less than anticipated, with revenue slightly below estimates. Uber’s results were helped by an expansion in its food delivery business as well as cost reductions. Uber shares were down 3.8% pre-market.

Bumble (BMBL) – Bumble makes its Wall Street debut today after pricing its initial public offering at $43 per share, above the already raised expected range of $37 to $39 per share. The dating service raised $2.2 billion in the IPO, giving it an overall value of more than $7 billion.

Sonos (SONO) – Sonos shares jumped 17% in pre-market trading, after the maker of high-end smart speakers beat estimates on both the top and bottom lines in its latest quarter. Sonos was helped by stronger margins as no promotions were held during the quarter. It also raised its full-year revenue guidance.

iRobot (IRBT) – iRobot earned an adjusted 84 cents per share for the fourth quarter, well above the consensus estimate of 84 cents, with revenue also comfortably topping Wall Street predictions. The maker of the Roomba robotic vacuum cleaner also gave strong full-year revenue and profit guidance. Shares rose 7.3% in pre-market trading.

Zillow Group (ZG) – Zillow beat estimates by 14 cents with adjusted quarterly earnings of 41 cents per share, with the operator of real estate websites also scoring a revenue beat. It also gave upbeat revenue guidance, and announced the acquisition of online home-viewing-scheduling platform ShowingTime.com for $500 million in cash. Zillow shares rose 12% in pre-market trading.

Zynga (ZNGA) – Zynga CEO Frank Gibeau told Barron’s that the mobile game developer is open to an acquisition offer, although it is not actively looking to sell the company. Zynga also reported a 61% jump in the key metric of net bookings during its latest quarter, more than analysts had anticipated.

XPO Logistics (XPO) – XPO earned an adjusted $1.19 per share for the fourth quarter, well above the 67-cent consensus estimate. The logistics company also saw revenue above forecasts and gave strong full-year earnings guidance. XPO is benefiting from a pandemic-induced acceleration in shipping activity due to an explosion in online shopping.

Merck (MRK) – Merck is in talks with both governments and other drugmakers to help produce already approved Covid-19 vaccines. The drugmaker did not specify which governments or other companies were involved in those talks.

Pinterest (PINS) – Pinterest was approached by Microsoft (MSFT) about a possible takeover in recent months, according to people brief on the matter who spoke to the Financial Times. However, the report added that negotiations about a buyout of the image-sharing company were not currently active.

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Business

Tesla’s China sales more than doubled in 2020

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Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020.

Aly Song | Reuters

BEIJING — Tesla’s sales in China more than doubled last year amid the coronavirus pandemic, according to a filing out Monday.

The electric car maker’s sales in China of $6.66 billion last year accounted for about a fifth, or 21% of the $31.54 billion total.

In 2019, Tesla’s China sales reached $2.98 billion, just 12% of the $24.58 billion total.

The U.S. remained Tesla’s largest market, with sales rising 20% last year to $15.21 billion and accounting for roughly half of total sales.

Tesla began ramping up production last year at its factory in Shanghai and selling China-made cars to the local market.

The company’s Model 3 was the best-selling electric car in the country in 2020, according to China’s Passenger Car Association. The automaker also began deliveries of a new model, a China-made Model Y, to local customers this year.

However, Tesla faces competition in the local market from Chinese electric car start-ups like Nio and Xpeng, while regulatory scrutiny has increased.

On Monday, China’s State Administration for Market Regulation said on its website that it and four other government departments recently met with Tesla’s local subsidiaries over an increase in consumer reports of vehicle problems.

Among several incidents that garnered attention on Chinese social media in the last few weeks, a Model 3 reportedly exploded in a Shanghai parking garage in January. Last week, Chinese authorities said Tesla needed to recall more than 36,000 cars due to a touchscreen failure.

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Business

China video apps Kuaishou, Douyin become e-commerce sites like Alibaba

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A man holding a phone walks past a sign of Chinese company ByteDance’s app TikTok, known locally as Douyin, at the International Artificial Products Expo in Hangzhou, Zhejiang province, China October 18, 2019.

Reuters

BEIJING — Chinese consumers are shopping more through livestreaming and video apps — a new trend that’s grabbing a slice of the massive market traditionally dominated by e-commerce giant Alibaba.

Popular livestreaming and short video apps became significant marketing channels in 2020, generating billions in merchant sales by connecting viewers to existing e-commerce sites, or their own.

Just take the example of short video and livestreaming app Kuaishou, which on Friday raised more than $5 billion in Hong Kong’s biggest IPO since the coronavirus pandemic, according to Wind Information.

Gross merchandise volume (GMV) for the 11 months through November grew nearly eight times from a year ago to 332.68 billion yuan ($51.44 billion), Kuaishou said in its prospectus. GMV is a metric commonly used in e-commerce to measure the total value of goods sold over a certain period of time.

The company primarily makes money by selling virtual gifts that users can buy for their favorite live streamers. Kuaishou shares surged nearly 200% at the open Friday.

Along with various types of e-commerce players springing up in recent 2-3 years, … customers’ appetites on online shopping platforms are also diversifying.

Douyin, the Chinese version of the TikTok video app that’s owned by ByteDance, saw e-commerce transactions triple last year to 500 billion yuan in GMV, according to a report Wednesday from Chinese tech news site LatePost.

However, most of the GMV went to third-party e-commerce sites like JD.com and Alibaba’s Taobao, the report said. Only about 100 billion yuan in Douyin’s GMV came from the app’s own e-commerce platforms, the report said.

ByteDance said in a statement to CNBC that LatePost’s figures on GMV are not accurate and that third-party sales resulting from re-directed user traffic should not be counted as part of the GMV.

Tencent’s Wechat messaging app, which counts more than 1 billion daily active users, has also become a platform for online shopping.

In January, WeChat said GMV for businesses running their own mini-programs in the app rose 255% last year to an undisclosed amount, while GMV for physical goods sold through those programs rose 154%.

“Along with various types of e-commerce players springing up in recent 2-3 years, including live streaming, social commerce, etc, customers’ appetites on online shopping platforms are also diversifying,” Morgan Stanley analysts said in a report last month. They predict Chinese consumer spending overall will double in the next decade to $12.7 trillion.

Growing market for all e-commerce players

The reports on video apps’ GMV show how quickly the streaming platforms are growing as a portal to online shopping, even if established players still dominate.

For example, Alibaba’s video streaming sales site Taobao Live generated over 400 billion yuan in GMV for 2020, according to the latest earnings report. But the company’s GMV for the Nov. 1 to 11 shopping holiday alone was 498 billion yuan.

“There is a lot of demand in China for e-commerce, so Alibaba, JD.com, they have the market because they are both online and offline,” said Suresh Dalai, senior director at consulting firm Alvarez & Marsal, which focuses on retail operations in Asia.

“They provide a one-stop shop through their ecosystem,” Dalai said. “These retailers, they’re not suffering even with these new e-commerce players coming out.”

Online retail sales of physical goods in China rose 14.8% last year to a total of 9.759 trillion yuan, accounting for a quarter of all consumer goods sold in the country, the National Bureau of Statistics said.

While the number of online shoppers climbed to 782 million by December, the country had more internet users watching videos, at 927 million, government agency China Internet Network Information Center (CNNIC) said in a report this week.

In particular, livestreaming e-commerce users surged by 123 million between March and December, for a total of 388 million, the report said. About two-thirds of these users have made a purchase while watching a livestream, the report said.

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Business

China central bank policymaker says fintech needs regulation just like banks

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People walk past the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China September 28, 2018. 

Jason Lee | Reuters

BEIJING — The central Chinese government is making it clear that fintech companies like Ant Group fall under the same stringent financial regulation as banks.

Many start-ups in China and other countries are using new technology to sell cheaper and faster financial services, from money transfers to loans. Rapid consumer adoption has prompted banks to work with the start-ups, which often emphasize they are technology or fintech companies, rather than financial institutions.

“But fintech is still finance in essence, so the principle of ‘same business, same rules’ should apply,” Pan Gongsheng, deputy governor of the People’s Bank of China, wrote in an opinion piece in the Financial Times Wednesday. Pan also heads the national foreign exchange regulator, the State Administration of Foreign Exchange.

“We need regulation that emphasises the substance not the form of a company,” Pan added. “The aim is to align business rules and standards with regulation to fend off arbitrage.”

Chinese authorities have stepped up regulation on fintech companies in the last several months.

Most prominently, regulators abruptly suspended Alibaba-affiliated Ant’s listing in November just days before the company was set to hold what would have been the world’s largest initial public offering.

Pan did not mention Ant by name in the op-ed, but noted that “non-bank mobile payment business, led by Alipay and WeChat Pay” saw growth of 75% a year between 2015 and 2019 in non-bank mobile payments. Ant Group owns Alipay and WeChat Pay is run by Tencent.

He added that fintech companies pose the same risks as others in the finance industry, and might also gather “excessive” amounts of data and infringe on user privacy.

On Tuesday, the governor of China’s central bank Yi Gang indicated Ant could resume the IPO process if it could resolve legal issues.

Read the full opinion piece in the Financial Times here.

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World

What happened when one Chinese city shut down after new Covid outbreak

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Volunteers in protective suits disinfect in a residential area of Tonghua, China on January 24, 2021.

Visual China Group | Getty Images

BEIJING — One small Chinese city’s rush to control the coronavirus has left some residents without food, and some officials without jobs.

The fallout shows the extreme lengths to which local Chinese authorities will go to try to contain the coronavirus. While new cases in China so far this year remain far below that of other countries, the stringent prevention measures can quickly cause greater disruptions to work and daily life.

After a spike in Covid-19 cases in mid-January, Tonghua city, about a 10 hour drive northeast of Beijing, announced on Wednesday that no one could leave the city. Authorities added that all apartment complexes were essentially locked down.

People stuck at home and with little time to stock up on food turned to smartphone-based delivery apps, but many complained online that they couldn’t get their orders, according to posts on Weibo, China’s version of Twitter.

On Saturday, the local Communist Party discipline and inspection commission dismissed three officials for their poor performance in the oversight of the pandemic situation, state media said. Eleven other officials received severe warnings, the report said.

Then on Sunday, Tonghua city apologized to its roughly 500,000 residents for “untimely” delivery of daily necessities and general inconveniences. The city added there was a severe shortage of workers but sufficient food.

More than 11,000 people left mostly angry comments on a national state media post about the apology on Weibo. Some users described how they or neighbors were going hungry and hadn’t received their orders for three or four days.

Many user comments noted an inability to place orders on Eleme, a food delivery app backed by Alibaba. The company did not immediately respond to a CNBC request for comment.

Nasdaq-listed Dada, a grocery delivery company which saw a surge in growth during the lockdowns of the initial coronavirus outbreak last year, said neither of its two apps operate in Tonghua city.

Covid-19 first emerged in late 2019 in the Chinese city of Wuhan. Chinese authorities shut down more than half the country in February 2020, and the outbreak stalled domestically within several weeks. Meanwhile, the virus accelerated its spread overseas in a global pandemic.

In the last two months, new domestically transmitted cases have emerged in China amid cold winter weather and a continued trickle of visitors from overseas. The northeastern province of Jilin where Tonghua city is located has become the third-hardest hit region, reporting 273 new confirmed coronavirus cases for January alone.

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