Jack Ma under scrutiny, Brexit becomes reality, Bitcoin price surge and Christmas movie streaming
28 December 2020 - 3 January 2021
Happy New Year! Welcome to 2021!
UNDER THE MICROSCOPE
Jack Ma's fintech and retail empire is being scrutinised like never before.
To recap: China's regulators suspended the mega IPO of Ant Group (parent company of payments app Alipay) at the 11th hour, causing much confusion and concern. The dual listing in Hong Kong and Shanghai was set to be jumbo-sized. In HK alone, Ant Group had to refund US$167 billion to 1.55 million investors who previously subscribed to the offering.
For weeks, Beijing kept its cards close to its chest. Then, towards the end of December, China's central bank summoned Ant's leadership and ordered them to draft a "rectification plan" to fix various problems. According to the statement, Ant's governance and compliance policies are lacking; the organisation unfairly drives out rivals from the market; and it needs to hold sufficient capital to cover bad debts.
The latter is a crucial point as Ant's business includes unsecured loans to individuals alongside its digital insurance and wealth management services and almighty e-wallets. The Wall Street Journal reports that Ant's lending strategy - targeting millions of consumers and small firms - was deemed to be highly risky.
If this is the case, China's regulators should be commended for taking steps to avert a potentially catastrophic credit crisis. However, the timing is still suspicious. Why was Ant's IPO approved in the first place? What happened to due diligence? Why was no one paying attention to the rising volume of micro loans?
These questions fuel speculation that the Communist Party wants to punish Ma for his outspoken ways. He's a famous and rich entrepreneur who sometimes clashes with the regime. It would also explain why his original brainchild Alibaba is now suddenly under investigation for monopolistic behaviour.
By squeezing Ma, Beijing is re-asserting its authority while sending a stern warning to the country's other private sector tech titans, e.g. Tencent, JD.com.
THE BREAK-UP
After four years of political wrangling and dubious slogans ("Brexit means Brexit" springs to mind), the UK formally started a new relationship with the European Union on Friday, 1 January.
PM Boris Johnson said Britons have "freedom in [their] hands" and was optimistic about the outcome. France's Emmanuel Macron promised his country would remain an ally but lamented the "lies and false promises" behind the 2016 referendum. Meanwhile, Belgian politician and MEP Guy Verhofstadt predicted that younger generations would "find their way back to the European family".
In reality, the messy divorce proceedings are far from done. The 1,246-page Trade and Cooperation Agreement is being applied on a provisional basis until each member of the EU bloc signs off on the text. For the moment, the UK's departure from the single market won't impact tariff-free trade but there's additional bureaucracy in the form of customs checks and paperwork.
Although rules on border control, fishing, university exchanges, driving licences and pet passports have been established, negotiations on services and the financial sector are pending. And there will undoubtedly be hiccups to sort out once everything is put into practice.
Essentially, the Brexit saga has more episodes to come, whether the public wish to tune in or not. As a result, London and Brussels will need to be exes on friendly terms for the foreseeable future.
ASSET APPRECIATION
Bitcoin certainly ended 2020 with a bang and not a whimper. The cryptocurrency's hot streak in December was unmatched, with price levels smashing records every few days.
On New Year's Eve, Bitcoin was trading around the US$29,000 mark, according to Bloomberg. The financial asset rallied more than 250% over the past 12 months.
To add to the excitement, the price of Bitcoin exceeded US$33,000 on Saturday, just hours after crossing the US$30,000 threshold. And many analysts think there's room to grow further.
Scepticism about unregulated digital currencies appears to be fading as investors become increasingly comfortable with the concept of Bitcoin and blockchain technology.
On top of that, massive stimulus spending in response to Covid-19 has boosted demand for hedges (protection) against inflation. Major central banks are printing huge amounts of money to prop up their economies, however, a consequence of this is usually reduced purchasing power.
So investors are turning to Bitcoin as a store-of-value, similar to gold, since it has a finite and fixed supply. As Michael Saylor, Microstrategy CEO, notes: "Bitcoin is the world's first engineered safe-haven investment...it's very appealing to anybody that wants to preserve shareholder wealth."
CHRISTMAS BLOCKBUSTERS
The festive season's blockbuster battle took place primarily at home instead of the cinema.
Both Disney and Warner Bros. competed for eyeballs over the Christmas break with the official streaming releases (in the US) of Pixar's Soul and Wonder Woman 1984. While the studios have yet to announce exact viewing figures, surveys suggest the movies were big draws for Disney+ and HBO Max.
WW1984 also marked the launch of WarnerMedia's simultaneous VOD/theatre model after Tenet failed to ignite the box office in August. Gal Gadot's latest outing as superhero Diana Prince performed relatively better though, collecting US$102 million worldwide from the small pool of cinemas open for business.
Of course, that figure pales in comparison to typical receipts, but Hollywood isn't operating in normal circumstances. In fact, the situation is so overwhelming that executives don't even know how to address the elephant in the room, i.e. rampant piracy and "stream-ripping".
As for the films themselves, WW1984 is a disappointing sequel, let down by a weak script, wooden acting and uninspired action sequences.
Soul, on the other hand, is a heartwarming animation featuring gorgeous visuals and excellent voice work by Jamie Foxx, Tina Fey and Graham Norton. In true Pixar fashion, the story will make you laugh and cry - but be prepared to shed extra tears when you see scenes of pre-pandemic city life.