Weekly Market Update: Holiday spirits remain high on Wall Street, bolstered by constructive data
Investors remained cheery heading into the Christmas holiday. M&A announcements continued to bubble up providing more hope that the deal environment will be substantially improved in 2024. The BOJ offered nothing new on plans to exit NIRP, removing a potential overhang for now. Corporate commentary from the likes of FedEx, Nike and General Mills did offer some caution by illustrating the challenges companies face as macro headwinds have begun to crimp demand while their ability to take additional pricing wanes. Also various central bank officials tried to temper 2024 rate cut expectations with some Fed officials opining the market had gotten over its skis. Nevertheless, Treasury yields stayed under wraps and the underlying bid in equities and risk assets remained in place, largely on the belief interest are coming down in 2024.
A range of economic readings continued show sustained signs that growth is slowing. UK CPI and German Dec IFO weakness pulled forward expectations for rate cuts there. US Final Q3 GDP was revised lower than expected, Philly Fed revealed a sharp contraction in new orders. Nov US PCE ran cooler than even expected, with core m/m just missing rounding down to zero while headline m/m printed negative for the first time since July 2022. In general, the readings clearly remained supportive to the case for central bank rate normalization, underscoring the belief the Fed is likely to start cutting rates in the first half of 2024. Volumes predictably dried up and trading was choppy into the holiday weekend. Oil prices drifted up on worries surrounding transit in Red Sea. The S&P gained 0.8%, chalking up its eighth straight week of gains and its longest winning streak since 2017, while the DJIA rose 0.2%, and the Nasdaq gained 1.2%.
Corporate news this week remained decidedly mixed, with definite winners and losers among the earnings reporters. Carnival proved to be a winner, beating quarterly estimates and touting strong bookings over the holiday season. Micron’s Q1 results dazzled investors, sending shares to a 52-week high as the company promised better pricing power for the fiscal year. FedEx missed quarterly expectations and cut guidance as it noted soft US market conditions and peak holiday volumes flat versus last year. Nike shares got kicked to the curb based on its cautious outlook for the second half of the fiscal year as the shoe-dogs observed more cautious consumer behavior developing globally. China regulators announced a fresh crackdown on the online gaming industry, setting time limits and other restrictions to ease video game addiction, and sending gaming stocks like Netease into a tailspin on Friday.
In M&A news this week, US Steel finally reached a deal, but not with the expected suitor, as Nippon Steel scooped up the US producer for a lofty enterprise value of $14.9B. Elsewhere, the FTC brought an end to Ilumina’s deal for Grail, sending a chill through investment bankers as they attempt to arrange other large deals. Similarly, Adobe broke off its $20B deal with Figma, citing regulatory hurdles, forcing it to pay a $1B breakup fee.
WEEKEND
ILMN FTC orders Co. to unwind Grail acquisition on antitrust grounds - US press
(CN) Ex-PBOC adviser Yu Yongding reiterates call that China needs to cut US Treasury bond holdings, notes low interest rates and potential risks over US' growing net debt overseas - The Standard
MON 12/18
(PH) Philippines and Japan start talks on a reciprocal access agreement that would allow the deployment of military forces on each other’s soil
OPENAI.IPO Said to have suspended ByteDance's account it used GPT to train its own AI model; Most of ByteDance’s GPT usage done through Microsoft’s Azure platform - The Verge
All contracts of Containerized Freight Index Futures hit 10% limit-ups overnight following COSCO Shipping and Evergreen Marine Corp suspended cargo loading in Bab-el-Mandeb Strait and will avoid Suez Canal after recent Yemen attacks
(UK) Reportedly 'strong signal' that UK’ govt is considering social media restrictions for under-16 children - Sky News
(DE) GERMANY DEC IFO BUSINESS CLIMATE SURVEY: 86.4 V 87.7E
JETS According to Tier1 analysts, airlines' system net sales accelerate for the fourth consecutive week during the week ending Dec 10th
X Confirms to be acquired by Nippon Steel for $55.00/shr in an all-cash transaction with EV of ~$14.9B
(US) Fed's Mester (voter in 2024): Markets are 'a little bit ahead' of Fed on rate cuts; Next phase is not when to reduce rates, even thought that is where the markets are at - FT
(US) BoFA analysts now expect the Fed to make 25bps rate cuts in Mar, June, Sept and Dec 2024
ADBE *ADOBE AND FIGMA MUTUALLY AGREE TO TERMINATE $20B CASH-STOCK MERGER AGREEMENT CITING NO CLEAR PATH FOR REGULATORY APPROVALS
(US) DEC NAHB HOUSING MARKET INDEX: 37 V 37E
AAPL Follow Up: Said to plan 'rescue' for its Apple Watch business in US; said to be submitting software workaround to customs agency - US financial press
TSLA Co is planning a 10% or higher pay rate increase for some workers at Nevada battery Gigafactory - US financial press
(US) Pentagon confirmed Prosperity Guardian international mission to counter attacks on commercial vessels in Red Sea; US Central Command confirmed that Yemen's Houthis carried out two attacks on commercial shipping in southern Red Sea on Dec 19 - X post
TUES 12/19
(EU) EU reportedly confirms to extend tariff suspension on US steel and aluminum for 15 months until end of Mar 2025 - press
(JP) BOJ Gov Ueda: Little chance for us to say that we will change policy in Jan 2024; Chances are also low that we will flag rate hike at Jan's meeting; Decision will depend on information by then - post rate decision press conference
(HU) HUNGARY CENTRAL BANK (MNB) CUTS BASE RATE BY 75BPS TO 10.75%; AS EXPECTED
Redfin: Redfin Home Price Index showed that U.S. home-price growth slowed for the third straight month in Nov; New listings climbed 1.3% m/m to the highest level in over a year
(US) NOV HOUSING STARTS: 1.560M V 1.360ME (above all analysts' estimates and six-month high); BUILDING PERMITS: 1.460M V 1.465ME
(CA) CANADA NOV CPI M/M: +0.1% V -0.1%E; Y/Y: 3.1% V 2.9%E
BAC CEO: Consumers remain in good shape, but the overall activity is slowing down; Spending still running +4-5% y/y in Dec, but that's about half the rate it was growing at last year at this time - media interview
(US) Mid Dec Manheim wholesale used vehicle Index at 205.5, +0.3% m/m, -6.3% y/y
(MX) Mexico Pres Lopez Obrador (AMLO): Efforts are underway to challenge to new Texas migration law
(US) Atlanta Fed GDPNow: raises Q4 GDP from 2.6% to 2.7%
MAERSKB.DK CEO: US led Red Sea task force will take a few weeks to get going - CNBC
FDX Notes peak holiday season volume is similar to last year; US market conditions remained soft, with Q2 demand lower than we anticipated; Retains majority of business won from UPS - earnings call comments
(US) Trump to be disqualified from 2024 Republican ballot in Colorado state by vote of 4-3, according to Colorado Supreme court [first court to disqualify Trump from the ballot; the decision is NOT obligatory for other states and does NOT refer to US general election] - CNBC
(CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: LEAVES BOTH 1-YEAR AND 5-YEAR RATES UNCHANGED; AS EXPECTED
(MY) Malaysia (~63% Muslim population) to block Israel-based shipping Co. Zim from anchoring; PM says Malaysia will not accept ships bearing Israel flags to dock - financial press
WED 12/20
(UK) NOV CPI M/M: -0.2% V 0.1%E; Y/Y: 3.9% V 4.3%E (lowest annual pace since Sept 2021, below all analysts' estimates)
Containerized Freight Index Futures hit 10% limit-ups overnight for 3rd consecutive session and closed at the highest levels since debut in Aug
(DE) German 10-year Bund yield below the 2% level for the 1st time since March
(TW) Taiwan Nov Export Orders Y/Y: 1.0% v 5.2%e (1st increase in 15 months); Sees Dec orders -8.0% to -4.2% y/y implying slowest annual growth in 14 years
GIS Expect some of the recent headwinds, such as our competitors’ improved on-shelf availability, to lessen as we exit Q3; Expect contributions from organic price/mix to decelerate but remain positive in FY24 - prepared remarks
SONY Exec: Seeing strong momentum in Nov-Dec for PlayStation 5 console, lifetime sales exceeding 50M units
(RU) US coalition announces revisions to Russia oil price cap compliance regime; To tighten enforcement of Russia oil price cap
(US) NOV EXISTING HOME SALES: 3.82M V 3.78ME
(US) DEC CONSUMER CONFIDENCE: 110.7 V 104.5E
(US) DOE CRUDE: +2.9M V -2.5ME; GASOLINE: +2.7M V +1ME; DISTILLATE: +1.5M V +1ME
(EU) European Finance Ministers (EcoFin) said to have reached an agreement on reform of EU fiscal, debt rules - press
(US) TREASURY $13B 20-YEAR BOND REOPENING DRAWS 4.213% v 5.245% prior, BID-TO-COVER 2.55 v 2.59 PRIOR AND 2.70 OVER LAST 8 REOPENINGS
(US) FAA issues bulletin: Suspect UK supplier handled aircraft parts from additional makers; probe may widen
WBD Reportedly in talks to merge with Paramount - press
MU Reports Q1 -$0.95 v -$0.99e, Rev $4.73B v $4.66Be; Guides Q2 above consensus
MU We have driven a strong inflection in industry pricing this calendar quarter, which will allow us to benefit from higher prices earlier in our fiscal year compared to prior plans - prepared remarks
MU Inventories for memory and storage are at or near normal levels for most customers across PC, mobile, auto and industrial end markets; Smartphone demand is showing signs of recovery; Q1 results reflect Micron’s strong execution combined with improved pricing - earnings deck
(KR) South Korea Dec 1-20th Exports Y/Y: +13.0% v +2.2% prior; Imports Y/Y: -9.2% v -6.2% prior
(TW) China to terminate tariff concessions on some Taiwan chemical products from Jan 1, 2024 - China Finance Ministry
THRS 12/21
(US) Citigroup analysts raise US bank stocks to Overweight; Raise Healthcare sector to Market Weight and Consumer Discretionary sector to Market Weight
(CN) CHINA BANS EXPORT OF SOME RARE-EARTH PROCESSING TECHNOLOGIES; EFFECTIVE IMMEDIATELY - PRESS [**Note: China started to ban rare earths manufacturing technologies in 2022]
UUUU Commences production at three of its U.S. uranium mines, also preparing two mines (Whirlwind and Nichols Ranch) to commence uranium production within one year; Notes its uranium production could be expanded to up to 5M pounds of U3O8 per year in the coming years
KMX Reports Q3 $0.52 v $0.43e, Rev $6.15B v $6.31Be; Resumed share repurchases during Q3 first time in a year
ANGOLA LEAVES OPEC - PRESS [**Note: Angola is the second largest oil producing country in Sub-Saharan Africa with output of ~1.2Mbpd, ~4% of total OPEC production]; Becomes 1st country to leave OPEC since Qatar and Ecuador left in 2019-2020
Redfin: Seen a double-digit annual increase in week to Dec 17th in homeowners contacting its real estate agents for help selling homes, and new listings are up 9% y/y (the biggest annual increase since July 2021)
(US) Reportedly top US and China military officials spoke in sign of warming ties after a 16-month rupture; Video call between generals followed a summit agreement between Pres Biden and China’s Pres Xi - press
(US) Q3 FINAL GDP ANNUALIZED Q/Q: 4.9% V 5.2%E; PERSONAL CONSUMPTION: 3.1% V 3.6%E
(US) Q3 FINAL GDP PRICE INDEX: 3.3% V 3.6%E; CORE PCE Q/Q: 2.0% V 2.3%E
(CZ) CZECH CENTRAL BANK (CNB) CUTS 2-WEEK REPURCHASE RATE BY 25BPS TO 6.75%; AS EXPECTED; 1st rate cut since May 2020
(US) INITIAL JOBLESS CLAIMS: 205K V 215KE; CONTINUING CLAIMS: 1.87M V 1.88ME
(US) DEC PHILADELPHIA FED BUSINESS OUTLOOK: -10.5 V -3.0E (lowest since Sept); New Orders: -25.6 v +1.3 prior
CCL Reports Q4 -$0.07 v -$0.12e, Rev $5.40B v $5.32Be
(CN) China reportedly to ban exports of rare-earth magnets with other restrictions on the vital industrial metals - Japanese press
(US) Weekly Baker Hughes Rig Count: 620 v 623 prior (-0.5% w/w)
NKE Reports Q2 $1.03 v $0.84e, Rev $13.4B v $13.4Be; Expects softer H2 rev outlook; Announces plan for $2B in cumulative cost savings over the next three years
NKE Exec: We are seeing indications of more cautious consumer behavior globally; Adjusting channel growth forecasts for rest of FY and stepping up plans to reduce marketpace supply for key franchises; Nike Digital had its strongest Black Friday week ever - earnings call comments
NKE Cuts FY24 Rev +1%, Affirms Gross margin +140-160bps (prior: FY24 mid-single digit growth; gross margin expanding 140-160bps) - earnings call
(JP) JAPAN NOV NATIONAL CPI Y/Y: 2.8% V 2.8%E; CPI EX FRESH FOOD (CORE) Y/Y: 2.5% V 2.5%E (Core CPI rises at slowest annual pace since July 2022)
(CN) China regulator (NPPA) issues draft rules for online game industry to prevent excessive game time; Sets spending limits and bans daily login rewards - China press
FRI 12/22
(UK) Q3 FINAL GDP Q/Q: -0.1% V 0.0%E; Y/Y: 0.3% V 0.6%E; Q2 GDP growth was revised lower to zero growth
(RU) Russia Deputy Foreign Min Ryabkov: US seizing Russia frozen assets could end ties; May take political action in response to US missile deployment in EU and APAC
(JP) Japan Cabinet approves ¥112T ($793B) draft budget for FY24/25 (as expected); Raises FY24/25 assumed interest rates for the first time in 17 years
Containerized Freight Index Futures hit 15% limit-ups overnight for 5th consecutive session, surged 70% this month
(US) NOV PRELIMINARY DURABLE GOODS ORDERS: 5.4% V 2.3%E (biggest increase since pandemic); DURABLES (EX-TRANSPORTATION): 0.5% V 0.1%E
(US) NOV PERSONAL INCOME: 0.4% V 0.4%E; PERSONAL SPENDING: 0.2% V 0.3%E
(US) NOV PCE DEFLATOR M/M: -0.1% V 0.0%E; Y/Y: 2.6% V 2.8%E (1st negative M/M print since July 2022)
(IR) Reportedly Iranian paramilitary vessel has provided intelligence to Houthi rebels in targeting ships in the Red Sea – press
(US) NOV NEW HOME SALES: 590K V 690KE
(US) DEC FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 69.7 V 69.4E; 5-10 year inflation expectations 2.9% v 2.8% prelim (lowest since Sep 2022)
(US) Atlanta Fed GDPNow: Cuts Q4 GDP from 2.7% to 2.3%
(US) Supreme Court rejects special counsel request in Trump case; Will NOT immediately consider Trump's immunity claim
Closing Stock Market Summary
Today's trade had an overall positive vibe in this lightly traded session ahead of the extended holiday weekend. Advancing issues had a roughly 2-to-1 lead over declining issues at both the NYSE and at the Nasdaq.
Market participants were digesting some economic releases today, which mostly fit with the soft landing narrative. The calendar was headlined by the November Personal Income and Spending report, which contained a healthy 0.4% increase in real disposable personal income, a 0.3% increase in real spending, and disinflation in both the PCE and Core PCE Price Indexes.
Durable goods orders were stronger than expected in November, and consumer sentiment increased while inflation expectations decreased in December.
The aforementioned reports overshadowed the disappointing 12.2% month-over-month decline in new home sales in November, although with the recent drop in mortgage rates, participants seemed willing to believe that sales activity will rebound smartly in December.
The three major indices traded with modest gains for most of the session, but hit an air pocket a little after 2:00 p.m. ET that brought the indices below yesterday's closing levels. The short-lived deterioration did not have a specific news catalyst to account for the activity. The S&P 500 (+0.2%), Nasdaq Composite (+0.2%), and Dow Jones Industrial Average (-0.1%) all climbed off their session lows, but the Dow couldn't manage a positive finish.
A big loss in NIKE (NKE 108.04, -14.49, -11.8%), which reported fiscal Q2 earnings and disappointing guidance, contributed to the relative underperformance of the DJIA.
NIKE's decline also weighed on the S&P 500 consumer discretionary sector (-0.7%), which was the only sector that closed lower today.
Meanwhile, economically-sensitive sectors and value stocks outperformed due to the positive sentiment around the economic outlook. The material (+0.6%) and industrial (+0.4%) sectors were among the winning standouts, and the Russell 3000 Value Index registered a 0.4% gain versus a 0.1% gain in the Russell 3000 Growth Index.
The health care (+0.5%) was another outperformer, propped up with some M&A activity that featured Bristol-Myers (BMY 52.29, +1.03, +2.0%) acquiring Karuna Therapeutics (KRTX 317.85, +102.66, +47.7%) for $330.00 per share in cash for a total equity value of $14.0 billion. The acquisition price is a 53% premium over Thursday's closing price for KRTX.
The 2-yr note yield settled unchanged from yesterday, and down ten basis points this week, to 4.33%. The 10-yr note yield rose one basis point today, and declined two basis points this week, to 3.90%.
As a reminder, markets are closed on Monday for Christmas Day.
- Nasdaq Composite: +43.3%
- S&P 500: +23.8%
- Russell 2000: +15.5%
- S&P Midcap 400: +14.7%
- Dow Jones industrial Average: +12.8%
Reviewing today's economic data:
- Personal income increased 0.4% month-over-month in November, as expected, following an upwardly revised 0.3% increase (from 0.2%) in October. Personal spending was up 0.2%, also as expected, following a downwardly revised 0.1% increase (from 0.2%) in October. The PCE Price Index declined 0.1% month-over-month (consensus 0.1%), taking the year-over-year change to 2.6% from 2.9% in October. That was the first decline in the PCE Price Index since 2020. The core PCE Price Index, which is the Fed's preferred inflation gauge, increased 0.1% month-over-month (consensus 0.2%), taking the year-over-year change to 3.2% from 3.4%.
- The key takeaway from the report is that it threads the needle for a Fed aiming to bring down inflation with higher rates, but not tank the economy in the process. The 0.3% month-over-month jump in real PCE combined with a 0.4% increase in real disposable personal income and the disinflation in the PCE Price Indexes is the stuff that soft landings/no landings are made of.
- Durable goods orders surged 5.4% month-over-month in November ( consensus 2.5%) following an upwardly revised 5.1% decline (from -5.4%) in October. Excluding transportation, durable goods orders were up 0.5% month-over-month (consensus 0.2%) following a downwardly revised 0.3% decline (from 0.0%) in October.
- The key takeaway from the report was found in the reading for nondefense capital goods orders excluding transportation -- a proxy for business spending. It was up 0.8% month-over-month on the heels of a 0.6% decline in October, connoting a welcome reacceleration in order activity that will mesh with a soft landing outlook.
- The final reading for the University of Michigan Consumer Sentiment Index for December came in at 69.7 (Bconsensus 69.7) versus the preliminary reading of 69.4. That was up nicely from the final reading of 61.3 for November, and it marked a recovery of all declines from the previous four months. In the same period a year ago, the index stood at 59.8.
- The key takeaway from the report is the linkage between the increase in sentiment and the decrease in inflation expectations. The latter set the tone for improved attitudes across age, income, education, geography, and political identification.
- New home sales decreased 12.2% month-over-month in November to a seasonally adjusted annual rate of 590,000 units (consensus 689,000) from a downwardly revised 672,000 (from 679,000) in October. On a year-over-year basis, new home sales were up 1.4%.
- The key takeaway from the report is that new home sales activity slumped badly in November, paced by the largest region for new home sales (the South) where prices are generally more affordable. The weakness speaks to supply constraints for lower-priced homes and general affordability constraints created by high mortgage rates and high prices relative to median prices for existing homes.
Tuesday's economic calendar features:
- 9:00 ET: October FHFA Housing Price Index (Prior 0.6%); October S&P Case-Shiller Home Price Index (Prior 3.9%)
The shadow of Gazprom hangs over one of the most luxurious villas on the French Riviera
Officially owned by a Russian-Armenian billionaire, Villa del Mare in Roquebrune-Cap-Martin is in reality linked to the Russian giant through a cascade of companies. French justice has opened an investigation for money laundering.
L’ombre de Gazprom plane sur une des plus luxueuses villas de la Côte d’Azur
Officiellement détenue par un milliardaire russo-arménien, la Villa del Mare à Roquebrune-Cap-Martin est en réalité liée au géant russe à travers une cascade de sociétés. La justice française a ouvert une enquête pour blanchiment.
Gazprom, le géant gazier russe dirigé par des proches de Vladimir Poutine qui a échappé aux sanctions européennes, est rattrapé par la justice française. La juridiction interrégionale spécialisée (JIRS) économique et financière du parquet de Paris s’intéresse à une villa de la Côte d’Azur qui, avec ses trois piscines, son court de tennis et son héliport, est l’une des plus luxueuses de la Côte d’Azur. Située à Roquebrune-Cap-Martin (Alpes-Maritimes), près de Monaco, elle fut jadis un pied-à-terre du dictateur zaïrois Sese Seko Mobutu et de sa famille.
Selon les informations du Monde, une procédure judiciaire portant sur des soupçons de « blanchiment aggravé » a été ouverte et confiée au service d’enquêtes judiciaires des finances (SEJF) de Bercy. « Des éléments laissent penser que les schémas d’acquisition successifs de la villa ont été faits au nom de différentes sociétés, dont les détenteurs indirects reviendraient à faire de la société Gazprom le bénéficiaire effectif », détaille le parquet auprès du Monde. Ce sont les soupçons sur l’identité réelle du propriétaire du bien qui ont déclenché l’enquête judiciaire.
Le géant gazier, qui pesait 8 % du PIB de la Russie avant la guerre en Ukraine, est l’un des plus grands contributeurs du budget de l’Etat russe. Une partie de ses revenus permettrait aussi de financer une milice privée engagée sur le front ukrainien, selon des documents dévoilés par Kiev en février. L’entreprise publique est dirigée par des proches de Vladimir Poutine, que ce soit son PDG, Alexeï Miller, ou Viktor Zubkov, le président du conseil de surveillance, qui l’ont tous les deux côtoyé lorsque ce dernier travaillait à la mairie de Saint-Pétersbourg.
Le propriétaire officiel de la villa de Roquebrune-Cap-Martin est, depuis l’automne 2016, un riche homme d’affaires russo-arménien, Samvel Karapetyan. Mais de nombreux éléments réunis par Le Monde, issus de registres officiels et des données qui ont fuité de l’enquête « Cyprus Confidential » montrent que Gazprom garde encore aujourd’hui des liens multiples avec cette villa malgré son retrait officiel en 2016. Selon nos informations, la villa a, par exemple, été mise en gage au profit de Gazprombank et d’une société offshore liée à un dirigeant de Gazprom. Si l’enquête judiciaire établit que les nombreux montages autour du bien immobilier ont permis de dissimuler l’identité du véritable propriétaire de Roquebrune-Cap-Martin, la justice pourrait saisir le bien et le confisquer définitivement en cas de condamnation.
Estimée à plus de 200 millions d’euros
« Dès que Gazprombank est impliquée dans des transactions immobilières de luxe quelque part dans l’Union européenne [UE], c’est une alerte qui doit entraîner une enquête en bonne et due forme de la part des autorités de l’UE », commente Ilia Shumanov, directeur de l’ONG Transparency International-Russie. Et ce, d’autant plus que la propriété en question, dont la valeur a été estimée à plus de 200 millions d’euros, est l’une des plus chères de la Côte d’Azur. Elle comprend une villa principale de 1 225 mètres carrés, longtemps appelée « Villa del Mare », et s’étend sur un domaine de plus de trois hectares, avec une maison pour les invités et une troisième bâtisse pour héberger les employés de maison. Bien plus qu’une propriété de luxe, elle est au cœur de montages financiers complexes entre Gazprom et des proches de Vladimir Poutine. Sollicités par Le Monde, ni les oligarques en question ni l’entreprise n’ont répondu à nos questions.
Le bien immobilier de luxe entre dans le giron russe en 2001 lorsque le milliardaire Shalva Chigirinsky en fait l’acquisition et la rebaptise « villa Maria Irina ». Cet homme d’affaires a longtemps été l’une des principales fortunes de Russie grâce à ses participations dans Sibir Energy, une entreprise russe cotée à Londres et spécialisée dans l’exploration, l’extraction et le raffinage de pétrole. Mais M. Chigirinsky la perd lorsqu’il est rattrapé par des difficultés financières en 2009 et des accusations de détournement de fonds au détriment de Sibir Energy.
Gazprom Neft, filiale pétrolière de Gazprom, profite des déboires de son concurrent pour l’absorber et récupère au passage, en 2010, la villa de Roquebrune-Cap-Martin pour 70 millions d’euros alors que des estimations tablaient à l’époque sur un prix trois fois supérieur. « Dans cette affaire je n’ai pas eu le choix, confie au Monde Shalva Chigirinsky qui a dû quitter la Russie. Que ce soit sur le prix [de la villa] ou sur la manière dont j’ai été évincé de l’entreprise [Sibir Energy]. » Le propriétaire déchu ajoute avoir « dépensé beaucoup d’argent pour réparer la villa car elle était en désordre, complètement en ruine ».
Gazprom Neft devient propriétaire de la villa par l’intermédiaire la société française Maritime Villa Holding, créée pour l’occasion. En 2015 et 2016, le bien immobilier se retrouve ballotté d’un d’actionnaire à l’autre, passant tour à tour par le Luxembourg, la Russie, Chypre mais également le Panama, tout en restant sous le contrôle ultime de Gazprom Neft. Ces montages juridiques, sans justification économique apparente, sont d’ailleurs au cœur de l’enquête judiciaire du parquet de Paris.
De juteux contrats signés avec Gazprom
Fin 2016, le milliardaire Samvel Karapetyan devient le nouveau propriétaire de la villa en rachetant à Gazprom Neft ses parts dans la société Leyson Holdings, immatriculée à Chypre, qui elle-même contrôle la société française Maritime Villa Holding.
Cet homme d’affaires, dont le nom apparaît régulièrement dans la liste des 100 plus grandes fortunes de Russie, est à la tête du groupe Tashir, présent dans les secteurs de l’immobilier, de la construction, de l’énergie ou encore de la finance. M. Karapetyan doit son ascension en grande partie, à de juteux contrats signés avec Gazprom. Les premiers sont signés dans les années 1990, notamment dans la région de Kalouga, au sud-ouest de Moscou, où son entreprise bâtit un campement de travailleurs.
D’après l’enquête publiée mi-2016 par le média russe indépendant RBC, l’année où il acquiert la villa sur la Côte d’Azur et bénéficie d’un prêt du géant gazier coïncide avec une hausse importante de contrats publics à son profit. Ces derniers passent, selon RBC, de 42,5 milliards de roubles (530 millions d’euros) en 2014, à 52,9 milliards de roubles en 2015 et à 20,8 milliards roubles sur les seuls trois premiers mois de l’année 2016, ce qui représente en moyenne 40 % de son chiffre d’affaires. Parmi les filiales de Tashir Group, Gazstroy, Neftegazstroy, Spetsgazstroy ou encore City Stroy Group fournissent au géant gazier des systèmes de chauffage, des usines de traitement d’eau ou des tuyaux utilisés dans la construction de gazoducs.
Une coquille vide offshore établie aux Seychelles
M. Karapetyan et Gazprom sont aussi liés par la villa de la Côte d’Azur. Pour en prendre le contrôle, l’homme d’affaires a l’obligation d’éponger une dette de 112 millions d’euros que Maritime Villa Holding doit à une société des îles Vierges britanniques détenue par Gazprom Neft. Pour autant, M. Karapetyan ne sort pas un centime pour rembourser cette somme. C’est sa société Leyson Holdings, fraîchement acquise, qui s’en charge, grâce à un emprunt de 115 millions d’euros contracté, en décembre 2016, auprès de Gazprombank, qui appartient à Gazprom et à Iouri Kovaltchouk, un proche de M. Poutine. Autrement dit, l’oligarque reste endetté auprès du géant gazier, qui peut récupérer la villa en cas de non-remboursement. Un montage qui permet finalement au groupe russe de disparaître du registre des propriétaires de la villa, tout en gardant une forme de contrôle.
En avril 2020, la villa Maria Irina sert une nouvelle fois de garantie, cette fois pour un prêt de 50 millions d’euros consenti à Leyson, la holding chypriote de Samvel Karapetyan, par la société offshore Megan Agency Ltd, immatriculée dans les îles Vierges britanniques et qui pourrait donc devenir l’un des ayants droit de la villa de la Côte d’Azur. Pour découvrir l’identité du prêteur, il faut tirer le fil des actionnaires. Megan Agency Ltd est détenue par une autre coquille vide offshore établie aux Seychelles, elle-même contrôlée par un Russe : Vadym Tregub, neveu de Sergei Tregub, un ancien membre des services de renseignement russes qui a lui aussi des liens avec Gazprom. D’après l’enquête du média d’investigation russe Proekt et du Fonds anticorruption de l’opposant Alexeï Navalny, il servirait de prête-nom à Alexeï Miller, le dirigeant de Gazprom, pour détenir des actifs immobiliers. Une association qui a valu à Sergei Tregub et son neveu d’être ajoutés à la liste des sanctions britanniques le 8 novembre.
« Les oligarques qui entourent Poutine se servent de Gazprom pour s’enrichir, explique Mikhail Krutikhin, le cofondateur du cabinet de conseil RusEnergy installé à Oslo, ils s’en servent comme d’un instrument pour transformer des fonds publics en argent de poche. »
Reste à savoir si la villa Maria Irina a été utilisée par l’entreprise ou par des personnes privées lorsque Gazprom Neft en était le propriétaire officiel. Selon un contrat de location retrouvé dans les millions de documents révélés par l’enquête « Cyprus Confidential », Gazprom Neft a loué le domaine à l’une de ses filiales chypriotes en 2015 et 2016 pour un loyer mensuel de 210 000 euros. Mais le mystère sur l’identité des occupants reste entier. « Aucun commentaire à faire », se contente de répondre la société Bordes Estates, chargée de gérer la villa. Le magazine Challenges affirmait en mars 2022 que le bien a été occupé par Alina Kabaeva, ex-gymnaste russe présentée comme la compagne cachée du président Poutine. Une information que Le Monde n’a pas pu vérifier à partir des registres officiels.
Gazprom, the Russian gas giant run by close friends of Vladimir Putin which escaped European sanctions, has been caught up in French justice. The specialized interregional economic and financial jurisdiction (JIRS) of the Paris public prosecutor's office is interested in a villa on the Côte d'Azur which, with its three swimming pools, its tennis court and its heliport, is one of the most luxurious in the French Riviera. Located in Roquebrune-Cap-Martin (Alpes-Maritimes), near Monaco, it was once a base for the Zairian dictator Sese Seko Mobutu and his family.
According to information from Le Monde, legal proceedings relating to suspicions of “aggravated money laundering” have been opened and entrusted to the judicial financial investigation service (SEJF) of Bercy. “There is evidence to suggest that the successive acquisition schemes for the villa were made in the name of different companies, whose indirect holders would amount to making the company Gazprom the effective beneficiary,” details the prosecution to Le Monde. It was suspicions about the real identity of the owner of the property that triggered the judicial investigation.
The gas giant, which accounted for 8% of Russia’s GDP before the war in Ukraine, is one of the largest contributors to the Russian state budget. Part of its income would also finance a private militia engaged on the Ukrainian front, according to documents released by kyiv in February. The public company is run by people close to Vladimir Putin, whether its CEO, Alexeï Miller, or Viktor Zubkov, the chairman of the supervisory board, who both worked with him when the latter worked at the town hall of Saint -Petersburg.
The official owner of the villa in Roquebrune-Cap-Martin has been, since fall 2016, a wealthy Russian-Armenian businessman, Samvel Karapetyan. But numerous elements gathered by Le Monde, from official registers and data leaked from the “Cyprus Confidential” investigation show that Gazprom still maintains multiple links with this villa today despite its official withdrawal in 2016. According to our information, the villa was, for example, pledged for the benefit of Gazprombank and an offshore company linked to a Gazprom manager. If the judicial investigation establishes that the numerous arrangements surrounding the property made it possible to conceal the identity of the true owner of Roquebrune-Cap-Martin, the courts could seize the property and definitively confiscate it in the event of conviction.
Estimated at more than 200 million euros
“As soon as Gazprombank is involved in luxury real estate transactions anywhere in the European Union [EU], it is a wake-up call that should lead to a proper investigation by EU authorities,” comments Ilia Shumanov, director of the NGO Transparency International-Russia. And all the more so since the property in question, whose value has been estimated at more than 200 million euros, is one of the most expensive on the Côte d'Azur. It includes a main villa of 1,225 square meters, long called "Villa del Mare", and extends over an estate of more than three hectares, with a house for guests and a third building to accommodate domestic employees. Much more than a luxury property, it is at the heart of complex financial arrangements between Gazprom and those close to Vladimir Putin. Asked by Le Monde, neither the oligarchs in question nor the company responded to our questions.
The luxury property entered the Russian fold in 2001 when billionaire Shalva Chigirinsky acquired it and renamed it “Villa Maria Irina”. This businessman has long been one of Russia's main fortunes thanks to his stakes in Sibir Energy, a Russian company listed in London and specializing in the exploration, extraction and refining of oil. But Mr. Chigirinsky lost it when he was caught up in financial difficulties in 2009 and accusations of embezzlement to the detriment of Sibir Energy.
Gazprom Neft, Gazprom's oil subsidiary, took advantage of its competitor's setbacks to absorb it and, in 2010, acquired the Roquebrune-Cap-Martin villa for 70 million euros, while estimates at the time predicted a price three times higher. “In this matter I had no choice,” Shalva Chigirinsky, who had to leave Russia, told Le Monde. Whether it was the price [of the villa] or the way I was ousted from the company [Sibir Energy]. » The deposed owner adds that he “spent a lot of money to repair the villa because it was in disarray, completely in ruins”.
Gazprom Neft becomes the owner of the villa through the French company Maritime Villa Holding, created for the occasion. In 2015 and 2016, the property found itself tossed from one shareholder to another, passing in turn through Luxembourg, Russia, Cyprus but also Panama, while remaining under the ultimate control of Gazprom Neft. These legal arrangements, without apparent economic justification, are also at the heart of the judicial investigation by the Paris prosecutor's office.
Juicy contracts signed with Gazprom
At the end of 2016, billionaire Samvel Karapetyan became the new owner of the villa by purchasing from Gazprom Neft its shares in the company Leyson Holdings, registered in Cyprus, which itself controls the French company Maritime Villa Holding.
This businessman, whose name regularly appears in the list of the 100 richest people in Russia, is the head of the Tashir group, present in the real estate, construction, energy and even finance. Mr. Karapetyan owes his rise largely to lucrative contracts signed with Gazprom. The first were signed in the 1990s, notably in the Kaluga region, southwest of Moscow, where his company built a workers' camp.
According to the investigation published in mid-2016 by the independent Russian media RBC, the year in which he acquired the villa on the Côte d'Azur and benefited from a loan from the gas giant coincided with a significant increase in public contracts for him. profit. The latter increased, according to RBC, from 42.5 billion rubles (530 million euros) in 2014, to 52.9 billion rubles in 2015 and to 20.8 billion rubles in the first three months of the year alone. 2016, which represents on average 40% of its turnover. Among the Tashir Group subsidiaries, Gazstroy, Neftegazstroy, Spetsgazstroy and City Stroy Group supply the gas giant with heating systems, water treatment plants and pipes used in the construction of gas pipelines.
An empty offshore shell established in Seychelles
Mr. Karapetyan and Gazprom are also linked by the Côte d’Azur villa. To take control, the businessman is required to pay off a debt of 112 million euros that Maritime Villa Holding owes to a company in the British Virgin Islands owned by Gazprom Neft. However, Mr. Karapetyan is not taking out a cent to repay this amount. It is his newly acquired company Leyson Holdings which is in charge, thanks to a loan of 115 million euros taken out in December 2016 from Gazprombank, which belongs to Gazprom and Youri Kovaltchouk, a close friend of M . Poutine. In other words, the oligarch remains in debt to the gas giant, who can recover the villa in the event of non-repayment. An arrangement which ultimately allows the Russian group to disappear from the register of owners of the villa, while retaining a form of control.
In April 2020, the Maria Irina villa once again served as collateral, this time for a €50 million loan granted to Leyson, the Cypriot holding company of Samvel Karapetyan, by the offshore company Megan Agency Ltd, registered in the Virgin Islands British and who could therefore become one of the beneficiaries of the villa on the Côte d'Azur. To discover the identity of the lender, you have to pull the thread of the shareholders. Megan Agency Ltd is owned by another offshore shell established in Seychelles, itself controlled by a Russian: Vadym Tregub, nephew of Sergei Tregub, a former member of the Russian intelligence services who also has links to Gazprom. According to the investigation by the Russian investigative media Proekt and the Anti-Corruption Fund of opponent Alexeï Navalny, he would serve as a nominee for Alexeï Miller, the director of Gazprom, to hold real estate assets. An association which led to Sergei Tregub and his nephew being added to the British sanctions list on November 8.
“The oligarchs surrounding Putin are using Gazprom to enrich themselves,” explains Mikhail Krutikhin, co-founder of the RusEnergy consultancy based in Oslo, “they are using it as an instrument to transform public funds into pocket money. »
It remains unclear whether Villa Maria Irina was used by the company or by private individuals when Gazprom Neft was its official owner. According to a rental contract found in the millions of documents revealed by the “Cyprus Confidential” investigation, Gazprom Neft rented the estate to one of its Cypriot subsidiaries in 2015 and 2016 for a monthly rent of 210,000 euros. But the mystery about the identity of the occupants remains unsolved. “No comments to make,” simply replied the company Bordes Estates, responsible for managing the villa. Challenges magazine affirmed in March 2022 that the property was occupied by Alina Kabaeva, a former Russian gymnast presented as the hidden companion of President Putin. Information that Le Monde was unable to verify from official records.
L’ombre de Gazprom plane sur une des plus luxueuses villas de la Côte d’Azur
Officiellement détenue par un milliardaire russo-arménien, la Villa del Mare à Roquebrune-Cap-Martin est en réalité liée au géant russe à travers une cascade de sociétés. La justice française a ouvert une enquête pour blanchiment.
Gazprom, le géant gazier russe dirigé par des proches de Vladimir Poutine qui a échappé aux sanctions européennes, est rattrapé par la justice française. La juridiction interrégionale spécialisée (JIRS) économique et financière du parquet de Paris s’intéresse à une villa de la Côte d’Azur qui, avec ses trois piscines, son court de tennis et son héliport, est l’une des plus luxueuses de la Côte d’Azur. Située à Roquebrune-Cap-Martin (Alpes-Maritimes), près de Monaco, elle fut jadis un pied-à-terre du dictateur zaïrois Sese Seko Mobutu et de sa famille.
Selon les informations du Monde, une procédure judiciaire portant sur des soupçons de « blanchiment aggravé » a été ouverte et confiée au service d’enquêtes judiciaires des finances (SEJF) de Bercy. « Des éléments laissent penser que les schémas d’acquisition successifs de la villa ont été faits au nom de différentes sociétés, dont les détenteurs indirects reviendraient à faire de la société Gazprom le bénéficiaire effectif », détaille le parquet auprès du Monde. Ce sont les soupçons sur l’identité réelle du propriétaire du bien qui ont déclenché l’enquête judiciaire.
Le géant gazier, qui pesait 8 % du PIB de la Russie avant la guerre en Ukraine, est l’un des plus grands contributeurs du budget de l’Etat russe. Une partie de ses revenus permettrait aussi de financer une milice privée engagée sur le front ukrainien, selon des documents dévoilés par Kiev en février. L’entreprise publique est dirigée par des proches de Vladimir Poutine, que ce soit son PDG, Alexeï Miller, ou Viktor Zubkov, le président du conseil de surveillance, qui l’ont tous les deux côtoyé lorsque ce dernier travaillait à la mairie de Saint-Pétersbourg.
Le propriétaire officiel de la villa de Roquebrune-Cap-Martin est, depuis l’automne 2016, un riche homme d’affaires russo-arménien, Samvel Karapetyan. Mais de nombreux éléments réunis par Le Monde, issus de registres officiels et des données qui ont fuité de l’enquête « Cyprus Confidential » montrent que Gazprom garde encore aujourd’hui des liens multiples avec cette villa malgré son retrait officiel en 2016. Selon nos informations, la villa a, par exemple, été mise en gage au profit de Gazprombank et d’une société offshore liée à un dirigeant de Gazprom. Si l’enquête judiciaire établit que les nombreux montages autour du bien immobilier ont permis de dissimuler l’identité du véritable propriétaire de Roquebrune-Cap-Martin, la justice pourrait saisir le bien et le confisquer définitivement en cas de condamnation.
Estimée à plus de 200 millions d’euros
« Dès que Gazprombank est impliquée dans des transactions immobilières de luxe quelque part dans l’Union européenne [UE], c’est une alerte qui doit entraîner une enquête en bonne et due forme de la part des autorités de l’UE », commente Ilia Shumanov, directeur de l’ONG Transparency International-Russie. Et ce, d’autant plus que la propriété en question, dont la valeur a été estimée à plus de 200 millions d’euros, est l’une des plus chères de la Côte d’Azur. Elle comprend une villa principale de 1 225 mètres carrés, longtemps appelée « Villa del Mare », et s’étend sur un domaine de plus de trois hectares, avec une maison pour les invités et une troisième bâtisse pour héberger les employés de maison. Bien plus qu’une propriété de luxe, elle est au cœur de montages financiers complexes entre Gazprom et des proches de Vladimir Poutine. Sollicités par Le Monde, ni les oligarques en question ni l’entreprise n’ont répondu à nos questions.
Le bien immobilier de luxe entre dans le giron russe en 2001 lorsque le milliardaire Shalva Chigirinsky en fait l’acquisition et la rebaptise « villa Maria Irina ». Cet homme d’affaires a longtemps été l’une des principales fortunes de Russie grâce à ses participations dans Sibir Energy, une entreprise russe cotée à Londres et spécialisée dans l’exploration, l’extraction et le raffinage de pétrole. Mais M. Chigirinsky la perd lorsqu’il est rattrapé par des difficultés financières en 2009 et des accusations de détournement de fonds au détriment de Sibir Energy.
Gazprom Neft, filiale pétrolière de Gazprom, profite des déboires de son concurrent pour l’absorber et récupère au passage, en 2010, la villa de Roquebrune-Cap-Martin pour 70 millions d’euros alors que des estimations tablaient à l’époque sur un prix trois fois supérieur. « Dans cette affaire je n’ai pas eu le choix, confie au Monde Shalva Chigirinsky qui a dû quitter la Russie. Que ce soit sur le prix [de la villa] ou sur la manière dont j’ai été évincé de l’entreprise [Sibir Energy]. » Le propriétaire déchu ajoute avoir « dépensé beaucoup d’argent pour réparer la villa car elle était en désordre, complètement en ruine ».
Gazprom Neft devient propriétaire de la villa par l’intermédiaire la société française Maritime Villa Holding, créée pour l’occasion. En 2015 et 2016, le bien immobilier se retrouve ballotté d’un d’actionnaire à l’autre, passant tour à tour par le Luxembourg, la Russie, Chypre mais également le Panama, tout en restant sous le contrôle ultime de Gazprom Neft. Ces montages juridiques, sans justification économique apparente, sont d’ailleurs au cœur de l’enquête judiciaire du parquet de Paris.
De juteux contrats signés avec Gazprom
Fin 2016, le milliardaire Samvel Karapetyan devient le nouveau propriétaire de la villa en rachetant à Gazprom Neft ses parts dans la société Leyson Holdings, immatriculée à Chypre, qui elle-même contrôle la société française Maritime Villa Holding.
Cet homme d’affaires, dont le nom apparaît régulièrement dans la liste des 100 plus grandes fortunes de Russie, est à la tête du groupe Tashir, présent dans les secteurs de l’immobilier, de la construction, de l’énergie ou encore de la finance. M. Karapetyan doit son ascension en grande partie, à de juteux contrats signés avec Gazprom. Les premiers sont signés dans les années 1990, notamment dans la région de Kalouga, au sud-ouest de Moscou, où son entreprise bâtit un campement de travailleurs.
D’après l’enquête publiée mi-2016 par le média russe indépendant RBC, l’année où il acquiert la villa sur la Côte d’Azur et bénéficie d’un prêt du géant gazier coïncide avec une hausse importante de contrats publics à son profit. Ces derniers passent, selon RBC, de 42,5 milliards de roubles (530 millions d’euros) en 2014, à 52,9 milliards de roubles en 2015 et à 20,8 milliards roubles sur les seuls trois premiers mois de l’année 2016, ce qui représente en moyenne 40 % de son chiffre d’affaires. Parmi les filiales de Tashir Group, Gazstroy, Neftegazstroy, Spetsgazstroy ou encore City Stroy Group fournissent au géant gazier des systèmes de chauffage, des usines de traitement d’eau ou des tuyaux utilisés dans la construction de gazoducs.
Une coquille vide offshore établie aux Seychelles
M. Karapetyan et Gazprom sont aussi liés par la villa de la Côte d’Azur. Pour en prendre le contrôle, l’homme d’affaires a l’obligation d’éponger une dette de 112 millions d’euros que Maritime Villa Holding doit à une société des îles Vierges britanniques détenue par Gazprom Neft. Pour autant, M. Karapetyan ne sort pas un centime pour rembourser cette somme. C’est sa société Leyson Holdings, fraîchement acquise, qui s’en charge, grâce à un emprunt de 115 millions d’euros contracté, en décembre 2016, auprès de Gazprombank, qui appartient à Gazprom et à Iouri Kovaltchouk, un proche de M. Poutine. Autrement dit, l’oligarque reste endetté auprès du géant gazier, qui peut récupérer la villa en cas de non-remboursement. Un montage qui permet finalement au groupe russe de disparaître du registre des propriétaires de la villa, tout en gardant une forme de contrôle.
En avril 2020, la villa Maria Irina sert une nouvelle fois de garantie, cette fois pour un prêt de 50 millions d’euros consenti à Leyson, la holding chypriote de Samvel Karapetyan, par la société offshore Megan Agency Ltd, immatriculée dans les îles Vierges britanniques et qui pourrait donc devenir l’un des ayants droit de la villa de la Côte d’Azur. Pour découvrir l’identité du prêteur, il faut tirer le fil des actionnaires. Megan Agency Ltd est détenue par une autre coquille vide offshore établie aux Seychelles, elle-même contrôlée par un Russe : Vadym Tregub, neveu de Sergei Tregub, un ancien membre des services de renseignement russes qui a lui aussi des liens avec Gazprom. D’après l’enquête du média d’investigation russe Proekt et du Fonds anticorruption de l’opposant Alexeï Navalny, il servirait de prête-nom à Alexeï Miller, le dirigeant de Gazprom, pour détenir des actifs immobiliers. Une association qui a valu à Sergei Tregub et son neveu d’être ajoutés à la liste des sanctions britanniques le 8 novembre.
« Les oligarques qui entourent Poutine se servent de Gazprom pour s’enrichir, explique Mikhail Krutikhin, le cofondateur du cabinet de conseil RusEnergy installé à Oslo, ils s’en servent comme d’un instrument pour transformer des fonds publics en argent de poche. »
Reste à savoir si la villa Maria Irina a été utilisée par l’entreprise ou par des personnes privées lorsque Gazprom Neft en était le propriétaire officiel. Selon un contrat de location retrouvé dans les millions de documents révélés par l’enquête « Cyprus Confidential », Gazprom Neft a loué le domaine à l’une de ses filiales chypriotes en 2015 et 2016 pour un loyer mensuel de 210 000 euros. Mais le mystère sur l’identité des occupants reste entier. « Aucun commentaire à faire », se contente de répondre la société Bordes Estates, chargée de gérer la villa. Le magazine Challenges affirmait en mars 2022 que le bien a été occupé par Alina Kabaeva, ex-gymnaste russe présentée comme la compagne cachée du président Poutine. Une information que Le Monde n’a pas pu vérifier à partir des registres officiels.
Tencent rocked by new Chinese online gaming restrictions
Shares in China’s most valuable company and gaming rival NetEase suffer dramatic falls on threat to revenues
Shares in China’s biggest online gaming companies were headed for record losses on Friday after Beijing fired a volley of new measures to tighten control over the industry.
In a set of proposed guidelines, the National Press and Publication Administration, China’s gaming regulator, said it would curb excessive consumption and high-priced features on games, as well as require publishers to issue more warnings to users.
Tencent, China’s biggest company by market capitalisation, tumbled as much as 15.7 per cent following the announcement and was on track for its sharpest one-day drop on record even after paring losses to about 14 per cent.
Shares in rival NetEase were down more than 20 per cent in Hong Kong, setting up the company’s US listing for the steepest daily fall since its Wall Street debut in 2010.
Those falls helped drag Hong Kong’s Hang Seng Tech index of large Chinese tech stocks down 3.6 per cent on the day, bringing year-to-date losses to more than 13 per cent.
“This was supposed to be a quiet day before Christmas and now you’ve got big, big [trading] volumes going through,” said the trading desk head at one investment bank in Hong Kong. “I haven’t seen moves like this in these names before.”
China’s online gaming industry is the biggest in the world with around 650mn users and annual revenues of $45bn last year, according to Goldman Sachs.
“Everybody is shocked [by the proposed regulations],” said Chenyu Cui, a Shanghai-based analyst with Omdia, a technology research group.
China’s regulators have typically focused on restricting the exposure of Chinese children to online gaming, but Friday’s announcement marked a significant new effort to curb adult spending, she added.
Goldman Sachs analysts noted earlier this year that Chinese gaming developers have “centred their attention” on revenue generation from in-game micro-transactions. These features, the bank’s analysts said, held greater revenue growth potential than traditional games played on consoles or personal computers, where there has been a struggle to raise the prices of titles.
Cui also said that a core marketing focus of many gaming groups has been promotions to reward consumers for consecutive days of play and account top-ups, features which appear to have been directly targeted by the regulator.
The gaming platforms have been squarely in Beijing’s crosshairs since 2021, as part of President Xi Jinping’s sweeping “common prosperity” campaign to reform social values in China and bring the country’s tech giants more firmly under Communist party control.
At the height of the crackdown, Chinese state media labelled gaming as “spiritual opium” and regulators halted approval of new gaming titles for nearly a year. Chinese children were also banned from playing video games for more three hours a week, a measure that was difficult to police.
Since April 2022, however, Beijing has resumed the approvals process for new online games, part of a broader reprieve for tech companies amid slowing economic growth in China.
Revolut swings to loss as cost increases offset boost from higher rates
Fintech says it remains committed to UK banking licence application
Revolut swung to a loss last year as higher costs offset a windfall from higher interest rates, according to delayed annual accounts from the fintech group on Friday.
The company posted a pre-tax loss of £25.4mn in 2022, compared with a pre-tax profit of £40mn the previous year which had been fuelled largely by a surge in cryptocurrency trading. Revenue rose 45 per cent year on year to £923mn as its interest income rose to £83mn from £1.7mn, thanks to interest rate increases from central banks.
Administrative expenses rose to £667.1mn from £380.1mn as the group’s headcount more than doubled to nearly 6,000 employees.
The fast-growing fintech, which has applied for a banking licence in the UK, attracted scrutiny last year after its auditor BDO warned that the bulk of its revenue “may be materially misstated”. This year it gave Revolut another qualified audit but said this was “solely in respect of the comparability of the current year’s figures for revenue and related balances with the prior year figures”.
Revolut’s 2022 results had been due to be filed by the end of September, nine months after the end of its financial year. However, the company was handed an extension until the end of December from the government agency Companies House for a second consecutive year.
Chief executive Nik Storonsky said: “Looking ahead, our focus is on continued growth across all our markets. We remain committed to our ongoing UK banking licence application in addition to bringing the Revolut app to new markets and customers around the world.”