Raphael Stevens

The International Olympics Committee has launched a mobile game based on the upcoming Beijing 2022 winter event that incorporates non-fungible tokens.
Olympic Games Jam: Beijing 2022 will let players compete in a number of sporting events, including snowboarding and skiing.
People will be able to buy digital versions of the iconic Olympic pins and trade them with other users on a marketplace.

Olympic Games Jam: Beijing 2022 is a Winter Games-themed game that incorporates non-fungible tokens (NFTs).

The International Olympic Committee has become the latest organization to jump into the non-fungible token craze.
The association that organizes the Olympic Games said Thursday it has launched a mobile game based on the upcoming Beijing 2022 winter event. The game will incorporate NFTs, collectible crypto tokens designed to represent ownership of virtual properties.

The app, called Olympic Games Jam: Beijing 2022, was developed by nWay, a blockchain game studio owned by Hong Kong-headquartered firm Animoca Brands. NWay’s titles reward users with NFTs as they progress, part of a fast-growing genre of games known as “play to earn.”
Olympic Games Jam: Beijing 2022 will let players compete in a number of sporting events, including snowboarding and skiing. Users can also don their avatars with a range of custom skins.
People will be able to buy digital versions of the famous Olympic pins and trade them with other users on nWay’s marketplace. The digital pins are licensed through the IOC’s official licensing program, with the organization taking royalties on each sale.
Taehoon Kim, CEO of nWay, said the company’s new game would allow people to “own a piece of Olympic history.”
“We intend to support the game with continuous updates in the months to come, to keep the players engaged, and the Olympic spirit ongoing,” he said in a statement Thursday.

An nWay spokesperson said the game will be available in each country where Apple’s App Store and Google Play are available. This excludes China, which has strict regulations both on games — all of which must be approved by Beijing officials — and crypto. The Chinese government moved to stamp out all crypto-related activities last year.
The launch arrives a day before the opening ceremony for the Beijing Winter Games. The IOC first unveiled plans to enter the NFT space last year, introducing virtual pins that can be collected or traded. It hopes to expand the audience for these pins with its new game.
The move could prove controversial, however. Several brands have tried to break into the NFT market, often facing criticisms due to concerns over fraudulent activity in the market and the environmental impact of cryptocurrencies.
NFTs have proven particularly unpopular with gamers, who have protested various moves in the space from publishers like Ubisoft and Team17, the maker of Worms.Gamers have criticized NFTs as a cash grab, with echoes of the controversy surrounding “pay to win” mechanics where players can gain an advantage over others by shelling out real cash for better items or abilities.
Proponents of NFTs, on the other hand, say they provide people with the ability to own in-game items in a way that they can’t on centralized services from big publishers. NFTs can be thought of as a digital receipt on the blockchain which says you own a particular item.
Disclosure: CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.

WATCH LIVEWATCH IN THE APP More

FOR YEARS after the global financial crisis the world economy was starved of investment. The aftermath of the covid-19 downturn has been drastically different. In America private non-residential investment is only about 5% below its pre-pandemic trend, compared with a shortfall of nearly 25% in mid-2010, the equivalent point in the previous economic cycle (see chart). The country has enjoyed the fastest rebound in business investment in any recovery since the 1940s, according to Morgan Stanley, a bank. In the rich world as a whole, predicts the World Bank, total investment will have overtaken its pre-pandemic trend by 2023.The lacklustre investment of the 2010s was largely blamed on slow output growth and dismal prospects for the economy. By contrast, the vibrant recovery this time is part of a V-shaped rebound encompassing growth, employment and—less happily—inflation. It helps, too, that investment fell less steeply than it did in 2008-09, even as GDP sank at rates not seen since the Depression. Economies shrank in spring 2020 mainly because consumption disappeared as people stayed home.Yet the investment rebound is not purely a cyclical bounceback. The changes wrought by the pandemic have necessitated more investment, too. The extent to which such investment continues will depend on whether those changes endure. One feature of the pandemic, for instance, has been soaring demand for everything digital. As a result, investment in computers in America is 17% above its pre-covid trend. Roughly a year ago the Taiwan Semiconductor Manufacturing Corporation announced that it would spend $100bn over three years to expand its chipmaking output. In mid-January 2022 it upped the stakes, saying it would spend $40bn-44bn this year alone. Days later Intel, another chipmaker, said it would invest more than $20bn in two factories in Ohio.Blockages in the global supply chain for goods have also led to a splurge on new capacity. In 2021 shipping companies ordered the equivalent of 4.2m twenty-foot containers—a record, according to Drewry, a consultancy. Perhaps the archetypal business investment of the pandemic is being made by logistics companies testing whether autonomous cranes can increase throughput at ports and rail terminals.As the heat of crisis has passed, the pace of the investment rebound has subsided a little. A composite indicator built by JPMorgan Chase, a bank, suggests that global capital spending rose at a underwhelming rate of 2.2% in the fourth quarter of 2021. Economists have recently marked down their forecasts for global GDP growth in 2022 owing to the spread of the Omicron variant of coronavirus and the prospect of tighter monetary policy, both of which might weigh on bosses’ willingness to splash out on risky projects.There are, however, three reasons why business investment might be stronger in the 2020s than it was in the 2010s. The first is that companies are likely to keep spending on their supply chains as they seek to strengthen and diversify them. During the pandemic many have discovered the inconvenience of distant suppliers shutting down when lockdowns or staff shortages strike: factory closures in Vietnam last year, for instance, imperilled America’s supply of tennis shoes and yoga pants. Firms must also cope with increasingly fraught geopolitics, which increases the chances of tariffs on trade and state meddling. This may not be good news for economic growth, because fragmentation means duplication and inefficiency. But it does mean tying up more capital.The second reason to expect more investment is the growing optimism about the potential of new technologies to boost productivity growth. Not long ago economists fretted that the world was running out of useful ideas. Yet firms are increasingly betting on technological progress. Intellectual property now makes up 41% of America’s private non-residential investment, compared with 36% before the pandemic and 29% in 2005. In 2021 the big five technology firms—Alphabet, Amazon, Apple, Meta and Microsoft—alone spent $149bn on R&D.Impressive technological advances are everywhere, from synthetic biology and the “messenger RNA” vaccines with which the world is battling covid-19, to areas such as virtual reality and decentralised finance. The advances in some frontier fields are headline-grabbing. In December Synchron, a medical-technology firm, revealed that a man with one of its chips implanted next to his brain’s motor cortex had sent a tweet just by thinking it. In January surgeons announced that they had successfully implanted a pig’s heart into a man for the first time.The third force driving investment higher is decarbonisation. A number of countries, together making up 90% of the world economy, have pledged to reduce carbon emissions to net zero over the coming decades in order to fight climate change. If that goal is to be achieved, the world will need everything from electric-vehicle charging infrastructure to battery storage and energy-efficient housing.Punters are pouring money into green-tinged investment funds, the assets of which amounted to $2.7trn in the fourth quarter of 2021, according to Morningstar, a data provider. Global investment spending on the transition away from fossil fuels reached $755bn last year, about half of which was spent on renewable energy, according to BloombergNEF, a research firm. Spending on electric vehicles has risen particularly quickly, by 77% since 2020 to $273bn, helped along by rapidly shifting consumer preferences and big orders from delivery and car-rental companies.If net-zero targets are to be met, however, then the green-investment boom still has a long way to run. The Office for Budget Responsibility, Britain’s fiscal watchdog, estimates that achieving the country’s target by 2050 requires investment worth about 60% of its GDP today, three-quarters of which would have to be stumped up by the private sector. If that share were to apply across the rest of the rich world too, then its need for private-sector green investment would exceed $20trn at present values. Other estimates of what is needed are higher still.An investment boom is hardly nailed on. The mass upheaval of supply chains is still a subject that is more often talked about than seen in the statistics. There were plenty of notable advances in the previous economic recovery, which began only two years after the launch of the first iPhone in 2007. Yet investment remained tepid (perhaps because many new technologies seem not to need much capital). Net-zero targets could always be missed.But the pay-offs to R&D investment, at least, may be rising. In a recent research note Yulia Zhestkova of Goldman Sachs, another bank, found that in America between 2016 and 2019 there was a positive correlation between an industry’s investment in intellectual property and its labour-productivity growth. It would not take much of a productivity revival to significantly boost the outlook for growth, which is being weighed down by population ageing. So-called total factor productivity growth, which measures increases in GDP that cannot be attributed to more capital or hours worked, averaged 1.2% a year between 1880 and 2020, notes Ms Zhestkova. By contrast, the figure was only about 0.5% in the 2010s. Simply returning to the historical average would create the prospect of a larger economy in the future, giving firms yet another reason to invest. ■This article appeared in the Finance & economics section of the print edition under the headline “The urge to splurge” More

CHINA IS HAUNTED by the spectre of the “middle-income trap”, the notion that emerging economies grow quickly out of poverty only to get stuck before they get rich. “During the next five years, we must take particular care to avoid falling into the middle-income trap,” said Li Keqiang, China’s prime minister, in 2016. Lou Jiwei, then China’s finance minister, once put the odds of China becoming ensnared at 50%.The trap was named by Homi Kharas and Indermit Gill, two economists, in 2006, when they were both at the World Bank. It raises an obvious question: what counts as middle income and what would qualify as surpassing it? Mr Kharas and Mr Gill adopted the bank’s own income classifications. These were established in 1989 when the bank drew a line separating high-income countries from the rest. The line had to accommodate all of the countries that were then considered “industrial market economies”. It was drawn at a national income per person of $6,000 in the prices prevailing in 1987, just low enough to include Ireland and Spain. That line is now $12,695. It rises in step with a weighted average of prices and exchange rates in five big economies: America, Britain, China, the euro area and Japan. Eighty countries met that threshold in 2020, three fewer than the year before. The pandemic relegated Mauritius, Panama and Romania to the middle division.Despite its leaders’ fears, or perhaps because of them, China is now on the cusp of becoming a high-income country by this definition (see chart). Based on the latest available forecasts from Goldman Sachs, we calculate that China could cross the line next year, helped in part by its strong currency. (The transition would not be officially announced until mid-2024, when the World Bank updates its classifications based on the previous year’s data.) If we are right, then 2022, the year of the tiger, could be China’s last as a middle-income country. It will be a fatter cat thereafter.The threshold, of course, is arbitrary. Several countries (including Argentina, Russia and even Venezuela) have surpassed it only to flounder or fail in subsequent years. A lasting escape from the middle-income trap requires a more fundamental transition. Countries at this intermediate stage of development can encounter a variety of pitfalls. They may face diminishing returns to capital. They typically run out of workers to move out of agriculture. And they must invest heavily in education, beyond the basic schooling a factory hand needs to follow instructions. The truer test of a high-income country is how well it copes with such threats to its growth. How is China faring on these three counts?China is still accumulating capital at a furious pace. It invested 43% of its GDP in the five years before the pandemic. The high-income countries averaged only half that percentage. But China’s high investment rate is perhaps not as fruitless as is often assumed. Just as its investment remains high by the standards of rich countries, so does its GDP growth rate. Indeed, the ratio between its investment share in output and its growth rate (sometimes called the incremental capital-output ratio, or ICOR) still looks favourable in comparison with high-income countries.What about other sources of growth? In its annual check-up of China’s economy, released on January 28th, the IMF noted with concern that China’s “total factor productivity” growth, which measures changes in output that cannot be attributed to more capital or labour, fell in the past decade, compared with the ten years before. It attributed this slackening to “a stalling” of structural reforms, especially of state-owned enterprises. “Market dynamism has been losing steam recently,” it argued. But this kind of productivity is notoriously hard to measure. And according to one gauge from the Conference Board, a business group, it is rising notably faster in China than in high-income countries (see chart).China’s employment patterns still differ markedly from those of more prosperous countries. Surprisingly, perhaps, the share of its workforce in construction is lower than the high-income average. The percentage in manufacturing is higher (19% compared with an average of 13%) and the share still in agriculture is far higher—about 25% compared with a high-income average of 3%. From one perspective, this residual rural workforce is a reason for optimism. If China can achieve high-income levels with a quarter of its workers marooned in agriculture, imagine what it will do as they escape into more productive employment? The worry, however, is that these workers have not left the farms because they cannot. Perhaps they do not want to forfeit their claims on communal land. Or perhaps they are too old or poorly educated to take advantage of better opportunities in cities.China’s stock of human capital is indeed a cause for concern. According to its latest census, its adult population had an average of 9.9 years of schooling in 2020. That would put it near the bottom of the heap of high-income countries, which have 11.5 years on average, according to Robert Barro of Harvard and Jong-Wha Lee of Korea University.The high-income trapThis problem can only be fixed one cohort at a time. China’s older citizens grew up in a much poorer country and were educated accordingly. A child now entering China’s school system could expect to receive 13.1 years of education, according to the World Bank. The quality does not yet match the quantity: based on how well children score on standardised tests, 13 years of school in China is equivalent to less than ten years in a country like Singapore, the bank calculates. Nevertheless, things have improved.The “stock” of human capital reflects China’s impoverished past, then, but the “flow” of investment in new human capital is more befitting of a high-income future. The problem is that this costly investment of money and time is deterring parents from having children, a demographic deadlock that is sadly characteristic of many rich parts of the world. China’s population increased last year by only 0.03%. Judging by Japan’s experience, an ageing, declining population can contribute to depressed spending, low growth and low interest rates. China’s policymakers must now worry about a different kind of trap. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “The high kingdom” More

WRITING IN JULY 2007, the fund manager and bubble spotter Jeremy Grantham likened the stockmarket to a brontosaurus. Although credit markets were collapsing around him, share prices remained stubbornly high. It was as if the great sauropod had been bitten on the tail, but the message was still “proceeding up the long backbone, one vertebra at a time” towards its tiny brain. It took its time arriving: America’s S&P 500 index did not reach its nadir for another 20 months.The story so far this year has been different. Equities, particularly the more speculative ones, have had a brutal start to 2022. The tech-heavy Nasdaq Composite index fell by about 16% in January, before rallying a little. The ARK Innovation fund, a vehicle devoted to young, high-risk tech stocks, declined by 20% last month, and is 53% below its peak in early 2021. Yet even the wilder parts of the credit markets remain comparatively serene. Bank of America’s US high-yield index, a popular barometer for the price of “junk” bonds issued by the least credit worthy borrowers, has fallen by just 2.4% since late December.The contrast is less surprising than you might think. The value of a stock stems from a stream of potential earnings extending far into the future. By contrast, the value of a bond depends on the issuer’s ability to pay interest until the security matures, and then to find the cash to repay the principal (probably by issuing another bond). That makes bondholders less starry-eyed than shareholders. If a firm wants to change the world, great—but avoiding going broke for a few years is fine, too. So bond markets tend to be less susceptible to swings in sentiment and price. In other words, 2007 was the exception, not the rule.Moreover, the creditworthiness of junk bonds as a category improved during the pandemic. The difficulties of 2020 hastened the descent of “fallen angels”: companies, such as Kraft Heinz, that were previously rated investment-grade but were then downgraded. Such issuers tend to sit at the safest end of the junk market.Nonetheless, there are good reasons for investors to be watchful. One is that the shock of monetary-policy tightening could be yet to feed through. The record amount of junk bonds that were issued over the past two years will eventually need refinancing. For American firms such issuance amounted to $869bn, or around half of the outstanding stock of junk bonds, according to Refinitiv, a data provider. Ensuring that firms did not flounder for lack of credit was a key aim of the Federal Reserve’s pandemic-prompted bond-buying. But its asset purchases are soon to end. Borrowers will have to either repay the debt or refinance it in a market that is no longer flooded with liquidity.More fundamentally, the investment case for high-yield debt has changed as interest rates have declined. Michael Milken, an American investment banker, pioneered the use of junk bonds in the 1980s by arguing that their yields were high enough to compensate investors for the odd default. In that decade, he was right: junk yields averaged 14.5% and just 2.2% of issuers defaulted each year. But the phrase “high-yield” has since lost its meaning. Although central-bank rate rises are on the cards, yields are still anaemic. In America and Europe, average junk-bond yields, of 5.1% and 3.3%, respectively, are well below inflation. The credit market’s resilience amounts to a belief that few of even the riskiest borrowers are likely to go bankrupt. Yet when the yield is in the low single figures, it takes only a handful of defaults to break the investment case.And borrowers that do default are likely to be in worse financial health, leaving creditors nursing heavier losses. Lender protections have weakened over the past decade, as yield-starved investors chased returns at any cost. Maintenance covenants, which allow lenders to seize the wheel if the borrower’s financial position deteriorates, have long been absent from bonds (and have largely disappeared from private loans, too). Incurrence covenants, which limit borrowers’ ability to issue new debt or pay dividends, have lost their teeth.Its proponents might point out that bond investors have few attractive alternatives to junk debt. Yields on Treasuries are still low; financial markets expect the Fed’s benchmark rate to peak no higher than 1.8%. But credit markets are priced for a world in which nasty surprises don’t happen and liquidity flows eternal. Those assumptions increasingly look like they belong with the brontosaurus.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Sting in the tail” More

INDIANS CAN BE excused for looking eastward with more than a little envy. In 1980 India’s GDP per person, in purchasing-power-parity terms, was nearly twice that of China. Then the dragon took off. By 2021 Chinese incomes per person were more than double those in India. Yet when it comes to the performance of the stockmarket over the past year, at least, India can declare triumph. The Sensex 30 index of stocks rose by nearly 22% last year, outperforming not just the Shanghai bourse but the MSCI emerging-markets index, and indices in many rich countries, too. As we wrote this, the Sensex was up so far this year, compared with declines elsewhere.The healthy showing has been enough to lure Indian retail punters to the market. According to Mint, a newspaper, bank accounts opened by customers with the intention of investing in stocks and bonds rose above 77m last year, compared with 39m in 2019. What lies behind the market’s extraordinary performance?After a desultory decade, profits are roaring back. Company earnings were lacklustre even before the pandemic, as firms coped with high inflation, patchy access to bank loans and obstructive regulation. The spread of covid-19 in 2020, and the strict lockdowns of that year, dealt another blow. But the economy is now on the mend. The IMF expects GDP to grow by 9% this year and 7.1% in 2023, more than any other big economy.Plenty about regulation in India is still forbidding, from the complexity of its tax system to the sheer number of its import tariffs. Yet some modest tweaks over the past three or so years may be beginning to bear fruit. That includes a cut to the corporate-tax rate and a promise, at last, to end the government’s practice of whacking companies with retroactive tax bills. Financial incentives for manufacturers may also have buoyed small firms in particular, which have benefited from the bullish mood as much as large ones. Overall, reckons Ridham Desai of Morgan Stanley, a bank, a new earnings cycle has begun. He predicts annual profit growth of 24% over the next three years.Big information-technology consultancies, such as Tata Consultancy Services and Infosys, have fared well in the boom. Investors had been cooling on their growth prospects in the years before the pandemic. Covid-induced digitisation, however, rekindled their interest. The share prices of the two firms more than doubled between March 2020 and December last year (although they have since fallen a little from their peaks).The striking thing, however, is that the recent pickup in the Sensex has been broad-based, says Neelkanth Mishra of Credit Suisse, a bank, as he rattles through one industry after another showing strong returns. Homebuilders, for instance, have been boosted by increasing demand from buyers and accelerating credit growth. That has in turn buoyed the share prices of cement and equipment makers.The share prices of clothing firms, together with cotton and yarn producers, have done well, as have chemical companies. The hunch is that these might have benefited not just from general optimism about the domestic economy, but also from manufacturing tilting away from its higher-cost, and increasingly geopolitically divisive, neighbour to the east. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Roaring tiger” More