Finance

Most consumers in China are planning to keep a lid on spending during this year’s Singles Day shopping festival, according to a survey from Bain and Company.
Excitement has waned, and nearly half of consumers surveyed this year also said they were turning to cheaper brands or private label products, the Bain study found.
This year, “we expect that there is probably going to be more stocking up of consumables,” James Yang, partner at Bain, said in a phone interview.

Workers at an e-commerce logistics industrial park sort parcels on an express delivery line in Lianyungang, East China’s Jiangsu Province, Nov 5, 2023.
Nurphoto | Nurphoto | Getty Images

BEIJING — Most consumers in China are planning to keep a lid on spending during this year’s Singles Day shopping festival, which ends Nov. 11.
That’s according to a survey of more than 3,000 consumers in the country by Bain and Company, released Tuesday.

Originally launched by Chinese e-commerce giant Alibaba, Singles Day has expanded from a one-day shopping festival into a multi-week period of shopping promotions across different online platforms in China.
Excitement has waned, and nearly half of consumers surveyed this year also said they were turning to cheaper brands or private label products, the Bain study found. Private label products tend to be cheaper than those from comparable big name brands.
For this year’s festival, more than three-fourths of consumers surveyed — or 77% — said they did not plan to increase spending, according to the report.

That’s a touch higher than the 76% reported last year, and up significantly from 49% in 2021, the report said.
Slowing economic growth and worries about future income have weighed on consumer spending over the last few years.

“Look at the broader macroeconomy. The consumer sentiment remains a bit lower than where it was pre-Covid,” James Yang, partner at Bain, said in a phone interview.
“There is more cost [consciousness] among consumers in where and how they want to spend their money.”
This year, “we expect that there is probably going to be more stocking up of consumables,” Yang said.

Keeping quiet on total numbers

Last year, both Alibaba and online retail giant JD.com for the first time declined to disclose Singles Day gross merchandise value, an industry measure of sales over time.
Bain estimates that including other platforms, Singles Day e-commerce GMV rose by 3% to 934 billion yuan ($128.25 billion) in 2022.

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When factoring in another 181 billion yuan in livestreaming and content-led e-commerce, the total GMV for last year’s festival topped 1 trillion yuan ($140 billion), the report said.
For context, those China market figures are still multiples larger than the $35.3 billion that Adobe Analytics said U.S. consumers spent online in 2022 for the local equivalent: the week of Thanksgiving, Black Friday and Cyber Monday.
Livestreaming and posting videos or photos on social media as a way to sell products has taken off in China. Alibaba and JD.com both offer livestreaming functions. Douyin, the Chinese version of TikTok, has become a major platform for people and retailers selling to consumers via livestreams.
“The expectation is that the livestreaming share is going to continue to increase,” Bain’s Yang said.
He added that different kinds of consumers are also spending differently. Those with higher incomes are generally still spending, while the blue-collar segment of the population are cutting back, he said.
“Middle class, they fluctuate in between,” he said. “People are more cautious in how they trade off, what they want to buy.” More

The cost of important health insurance components, like deductibles and out-of-pocket maximums, has risen at a more muted pace in recent years.
For example, the average deductible has grown by 10.3% in the past five years. That’s down significantly from 38.6% growth during the 2013-2018 period, and 54.4% from 2008 to 2013, according to data from KFF, a nonprofit health-care data provider.
Workers can potentially save money by ensuring they’re picking the best plan for their circumstances.

Morsa Images | Digitalvision | Getty Images

Costs for some key health insurance components have slowed for workers in recent years. While the deceleration is a positive trend, many workers likely still find current prices unaffordable, experts said.
“Yes, it’s slowed,” said Carolyn McClanahan, a physician and certified financial planner, and founder of Life Planning Partners in Jacksonville, Florida. “But it’s already egregious for the average person.”

Employer-sponsored health plans have many moving parts that can affect workers’ wallets. For example, workers get premiums deducted from each paycheck. Visiting the doctor generally comes with cost-sharing, like co-payments, deductibles and out-of-pocket maximums.
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The rise in worker premiums has somewhat mitigated.
Workers pay $1,401 in total premiums in 2023, up 18% from 2018, according to KFF, a nonprofit health-care data provider. They increased by an equivalent amount from 2013 to 2018, but had swelled by 39% from 2008 to 2013.
The dynamic is more pronounced for deductibles and out-of-pocket maximums.

A deductible is the annual sum a consumer must pay out of pocket before a health insurer starts to pay for services.

Single workers have a $1,735 average deductible in 2023, according to KFF. (This cost is for employer-sponsored health plans and assumes consumers receive in-network care.)
The average deductible has grown by 10.3% in the past five years, up from $1,573 in 2018. However, that rate has slowed significantly relative to the recent past: Deductibles rose by 38.6% from 2013 to 2018, and by 54.4% from 2008 to 2013, for example, according to KFF data.
Prior to 2018, deductibles “were taking off,” said Matthew Rae, associate director of KFF’s health-care marketplace program and co-author of its annual health benefits survey.  

How out-of-pocket maximums have changed

The dynamic is similar for out-of-pocket maximums, the annual limit on a worker’s cost-sharing for the year. After hitting this limit, insurers can’t ask for more co-pays, co-insurance or deductibles, for example.
The out-of-pocket maximum is “what really matters for people who spend a lot” on health care, Rae said.
In 2023, 13% of single workers have an out-of-pocket maximum of less than $2,000, while 21% of these workers have one above $6,000, KFF said. That’s hardly changed in the past five years.

It’s already egregious for the average person.

Carolyn McClanahan
founder of Life Planning Partners

However, the dynamic changed a lot during the prior five-year period. In 2013, 29% of workers had an out-of-pocket maximum below $2,000, while only 4% had one of $6,000 or more, according to KFF. In other words, the share of people with a relatively low limit was halved from 2013 to 2018, and the share with a high limit jumped fivefold.
After years of both the maximum and deductibles increasing rapidly, “that’s not the story anymore,” Rae said.

Strong labor market is a big factor

Solskin | Digitalvision | Getty Images

A reduction in the growth of worker cost-sharing requirements is largely attributable to a strong labor market in recent years, Rae said. That has led employers to make their health plans more competitive to attract and retain staff. But it’s unclear how long that strength will last; indeed, it’s been cooling in recent months.
However, consumers shouldn’t necessarily “throw up [their] hands and celebrate,” Rae added. Families with multiple dependents trying to meet an annual deductible may be enough to put middle class households in debt, he said.
One in four employers report being highly concerned about the affordability of cost-sharing within their health plans, according to KFF.
And while cost-sharing costs may have slowed, insurers may be tweaking certain aspects of health plans that make them relatively less valuable to consumers — by narrowing a plan’s roster of in-network providers, for example, said McClanahan, a member of CNBC’s Advisor Council.

How to keep costs down

Choosing the most cost-effective health plan for you generally comes down to picking “only the plan you need,” McClanahan said.
In other words, a plan with comprehensive coverage but high monthly premiums may not be the best choice for someone who doesn’t get frequent medical care.

For example, an HMO plan will generally be best for consumers who don’t have significant health problems and rarely go to the doctor, she said. Find a good primary care doctor and ask what network the doctor is on for HMOs so you can get the doctor you want, she recommended.
Of course, most employees only get a few choices during open-enrollment season, so there’s not much they can do on an individual level, McClanahan said. At the family level, however, there may be other variables: If both spouses work, the most efficient option may be electing one plan for the whole family, or putting a spouse and kids on one plan and the remaining spouse on the other, she said. More

Buy now, pay later firm Klarna has begun a legal entity restructuring to set up a new holding company in the U.K., as a precursor to an eventual IPO.
Klarna has no immediate plans to go public, a spokesperson said, and setting up its new legal entity in the U.K. does not necessarily mean that the company will list there.
The company last raised cash at a valuation of $6.7 billion, which marked a massive 85% haircut to its previous valuation of nearly $46 billion.

“Buy-now, pay-later” firm Klarna aims to return to profit by summer 2023.
Jakub Porzycki | NurPhoto | Getty Images

Buy now, pay later firm Klarna has established a holding company in the U.K. that will sit at the top of its corporate structure, in a symbolic move that paves the path for an eventual listing.
A Klarna spokesperson confirmed to CNBC that the Stockholm-based business, which lets shoppers defer payments over a period of installments, has begun a legal entity restructuring to set up the holding company.

Preparations for the new company have been agreed with some of Klarna’s largest shareholders, including Sequoia and Heartland, the spokesperson said.
The Klarna spokesperson said the move was a precursor to a formal listing, but added these are still “very early days,” and the company has no immediate-term plans to go public.
Klarna also hasn’t decided on where it would opt to list, the spokesperson said, and setting up its new legal entity in the U.K. does not necessarily mean that the company will go public there.
It does, however, give Klarna flexibility over which stock exchange it decides on.
The restructuring “is an administrative change that has been in the works for over 12 months and does not affect anyone’s roles, nor Klarna’s Swedish operations,” the Klarna spokesperson told CNBC via email.

“Klarna Holding will continue to be the regulated financial holding company under the direct supervision of the SFSA [Swedish Financial Services Authority] and we will continue to hold a Swedish banking license.”
Klarna is a big player in the European payments industry, worth $6.7 billion.
Like PayPal and Stripe, it allows merchants to add checkout functionality to their online stores. It differs from these competitors in its flexible payment plans, known as buy now, pay later.
At the height of the Covid-driven boom in e-commerce, Klarna was worth a whopping $46 billion, onboarding SoftBank as an investor. Its valuation was slashed by 85%, to $6.7 billion after the pandemic-fueled boom in technology valuations deflated.
Klarna, which was included in CNBC and Statista’s list of the top 200 fintech companies, has raised more than $4 billion in funding to date from investors including Sequoia, Silver Lake and China’s Ant Group.
The U.K. was originally set to enforce tough new regulations on the buy now, pay later industry, with plans to require affordability checks and clearer communication in the advertisement of such services.
Britain has reportedly been considering shelving those plans after a number of the biggest players said, in talks with the government, that they may be forced to leave the U.K. if they are subjected to “heavy-handed” regulation.
Bosses at Klarna and Block, which owns buy now, pay later service Clearpay, had lashed out at certain aspects of the U.K.’s regulation plans, including a measure which would have exempted e-commerce giant Amazon from being subjected to the rules.
Klarna has since been pushing aggressively toward profitability, reporting its first month of profit earlier this year for the first time since 2020.
Klarna has been investing heavily in artificial intelligence products, most recently launching an AI image recognition tool that can identify certain products, like a jacket or a pair of headphones.
Separately this weekend, Klarna also reached a deal with workers in Sweden to put an end to plans to go on strike.
WATCH: Klarna’s buy now pay later losses are 30% below industry standard, says CEO Sebastian Siemiatkowski More

During the quarter, DBS net profit rose to 2.63 billion Singaporean dollars ($1.94 billion) compared to SG$2.24 billion a year ago.
The Singapore bank also declared a dividend of 48 Singapore cents for each ordinary share for the third quarter.
“We achieved record income in the third quarter as net interest margin continued to expand and growth in commercial book non-interest income was sustained,” said Piyush Gupta, chief executive officer of DBS.

DBS branch in Hong Kong.
Budrul Chukrut | SOPA Images, LightRocket | Getty Images

Southeast Asia’s largest lender DBS Group reported a 17% jump in third-quarter profit on Monday, benefiting from a high-interest rate environment.
During the quarter, net profit rose to 2.63 billion Singaporean dollars ($1.94 billion) compared to SG$2.24 billion a year ago.

It was higher that analysts’ estimates compiled by LSEG, which predicted a quarterly profit estimate of SG$2.5 billion for the July to September quarter.
The Singapore bank also declared a dividend of 48 Singapore cents for each ordinary share for the third quarter.

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Shares of the company rose 0.75%.
Net interest margin, a measure of lending profitability, was at 2.19% in the third quarter, higher than 1.90% during the same period a year ago.
“We achieved record income in the third quarter as net interest margin continued to expand and growth in commercial book non-interest income was sustained,” said Piyush Gupta, chief executive officer of DBS.

“As we enter the coming year, higher-for-longer interest rates will be a net benefit to earnings, while our solid balance sheet with ample liquidity, prudent general allowance reserves and healthy capital ratios will provide us with strong buffers against macro uncertainties,” Gupta added.
DBS, Singapore’s largest bank, was second to report among the country’s top lenders.
Smaller rival United Overseas Bank posted a 1% drop in third-quarter net profit in October, missing analysts’ expectations.
Oversea-Chinese Banking Corporation is set to report quarterly results on Nov. 10. More

The Omaha-based conglomerate’s operating earnings totaled $10.761 billion last quarter, 40.6% higher than the number from the same quarter a year ago.
Berkshire held a record level of cash at the end of September — $157.2 billion.
The “Oracle of Omaha” has been taking advantage of surging bond yields, buying up short-term Treasury bills yielding at least 5%.
Geico, the crown jewel of Berkshire’s insurance empire, reported another profitable quarter.

An Andy Warhol-like print of Berkshire Hathaway CEO Warren Buffett hangs outside a clothing stand during the first in-person annual meeting since 2019 of Berkshire Hathaway Inc in Omaha, Nebraska, U.S. April 30, 2022.
Scott Morgan | Reuters

Berkshire Hathaway on Saturday reported a big jump in third-quarter operating earnings, while sitting on a record amount of cash as Warren Buffett saw few dealmaking opportunities.
The Omaha-based conglomerate’s operating earnings — which encompass profits made from the myriad of wholly owned businesses such as insurance, railroads and utilities — totaled $10.761 billion last quarter. That’s 40.6% higher than the $7.651 billion earned from the same quarter a year ago.

Berkshire held a record level of cash at the end of September — $157.2 billion — topping the $149.2 billion high set in the third quarter of 2021.
The “Oracle of Omaha” has been taking advantage of surging bond yields, buying up short-term Treasury bills yielding at least 5%. The conglomerate owned $126.4 billion worth of such investments at the end of the third quarter, compared to about $93 billion at the end of last year.
Buyback activity continued to slow down as Berkshire shares roared to a record high during the quarter. The firm spent $1.1 billion to repurchase shares, bringing the nine-month total to approximately $7 billion.
Berkshire Class A shares have rallied nearly 14% this year. After reaching an all-time high on Sept. 19, shares have fallen about 6% from the peak.

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Berkshire Hathaway Class A shares

Geico, the crown jewel of Berkshire’s insurance empire and Buffett’s “favorite child,” reported another profitable quarter with underwriting earnings of $1.1 billion. The auto insurer is in the middle of a turnaround after losing market share to competitor Progressive.

BNSF, however, saw a 15% decline in earnings as the railroad division grappled with lower volumes and higher costs.
Investment loss
Buffett’s company did post a significant investment loss of $24.1 billion in the third quarter, which largely came from a decline in its big Apple stake. Shares of the iPhone maker fell 11.7% during the quarter but have rebounded over 3% since.
As per usual, Berkshire Hathaway asked investors to look past the quarterly fluctuations in Berkshire’s equity portfolio.
“The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings (losses) per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” the company said in a statement.
While Berkshire scored a sizable increase in operating earnings, the conglomerate did acknowledge the negative economic impact from the pandemic, as well as geopolitical risks and inflation pressures.
“To varying degrees, our operating businesses have been impacted by government and private sector actions to mitigate the adverse economic effects of the COVID-19 virus and its variants as well as by the development of geopolitical conflicts, supply chain disruptions and government actions to slow inflation,” Berkshire said. “The economic effects from these events over longer terms cannot be reasonably estimated at this time.” More

Among Hispanic Americans, the jobless rate rose 0.2% to 4.8%.
Black Americans, the group with the highest jobless percentage in America, saw their unemployment rate tick up 0.1% to 5.8% last month.

People walk through downtown Manhattan in New York City on Dec. 2, 2022.
Spencer Platt | Getty Images News | Getty Images

The labor market showed greater deterioration for Hispanic workers, whose unemployment rate rose more than that of the U.S.’, according to data released Friday by the Department of Labor.
The overall unemployment rate rose 0.1% to 3.9% last month, the highest level since January 2022, against expectations that it would hold steady at 3.8%. Among Hispanic Americans, the jobless rate rose 0.2% to 4.8%.

Arrows pointing outwards

Black Americans, the group with the highest jobless percentage in America, saw their unemployment rate tick up 0.1% to 5.8% last month. The record low for Black unemployment is 5.4% in October 2019.
“When averages tick downwards, there’s often larger movement at the bottom end of the wage distribution,” Julia Pollak, ZipRecruiter’s chief economist, told CNBC. “Low-wage workers, less-educated workers and those facing barriers to employment suffer the brunt of any slowdown in the labor market.”
Black and Hispanic Americans were hit particularly hard by the business shutdowns in the depths of the Covid-19 pandemic, with the unemployment rate for Black workers peaking at 16.8% in 2020 and the Hispanic jobless rate surging as high as 18.8%. The overall unemployment rate hit a high of 14.7% in April 2020.

Asian Americans, while having the lowest jobless rate among different demographic groups, saw the biggest percentage increase in unemployment. The rate rose 0.3% to 3.1% in October.
The Federal Reserve, which has a dual mandate that includes full employment, has deliberately tried to slow the economy to tackle inflation. Fed Chair Jerome Powell said earlier this week that slower growth and a softer labor market are still “likely” needed to tame price pressures.

The participation rate for Hispanic workers declined to 66.9% last month from 67.3% in September. Overall, the labor force participation rate declined slightly to 62.7%, while the labor force contracted by 201,000.Don’t miss these stories from CNBC PRO: More

The ongoing Israel-Hamas war could affect European economies via lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence, Goldman Sachs said.
Concerns are growing among economists that the conflict could spill over and engulf the Middle East, with Israel and Lebanon exchanging missiles, as Israel continues to bombard Gaza.

Armoured vehicles of the Israel Defense Forces (IDF) are seen during their ground operations at a location given as Gaza, as the conflict between Israel and the Palestinian Islamist group Hamas continues, in this handout image released on November 1, 2023. 
Israel Defense Forces | Reuters

The Israel-Hamas war could have a significant impact on economic growth and inflation in the euro zone unless energy price pressures remain contained, according to Goldman Sachs.
The ongoing hostilities could affect European economies via lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence, Europe Economics Analyst Katya Vashkinskaya highlighted in a research note Wednesday.

Concerns are growing among economists that the conflict could spill over and engulf the Middle East, with Israel and Lebanon exchanging missiles as Israel continues to bombard Gaza, resulting in massive civilian casualties and a deepening humanitarian crisis.
Although the tensions could affect European economic activity via lower trade with the Middle East, Vashkinskaya highlighted that the continent’s exposure is limited, given that the euro area exports around 0.4% of the GDP to Israel and its neighbors, while the British trade exposure is less than 0.2% of the GDP.
She noted that tighter financial conditions could weigh on growth and exacerbate the existing drag on economic activity from higher interest rates in both the euro area and the U.K. However, Goldman does not see a clear pattern between financial conditions and previous episodes of tension in the Middle East
The most important and potentially impactful way in which tensions could spill over into the European economy is through oil and gas markets, Vashkinskaya said.

“Since the current conflict broke out, commodities markets have seen increased volatility, with Brent crude oil and European natural gas prices up by around 9% and 34% at the peak respectively,” she said.

Goldman’s commodities team assessed a set of downside scenarios in which oil prices could rise by between 5% and 20% above the baseline, depending on the severity of the oil supply shock.
“A persistent 10% oil price increase usually reduces Euro area real GDP by about 0.2% after one year and boosts consumer prices by almost 0.3pp over this time, with similar effects observed in the U.K.,” Vashkinskaya said.
“However, for the drag to appear, oil prices must remain consistently elevated, which is already in question, with the Brent crude oil price almost back at pre-conflict levels at the end of October.”
Gas price developments present a more acute challenge, she suggested, with the price increase driven by a reduction in global LNG (liquefied natural gas) exports from Israeli gas fields and the current gas market less able to respond to adverse supply shocks.
“While our commodities team’s estimates point to a sizeable increase in European natural gas prices in case of a supply downside scenario in the range of 102-200 EUR/MWh, we believe that the policy response to continue existing or re-start previous energy cost support policies would buffer the disposable income hit and support firms, if such risks were to materialize,” Vashkinskaya said.

Bank of England Governor Andrew Bailey told CNBC on Thursday that knock-on effects of the conflict on energy markets posed a potential risk to the central bank’s efforts to rein in inflation.
“So far, I would say, we haven’t seen a marked increase in energy prices, and that’s obviously good,” Bailey told CNBC’s Joumanna Bercetche. “But it is a risk. It obviously is a risk going forward.”
Oil prices have been volatile since Hamas launched its attack on Israel on Oct. 7, and the World Bank warned in a quarterly update on Monday that crude oil prices could rise to more than $150 a barrel if the conflict escalates.
General consumer confidence is the final potential channel for spillover affects, according to the Wall Street bank, and Vashkinskaya noted that the euro area experienced a substantial deterioration in the aftermath of Russia’s invasion of Ukraine in March 2022.
The same effect has not been historically observed alongside outbreaks of elevated tensions between Israel and Hamas, but Goldman’s news-based measure of conflict-related uncertainty reached record highs in October. More

Wefox, which sells insurance plans via an online platform, raised $55 million in debt financing from Deutsche Bank and Unicredit.
As Wefox didn’t raise equity, its valuation remains unchanged at $4.5 billion.
It brings the total amount of funding Wefox has raised so far this year to $160 million.

Wefox CEO Julian Teicke.

Wefox, the $4.5 billion German insurance technology group, has raised $55 million of fresh funding from Deutsche Bank and UniCredit, two anonymous sources familiar with the deal told CNBC.
The company, which sells insurance plans via an online platform, raised the fresh cash in a debt financing deal from the two European lenders, according to the sources, who were not authorized to disclose the information publicly.

The deal was structured as a convertible debt agreement, meaning that the debt will be converted into equity when Wefox next raises cash, the sources told CNBC.
The fresh funding follows on from a $55 million debt round Wefox raised from JPMorgan and Barclays and a $55 million internal fundraise earlier this year.
As Wefox didn’t raise equity, its valuation remains unchanged at $4.5 billion.
It brings the total amount of funding Wefox has raised so far this year to $160 million and marks a vote of confidence at a time when the insurtech industry faces a grim macroeconomic environment.
The funds will be used to help eight-year-old Wefox accelerate its global expansion plans and double down on mergers and acquisitions, according to the sources.

Unlike other insurtech platforms like Lemonade in the U.S. or Getsafe in Germany, which offer insurance directly to consumers without involving brokers, Wefox works with a network of brokers, both in-house and externally, who distribute its insurance products.
Wefox is also pushing into a new model of selling insurance called “affinity” distribution. This is where the company sells its insurance software to other businesses for a subscription fee — for example, an online car dealer adding car insurance at the point of sale.
Wefox is backed by some of the best-known names in venture capital, as well as large institutional names in the traditional financial world.
Its VC backers include Salesforce Ventures, Target Global, Seedcamp, Speedinvest, and Horizon Ventures, while UBS, Goldman Sachs, Mubadala Capital Ventures, Jupiter Asset Management are also existing investors.
Wefox is also investing heavily in artificial intelligence, which has become a hot area of tech recently following the rise of viral AI chatbot ChatGPT.
Wefox mainly uses AI to automate policy applications and customer service. The company has three tech hubs in Paris, Barcelona, and Milan dedicated to AI. More