Raphael Stevens

Chinese President Xi Jinping arrived Thursday in the special administrative region of Hong Kong, state media said.
The trip is for the 25th anniversary on Friday of Hong Kong’s handover to China from British colonial rule.
The visit marks Xi’s first travel off mainland China since the pandemic began more than two years ago.

China’s President Xi Jinping, pictured on the left, looks at Hong Kong’s outgoing Chief Executive Carrie Lam as he prepares to speak following his arrival in Hong Kong on June 30, 2022, for celebrations marking the 25th anniversary of Hong Kong’s handover from Britain to China.
Selim Chtayti | Afp | Getty Images

BEIJING — Chinese President Xi Jinping arrived Thursday in the special administrative region of Hong Kong, state media said.
The trip is for the 25th anniversary on Friday of Hong Kong’s handover to China from British colonial rule.

The visit marks Xi’s first travel off mainland China since the pandemic began more than two years ago.
In a brief speech upon arriving in Hong Kong, Xi said Beijing would stick to the “one country, two systems” policy that he claimed would “ensure the long term prosperity and stability in Hong Kong,” according to an official English translation carried by state media.
The “one country, two systems” policy has allowed the Chinese city of Hong Kong to operate as a semi-autonomous region under Beijing’s rule.
Large-scale, violent protests in 2019 were initially triggered by a controversial extradition bill that many in Hong Kong claimed went against the principle of “one country, two systems.” The region’s retail sales contracted in 2019 and 2020 as protests disrupted the local economy, even before the pandemic shut Hong Kong off from foreign and mainland tourists. 

Xi said Thursday that Hong Kong overcame “severe tasks” and “a number of risks and challenges” in the last few years, without going into detail.

In a 2020 speech in Shenzhen, Xi said the mainland Chinese city should promote development of Guangdong, Hong Kong, Macao — the Greater Bay area — and enrich the new practice of “one country, two systems.'”
He did not specifically say what the “new practice” entailed. That speech commemorated the 40th anniversary of the establishment of the Shenzhen special economic zone in the southern province of Guangdong.
Xi closed his remarks Thursday by referring to his aim of building China into a greater power.
“Hong Kong will make great contribution to the rejuvenation of the Chinese nation,” he said.
Xi arrived in Hong Kong with his wife at West Kowloon railway station, according to a live broadcast Thursday afternoon on state media.
The stream showed a station filled with children and adults chanting “welcome” in Mandarin and waving the flags of Hong Kong and China.
On Friday, Beijing loyalist John Lee will begin his five-year term as Hong Kong chief executive, replacing outgoing Chief Executive Carrie Lam. Lee was the only candidate for the position in an election held in May.
— CNBC’s Su-Lin Tan contributed to this report.

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Rather than spend or invest, 58.3% of survey respondents said they preferred to save their money, according to a People’s Bank of China second quarter report.
That’s a jump from 54.7% in the first quarter, which already marked the highest on record for data going back to 2002.
If Chinese consumers did plan to increase spending in the next three months, the most popular choice was education, followed by health care and big-ticket items, the survey found.

Education remained the most popular category for Chinese consumer’s planned spending, according to a People’s Bank of China survey in the second quarter of 2022.
China News Service | China News Service | Getty Images

BEIJING — Chinese consumers’ inclination to save is at its highest in two decades, the People’s Bank of China found in a second quarter survey.
Rather than spend or invest, 58.3% of survey respondents said they preferred to save their money. That’s a jump from 54.7% in the first quarter, which already marked the highest on record for the data which goes back to 2002.

The new record came as mainland China enforced strict Covid controls in the second quarter to control the virus’ worst outbreak in the country since early 2020. Shanghai locked down in April and May, while Beijing banned dining out in restaurants in May, among other restrictions.
Both cities have since eased those controls, and this week, the central government cut the quarantine time for international travelers and for local contacts of people infected with Covid.
The PBOC said its quarterly survey, conducted since 1999, covered 20,000 people with bank deposits across 50 large-, medium- and small-sized cities in the country. The latest results came out Wednesday.
A big driver of consumer cautiousness is worries about future income.

By several measures, the PBOC’s survey pointed to falling income expectations. The study’s index for the job outlook fell to 44.5%, the lowest since the first quarter of 2009’s 42.2% print, according to the CEIC database.

The overall share of respondents most inclined to spend rose slightly from the first quarter by 0.1 percentage points to 23.8%.
If Chinese consumers did plan to increase spending in the next three months, the most popular choice was education, followed by health care and big-ticket items, the survey found.
However, consumers’ inclinations to invest fell by 3.7 percentage points to 17.9% in the second quarter, with stocks the least attractive asset.
The unemployment rate in China’s 31 largest cities has surpassed pandemic highs this year to reach 6.9% in May. The jobless rate for young people ages 16 to 24 has remained far higher, at 18.4% in May. The number of higher education graduates reached new annual records in the last few years.

China tries to boost youth employment

To address young people’s unemployment, the country’s economic planning agency will implement a “bailout policy” to help businesses stabilize and expand their headcount, Yang Yinkai, Deputy Secretary-General of the National Development and Reform Commission, told reporters this week. That’s according to a CNBC translation of the Chinese.
He said small businesses that offered college graduates a certain number of jobs and met other conditions could get preferential support. Yang added the government would carry out vocational skills training, and speeding up recruitment of civil servants and teachers for kindergartens to middle schools.

Read more about China from CNBC Pro

Earlier this month, Beijing also called on state-owned enterprises to increase their recruitment of college graduates this year.
In a statement to CNBC this month, the PBOC said its employment-friendly measures included helping migrant workers and university graduates become eligible for guaranteed start-up loans in regions away from their hometown.
The central bank said it would encourage banks to extend loan repayment deadlines for small businesses and truck drivers, as well as those for consumption loans and mortgages for personal residences.

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Coinbase plans to hire a regional manager to oversee its European operations, Nana Murugesan, the firm’s vice president of international, told CNBC.
The company is in talks to get regulatory approval in various countries, including France, said Katherine Minarik, Coinbase’s vice president of legal.
Coinbase is racing to keep pace with rivals like Binance, FTX and Crypto.com, which have gained significant traction in territories outside the U.S.

Coinbase reported a 27% decline in revenues in the first quarter as usage of the platform dipped.
Chesnot | Getty Images

Coinbase is seeking licenses with various countries in Europe as part of an aggressive expansion in the region.
The exchange already has an active presence in the U.K., Ireland and Germany, but wants to set up operations in Spain, Italy, France, the Netherlands and Switzerland, according to Nana Murugesan, Coinbase’s vice president of international. Coinbase recently hired its first employee in Switzerland, he says.

The U.S. crypto giant is looking to international markets to drive growth amid fears of a looming “crypto winter.” Earlier this month, Coinbase announced it would lay off 18% of its workforce, while other firms including Gemini and BlockFi haven taken similar steps amid a fall in crypto prices.
Still, Murugesan says Coinbase is planning to hire a regional manager to oversee its European operations. The firm is mainly prioritizing “mission-critical roles” in fields like security and compliance after a period of rapid growth, he added.
“When we entered U.K. and Europe, this was actually during the last big bear market in 2015-2016,” said Murugesan, who joined Coinbase in January 2022.
“But then when you fast forward to 2017-2018, the U.K. is now a massive part of our business, as is Europe,” he added. “We entered, we made bets. I’m sure it was probably a tough time. But it’s paid off, significantly.”
Coinbase is in talks to get approval under anti-money laundering rules in a number of countries, including France, said Katherine Minarik, the company’s vice president of legal.

The company is gearing up for MiCA, or Markets in Crypto-Assets, a landmark piece of legislation from the EU that aims to harmonize the regulation of crypto across the bloc.

Officials from the European Council and Parliament are due to meet Thursday in a bid to reach an agreement on the rules. If all goes smoothly, the expectation is that MiCA will come into force by 2024.
Once approved, it will enable Coinbase to “passport” its services into all 27 EU member states, Minarik said.

Slow and steady wins the race?

While Coinbase is the biggest crypto exchange in the U.S., it’s facing intense competition from newer players like Binance, FTX and Crypto.com. Binance’s U.S. affiliate recently ditched fees for customers trading bitcoin, news that sent shares of Coinbase tumbling.
Coinbase is racing to keep pace with its rivals, which are gaining significant traction in territories outside the U.S.
In the Middle East, for example, both Binance and FTX obtained licenses in Dubai. Binance also secured authorization in France and Italy and is seeking approvals in additional European countries.
“Being a publicly traded company, the bar is very high,” Murugesan said. “Sometimes it may take a bit longer to get some things done. But we want to stay the course.”
At the same, major crypto players — Coinbase included — are reeling from a dramatic plunge in digital currency prices, which some investors believe will be the start of a much longer downturn known as “crypto winter.”

A confluence of factors is weighing on the market, including higher interest rates from the Federal Reserve and the collapse of the UST stablecoin. The slump in token prices has in turn led to solvency issues at investment firms that loaded up with leverage, like Three Arrows Capital.
Coinbase made a sudden U-turn on its cost-cutting strategy this month, announcing plans to cut roughly 1,100 employees globally. Though the cuts affected 18% of Coinbase’s global headcount overall, Murugesan says its U.K. workforce was less impacted with around 7% of roles cut locally.
Coinbase reported a 27% decline in revenues in the first quarter as overall usage of the platform declined. The business is currently heavily reliant on trading fees. But it’s hoping to diversify into new products, including nonfungible tokens and interest-like rewards known as staking.
Coinbase has around 9.2 million monthly transacting users globally but less than 50% of those are using the app for trading, Murugesan said.

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With a recession possibly around the corner, investors are writing fewer — and smaller — checks.
That’s led to a rotation out of certain pockets of fintech such as crypto and “buy now, pay later.”
Investors are flocking to less sexy areas like digitizing payment processing for businesses.

There has been something of a rotation out of certain pockets of fintech that were hyped by venture capitalists last year, such as crypto and “buy now, pay later,” and into less sexy areas focused on generating stable streams of income.
Jantakon Kokthong / Eyeem | Eyeem | Getty Images

Financial technology is the hottest area of investment for venture capitalists — $1 out of every $5 of funding flowed into fintech startups in 2021.
But with a recession possibly around the corner, investors are writing fewer — and smaller — checks. And they’re getting much more selective about the kind of companies they want to back.

According to CB Insights, global venture investment in fintech firms sank 18% in the first quarter of 2022.
That’s led to something of a rotation out of certain pockets of fintech that were hyped by venture capitalists last year, such as crypto and “buy now, pay later,” and into less sexy areas focused on generating stable streams of income, like digitizing payment processing for businesses.
So what’s hot in fintech right now? And what’s not? I went to the Money 20/20 Europe event in Amsterdam in June to speak to some of the region’s top startup investors, entrepreneurs and analysts. Here’s what they had to say.

What’s hot?

Investors are still obsessed with the idea of making and accepting payments less onerous for businesses and consumers. Stripe may be facing a few questions over its eyewatering $95 billion valuation. But that hasn’t stopped VCs from looking for the next winners in the digital payments space.
“I think we’ll see a next generation of fintechs emerge,” said Ricardo Schafer, partner at German venture capital firm Target Global. “It’s a lot easier to build stuff.”

Niche industry buzzwords like “open banking,” “banking-as-a-service” and “embedded finance” are now in vogue, with a slew of new fintech firms hoping to eat away at the volumes of incumbent players.
Open banking makes it easier for firms that aren’t licensed lenders to develop financial services by linking directly to people’s bank accounts. Something that’s caught the eye of investors is the use of this technology for facilitating payments. It’s an especially hot area right now, with several startups hoping to disrupt credit cards which charge merchants hefty fees.

Companies like Visa, Mastercard and even Apple are paying close attention to the trend. Visa acquired Sweden’s Tink for more than $2 billion, while Apple snapped up Credit Kudos, a company that relies on consumers’ banking information to help with underwriting loans, to drive its expansion into “buy now, pay later” loans.
“Open banking in general has gone from a big buzz word to being seamlessly integrated in processes that nobody really cares about anymore, like bill payments or top-ups,” said Daniel Kjellen, CEO of Tink.
Kjellen said Tink is now so popular in its home market of Sweden that it’s being used by about 60% of the adult population each month. “This is a serious number,” he says.
Embedded finance is all about integrating financial services products into companies that have nothing to do with finance. Imagine Disney offering its own bank accounts which you could use online or at its theme parks. But all the work that goes into making that happen would be handled by third-party firms whose names you might never encounter.
Banking-as-a-service is a part of this trend. It lets companies outside of the traditional world of finance piggyback on a regulated institution to offer their own payment cards, loans and digital wallets. 
“You can either start building the tech yourself and start applying for licenses yourself, which is going to take years and probably tens of millions in funding, or you can find a partner,” said Iana Dimitrova, CEO of OpenPayd.

What’s not?

Got an idea for a new crypto exchange you’re just dying to pitch? Or think you might be onto the next Klarna? You might have a tougher time raising funds.
“The tokenization and the coin side of things we want to stay away from right now,” said Farhan Lalji, managing director at fintech-focused venture fund Anthemis Capital.
However, the infrastructure supporting crypto — whether it’s software analyzing data on the blockchain or keeping digital assets safe from hacks — is a trend he thinks will stand the test of time.
“Infrastructure doesn’t depend on one particular currency going up or down,” he said.

Investors see more potential in companies making it easier for people to access digital assets without all the knowhow of someone who trades cryptocurrencies and nonfungible tokens every day — part of a broader trend called “Web3.”
When it comes to crypto, “the areas that most interest us today are areas that we have an analogue experience to in classic industries,” said Rana Yared, a partner at venture capital firm Balderton.
As for BNPL, there’s been something of a shift in the business models VCs are gravitating toward. While the likes of Klarna and Affirm have seen their valuations plummet, BNPL startups focused on settling transactions between businesses are gaining a lot of traction.
“Growth in B2C [business-to-consumer] BNPL is slowing … and regulatory concerns could curtail growth,” said Philip Benton, fintech analyst at market research firm Omdia.
Business-to-business BNPL, on the other hand, is “starting from a very low base” and therefore has “huge” potential, he added.

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