Finance

Zilch said Tuesday that it made an operating profit in July 2024, hitting profitability faster than other major consumer fintechs that have also managed to break even.
The company also said it topped £100 million ($130 million) in annual revenue run rate, doubling from the run rate it reported last year.
Philip Belamant, Zilch’s CEO, told CNBC the firm was able to hit profitability by growing rather than cutting back like other fintechs have done.

Zilch CEO Phil Belamant.

British financial technology firm Zilch on Tuesday reported its first-ever month of profit, marking a key milestone for the company as it looks toward an eventual initial public offering.
In a trading update, Zilch, which competes with the likes of Klarna and Block in the buy now, pay later space, said that it made an operating profit in July 2024, hitting profitability within four years of its founding date — faster than other major consumer fintechs that have also managed to break even.

Competitors Starling and Monzo, meanwhile, took more than three and four years to make their first profit, respectively. Others have managed to hit profitability faster. Digital banking startup Revolut, for example, broke even for the first time just two years after its launch.
Zilch also said it topped £100 million ($130 million) in annual revenue run rate, doubling from the run rate it reported last year.
Philip Belamant, Zilch’s CEO and co-founder, told CNBC Tuesday that, despite the current high-interest rate environment, the firm was able to hit profitability by growing its business rather than cutting back like other fintechs have done.

“If you think of the last two and a half, three years, a lot of VC-backed companies, especially high growth fintech businesses have had to cut their way to get to profitability. And some of those have actually cut so far they went bust along the way,” Belamant told CNBC’s “Squawk Box Europe.”
“It’s not been easy. And, for Zilch, we took a different approach. We looked at this and said let’s grow our way to profitability,” Belamant added.

Separately Tuesday, Zilch announced the appointment of former Aviva CEO Mark Wilson to its board. Wilson, who was made a non-executive director, said he was “excited” to join the firm at a critical juncture and “further help Zilch steer its path toward sustainable success as a category leader.”
Zilch’s CEO Belamant told CNBC in June that he wants to list the business publicly in the next 12 to 24 months. That same month, the company announced that it had raised $125 million of initial debt financing from Deutsche Bank.
That deal, which gives Zilch the option to draw down up to $315 million of credit from both Deutsche Bank and other banks, is expected to help the company triple its overall sales volumes in the next couple of years, according to the firm.
Klarna, which Zilch competes with in the U.K., is also planning a stock market flotation in the medium term, with its CEO Sebastian Siemiatkowski having previously told CNBC it wouldn’t be “impossible” for the firm to list as soon as this year. More

China’s property struggles and U.S. sanctions have significantly affected some of its cities, even as others benefit from Beijing’s tech push, Milken Institute’s best performing cities China index showed Tuesday.
Hangzhou, capital of the eastern Zhejiang province and home to Alibaba and other tech companies, ranked first in this year’s rankings.
Other cities, such as Zhuhai, once a “rising star,” dropped in the rankings due to the slump in real estate.

HANGZHOU, CHINA – SEPTEMBER 1, 2024 – Photo taken on Sept 1, 2024 shows a newly built building of China Vanke in Hangzhou, Zhejiang province, China. 
Cfoto | Future Publishing | Getty Images

BEIJING — China’s property struggles and U.S. sanctions have significantly affected some of its cities, even as others benefit from Beijing’s tech push, Milken Institute’s best performing cities China index showed Tuesday.
Since 2015, the index has studied China’s large- and mid-sized cities for their economic vibrancy and growth prospects. The latest version generally compares data for 2023 with that of 2021. Last year, the institute did not publish a report due to a reassessment of its methodology.

Hangzhou, capital of the eastern Zhejiang province and home to Alibaba and other tech companies, ranked first in this year’s rankings.
While other cities, such as Zhuhai, once a “rising star,” dropped in the rankings due to the slump in real estate.
The city, in the southern province of Guangdong near Hong Kong, fell 32 places from the previous index published in 2022 to 157th place. Suddenly no one bought houses.
“Builders didn’t have much money to complete their projects,” Perry Wong, managing director of research at the institute, told reporters in Mandarin, translated by CNBC.
Property and related sectors once accounted for more than a quarter of China’s gross domestic product. But in 2020, Chinese authorities started cracking down on real estate developers’ high reliance on debt.

Wong added that real estate dragged down growth for several of the main cities in that region, except for Dongguan. The city of factories, home to Huawei’s sprawling European-style campus, was instead hit by U.S. sanctions. Dongguan dropped 15 places in the Milken index rankings to 199th place.
There are 217 cities in the index. While the nearby metropolis of Shenzhen went up in rankings, the city landed in 9th place, behind Beijing. A majority of the Chinese companies initially blacklisted by the U.S. were based in Shenzhen or Beijing, Wong pointed out in an interview with CNBC.
“Zhuhai is an extremely good place to do service jobs, to do even production jobs, high-end production jobs in biotech,” he said. “So [excluding the real estate impact] it should have a pretty promising future.”
Another city affected by the geopolitical drag on exports is Zhengzhou, capital of the Henan province and home to iPhone manufacturer Foxconn. Zhengzhou fell to 22nd place, down from 3rd.
Historically, Wong pointed out, having control of Zhengzhou, Hefei, and Wuhan have been critical to ensuring control of the country.
From an economic perspective, Hefei, in the Anhui province, and Wuhan, in Central China’s Hubei province, fared better in the latest index.
Wuhan surged by nearly 30 places to second, while Hefei remained among the top ten. Wong attributed this to Wuhan’s efforts to keep factories running during the pandemic, allowing the city to rebound quickly, while a university in Hefei received direct government support for technological development.
As for Hangzhou’s success, the institute’s research pointed to the city’s growth as a hub for e-commerce, manufacturing and finance.
But asked on CNBC’s “Squawk Box Asia” if Hangzhou’s success could be replicated, Wong said it would be difficult, partly due to the outperformance of the local property sector that’s increased living costs. More

When commodity prices move in tandem, it is usually because real-world events jolt markets. China is the world’s biggest consumer of raw materials, so its economic leaps and stumbles matter. Russia’s invasion of Ukraine hindered the trade of fuels and grains, causing prices to surge. But every once in a while it is news in the financial sphere that prompts traders to act. And the most common source of such news is America’s Federal Reserve. More

American demand for international trips has supported continued strength in overall travel spending.
Declining prices for international airfare has helped underpin the trend.
Europe is the most popular destination abroad, while Asia has seen the largest annual growth.

Hinterhaus Productions | Digitalvision | Getty Images

Travel spending among American households continues to outpace its pre-pandemic levels, a trend underpinned by a zeal for international trips, according to new Bank of America research.
“A key part of travel momentum lies within vacationing abroad,” Taylor Bowley and Joe Wadford, economists at the Bank of America Institute, wrote in a note Wednesday.

Overall, travel spending is down slightly from 2023, yet it remains “much higher” than 2019 — up by 10.6% per household, they wrote, citing Bank of America credit and debit card data from January to mid-August.
More from Personal Finance:4 big ways to save on your next trip’Dupes’ are a good way to lower trip costsWhat Taylor Swift’s The Eras Tour says about ‘passion tourism’
International travel is “one area of continued strength,” Bowley and Wadford said.
About 17% of Americans said in June that they intended to vacation abroad during the next six months, up from roughly 14% in 2018 and 2019, according to a recent Conference Board survey.  
“I do expect the demand to continue,” said Hayley Berg, lead economist at travel site Hopper.

Lower airfares underpin international travel demand

Demand for international travel surged over the past two years as Covid-19-related health fears waned and countries began dropping their pandemic-era travel restrictions.
Americans spent zealously amid pent-up wanderlust and a stockpile of cash.
Falling prices for international airfare have helped underpin high demand this year, Berg said.
“Those lower prices are definitely going to drive some incremental demand for international [travel] more so than what we’ve see the last couple years,” she said.

For example, average round-trip fares to Europe — generally the most popular international destination for U.S. tourists — declined to roughly $950 this summer, down from more than $1,000 the prior two years, Berg said.
European fares in 2022 were the highest on record, according to Hopper data, which goes back a decade.
A flight to Rome during the fall shoulder season is now about $600, down from a pandemic-era peak of roughly $1,300, for example, Berg said.
(The fall shoulder season is the time of year between the summer high season and the winter low season, usually from September to November.)
Europe accounted for the bulk of Americans’ spending from May to July, at 43%, according to Bank of America. Canada and Mexico combined held the No. 2 spot, at 21% of spending.

However, Asia has been the fastest-growing region: Spending on the continent jumped 11% relative to 2023, compared to 3% in Europe, Bank of America said. Advantageous exchange rates played into that relative strength, it said.
While international travel spending remains robust, most Americans are still vacationing domestically: About 68% of all trips that start in the U.S. remain within its borders, according to a recent analysis by the consulting firm McKinsey.
That said, “domestic demand has softened slightly, as American travelers return abroad,” McKinsey wrote.

High earners ‘splurge on travel’

Higher-income households — those earning more than $125,000 a year — seem to be driving the international-travel trend, according to Bank of America economists.
High-end luxury hotels have “outperformed” standard offerings this summer, suggesting high earners “are more resilient and continue to splurge on travel,” the Bank of America report said.
While “cost-constrained” travelers seem to be worried by a pandemic-era spike in inflation, most plan to continue traveling, McKinsey said.
“Instead of canceling their trips, these consumers are adapting their behavior by traveling during off-peak periods or booking travel further in advance,” McKinsey wrote. More

While British fund manager abdrn predicts that the U.S. economy will see a soft landing, there is still the risk of a prolonged slowdown in 2025, said Kenneth Akintewe, the company’s head of Asian Sovereign Debt.
Is the economy already weaker than the headline data suggests and should the U.S. Federal Reserve already be easing? Akintewe questioned on CNBC’s “Squawk Box Asia.”
In the U.S. on Friday, data showed the personal consumption expenditures (PCE) price index, the Federal Reserve’s favored measure of inflation, ticked up 0.2% last month, as expected. The data seems to back a smaller rate cut.

An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst/
Jonathan Ernst | Reuters

While British fund manager abdrn predicts that the U.S. economy will see a soft landing, there is still the risk of a prolonged slowdown in 2025, said Kenneth Akintewe, the company’s head of Asian sovereign debt.
Speaking to CNBC’s “Squawk Box Asia” on Monday, Akintewe asked the question: “Is the Fed already sleepwalking into a policy mistake?”

He pointed to economic data like non-farm payrolls, saying they were later revised to reflect a weaker economic picture. In August, the U.S. Labor Department reported that the U.S. economy created 818,000 fewer jobs than originally reported from April 2023 to March 2024.

As part of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics said the actual job growth was nearly 30% less than the initially reported 2.9 million from April 2023 through March of this year.
Akintewe said: “Is the economy already weaker than the headline data suggests and [the Fed] should already be easing?”
He added that policy changes by the Fed takes time to move through the economy, “so if the economy is weaker than the headline data suggests, they will need to accumulate [a] sufficient amount of easing, you know, 150, 200, basis points, that will take time.”
“And once you’ve done that amount of easing, it takes six to eight months to transmit that.” A spokesperson for the U.S. central bank wasn’t immediately available when contacted by CNBC.

If the economy suddenly shows signs of more weakness at the start of 2025, Akintewe said it will take until the second half of 2025 to see the effects of any easing transmitted through the economy, which could look “quite different” by that time.
He also argued that the market is too focused on forecasting the size of any possible upcoming cut, asking. “The other question no one seems to ask is, why is the policy rate still at 5.5% when inflation is down [to] almost 2.5%? Like, do you need a 300 basis point real policy rate in this kind of environment with all the uncertainty that we’re facing?”

In the U.S. on Friday, data showed the personal consumption expenditures (PCE) price index, the Federal Reserve’s favored measure of inflation, ticked up 0.2% last month, as expected.
The data seems to back a smaller rate cut, with U.S. rate futures suggesting a lesser chance of a 50 basis-point rate cut later in September.
Currently, markets see an almost 70% chance of a 25-basis-point cut at the Fed’s meeting this month, with the remaining 30% expecting the Fed to slash rates by 50 basis points, according to the CME Fedwatch Tool.
— CNBC’s Jeff Cox contributed to this report. More

China’s first attempt at a top-tier video game has smashed world records, bolstering the industry’s global ambitions after Beijing’s gaming crackdown.
Black Myth: Wukong, an action game set in mythological China, sold more than 10 million units three days after its launch on Aug. 20.
Dino Ying, chairman of Hero Games, which co-published the game and was an early investor in its developer Game Science, spoke with CNBC in an exclusive interview.

People walk past the image of the ‘Monkey King’ character, or ‘Sun Wukong’ of Chinese action role-playing game ‘Black Myth: Wukong’, developed by Chinese video game company Game Science, during its launch day in Hangzhou, in eastern China’s Zhejiang province on August 20, 2024.
Str | Afp | Getty Images

BEIJING – China’s first attempt at a top-tier video game has smashed world records, bolstering the industry’s global ambitions just a few years after Beijing’s gaming crackdown.
Black Myth: Wukong, an action game set in mythological China, sold more than 10 million units three days after its launch on Aug. 20. Ten days later, the title still ranked second by revenue in the U.S., and No. 1 globally, according to the Steam video game platform where it sells for around $60 or more.

“I think the next triple-A game is likely very close, because Black Myth: Wukong has shown everyone that a China-made AAA game can reach such high global sales,” said Dino Ying, chairman of Hero Games, which co-published the game and was an early investor in its developer Game Science. That’s according to a CNBC translation of his Mandarin-language remarks in an exclusive interview Thursday.
Ying said he knew of at least one such game under development, which his business partner at Hero Games has invested in. But he declined to share a timeframe.
As for how well Black Myth: Wukong has done, Ying only said sales have since increased by “much more” than the 10 million unit figure, although he indicated it had not yet doubled.

He said that in the future, the company’s game releases will have a global strategy from the start. He also expects foreign AAA game developers to realize how large China’s market is and tailor more features to Chinese players.
AAA games generally refer to titles with high graphics quality and significant marketing. That’s meant such video games have tended to come from companies such as Nintendo, Ubisoft and Electronic Arts.

“China is a big country. We’re talking about 1 million concurrent players,” said Ivan Su, senior equity analyst at Morningstar. “China has 600 million gamers.”
He said the reason why China hasn’t previously developed its own AAA game, which are typically played on computers and consoles, is the years-long production time. “It’s much more cost-effective if you create mobile games,” Su said.

Apple’s Tim Cook visited Hero Games

When Hero Games first invested in Game Science, Apple CEO Tim Cook visited in 2017 and was so impressed by the first game, Art of War: Red Tides, he gave it the front page of the iOS App store in 178 countries, Ying said.
But that wasn’t a commercial success.

Apple CEO Tim Cook visited the office of Hero Games in 2017 after it invested in Game Science, which went on to develop Black Myth: Wukong.
Hero Games

Hero Games had already spent three years investing 60 million yuan (about $8.5 million today) in two failed projects from Game Science when the developer approached Ying and his team in August 2020 about Black Myth: Wukong, he said.
“We’re very lucky, we didn’t give up on Game Science before it succeeded,” Ying said, noting his business partner Daniel Wu, now CEO of Hero Games, had first discovered the startup.
“We aren’t saying to blindly wait for all people,” he said. “When you see that kind of talent, you need to be confident that that talent has been underappreciated. It may not have found the right direction. [So you just need to] help it to find it.”

‘Best game that I have seen’ 

Two days before Game Science planned to release a promotional video for Black Myth: Wukong, the company showed it to Ying and asked his team for at least 100 million yuan more, he said. If not, he said the startup planned to ask Bilibili, a major Chinese video streaming and game platform.
After watching the video, Ying said he told his team that “I really don’t want to miss this opportunity because this is the best game that I have seen in my life.”
Tencent then bought a 5% stake, but said it would not interfere with Game Science’s plans, Ying said. “Because this was an AAA game, under the normal process of a big business, there was no way it would have been approved.”
Hero Games’ initial investment in Game Science was for a 20% stake.

Beijing has only in the last two years started to approve games, after suspending new titles and limiting how many hours minors could play in 2021.
Black Myth: Wukong got China’s government approval in February. No part of the game needed to be changed for it to pass, Ying said.
“Personally I think in the past two years the regulation is increasingly respectful of the game industry and is beneficial to its development,” Ying said, noting that one or two years ago, there “was a misunderstanding.”

Massive market potential

In the first half of this year, domestic game sales in China reached 147.27 billion yuan, said Ashley Dudarenok, founder of China digital consultancy ChoZan, citing industry figures.
But console game revenue was just 0.5% of that, she said.
Ying pointed out that many people in China bought PlayStations or upgraded their graphics cards after Black Myth: Wukong’s release, similar to how many people first bought the Nintendo Switch because of Zelda.

Something that’s lasted 1,000 years, people will definitely like it

Hero Games, chairman

As for the global market, Dudarenok said overseas sales of China-developed games rose to $16.4 billion in 2023, up from $11.6 billion in 2019.
“Chinese games often incorporate rich cultural elements that appeal more and more to a global audience,” she said. “This unique cultural flavor sets them apart from games developed in other regions”
Ying said he expects China has at least five to 10 other stories that have been passed down over the last millennia that can be turned into games.
“If I create a new thing, I don’t know if people will like it. But something that’s lasted 1,000 years, people will definitely like it,” Ying said. “We don’t know why it was preserved over so many years. But we just need to respect the [original] artisans.”
He said Game Science sent teams and equipment to ancient temples in China to scan and replicate the designs, boosting the game’s immersive feel.

Indie Chinese games 

In the more niche market of independent games, Chinese companies are also on the rise.
Shanghai-based Cotton Game, which has a staff of 70 people, won the 2024 award for best development team in indie games from the French-supported Game Connection organization and ChinaJoy, which runs a major annual game conference in China.
“It depends on how capable we are, but [we hope to] use games as a way to share art, philosophy and thoughtful content,” the company’s CEO, who goes by the English name Cotton Guo, said in Mandarin translated by CNBC.
Cotton Game’s Sunset Hills – which took five years to draw by hand – also won the “Game of the Year” and “Best Indie Game” awards. The $20 game launched on Aug. 21 on Steam after raising $13,000 on Kickstarter.
The game follows an anthropomorphic dog through a Europe-like village, accompanied by the sounds of nature and music. Players solve puzzles along the way.
“Everyone is quite tired. In society today, the speed of life is very fast,” Robin Luo, the manager of Sunset Games. Its main character is based on his own dog. “So my hope while making Sunset Hills was that everyone playing the game could [find it] refreshing.” More

A sign hangs above a Dollar General store in Chicago on Aug. 31, 2023.
Scott Olson | Getty Images

Dollar General shares tumbled Thursday after the discount retailer slashed its sales and profit guidance for the full year, suggesting its lower-income customers are struggling in this economy.
Shares of the retailer, which caters to more rural areas, tumbled 25% in premarket trading after the earnings report.

The company now expects fiscal 2024 same-store sales to be up 1.0% to 1.6%, lower than prior outlook for a 2% to 2.7% increase. Earnings per share for the year are expected to be in the range of just $5.50 to $6.20, versus the prior forecast of $6.80 to $7.55 per share.
“While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control,” said CEO Todd Vasos in a statement.
Dollar General also reported disappointing numbers for the latest quarter. EPS of $1.70 per share came in below an LSEG estimate of $1.79 per share, while revenue of $10.21 billion was also lower than the analyst expectation of $10.37 billion.
Competitor Dollar Tree was falling in sympathy, off by more than 9% in premarket trading.

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U.S. national security advisor Jake Sullivan said he raised concerns about the country’s focus on economic security in meetings with Chinese officials.
Earlier Thursday, a statement from Chinese President Xi Jinping said he told Sullivan that Beijing hopes Washington will find “a right way” to get along.
Tensions between the world’s two largest economies have escalated in recent years spilling over from trade into finance and technology.

US National Security Advisor Jake Sullivan shakes hands with China’s President Xi Jinping (R) during their meeting at the Great Hall of the People in Beijing on August 29, 2024. 
Trevor Hunnicutt | Afp | Getty Images

BEIJING — U.S. national security advisor Jake Sullivan said he raised concerns about the country’s focus on economic security in meetings with Chinese President Xi Jinping and other officials this week.
Just as the U.S. has cited national security concerns for its own restrictions on Chinese tech imports, China has increasingly emphasized the need to protect its economic security.

Foreign businesses in China have complained of vague data rules and preferential treatment for local players, as well as subsidies that allow Chinese businesses to sell at far lower prices.
Sullivan told reporters Thursday that he had discussed the impact such issues have on Western businesses and supply chains.
“We had a vigorous give and take on the issue, obviously didn’t come to agreement,” Sullivan told reporters during a press conference at the end of the trip.
Sullivan, advisor to the outgoing Biden administration, said his trip to China was part of an effort to manage the bilateral relationship ahead of the inauguration of a new U.S. president in January.

U.S. National Security Advisor Jake Sullivan attends a press conference at the U.S. embassy in Beijing, China August 29, 2024. 
Tingshu Wang | Reuters

It comes just over a month after U.S. President Joe Biden dropped out of the presidential race and endorsed his Vice President Kamala Harris as the Democrat nominee.

Sullivan said he told Chinese officials how Harris has been a “central member” of Biden’s foreign policy team, and is known to China’s top leaders, including having had a meeting with Xi.
The security advisor said Harris “shares” Biden’s view for responsibly managing competition so that it doesn’t veer into confrontation, and that high-level communication is the way to manage that.

Xi-Biden meeting?

Sullivan arrived in Beijing Tuesday for two days of meetings in his first trip to China as national security advisor. He is scheduled to depart China later Thursday.
Sullivan met with Chinese President Xi Jinping, China’s top diplomat Wang Yi, and Zhang Youxia, vice chairman of the Chinese Communist Party’s Central Military Commission on his visit.
Biden and Xi are planning to speak by phone in “coming weeks,” the White House said Wednesday, and Sullivan indicated to reporters that the leaders would likely meet in person later this year on the sidelines of a multilateral conference.
Earlier Thursday, a statement from Xi said he told Sullivan that Beijing hopes Washington will find “a right way” to get along.

Zhang Youxia, Vice Chairman of the CPC Central Military Commission holds a meeting with White House national security adviser Jake Sullivan, at the Bayi building in Beijing, Thursday, Aug. 29, 2024. 
Ng Han Guan | Via Reuters

“While great changes have taken place in the two countries and in China-U.S. relations, China’s commitment to the goal of a stable, healthy and sustainable China-U.S. relationship remains unchanged,” Xi said, according to an English-language release shared by China’s Ministry of Foreign Affairs.
Tensions between the world’s two largest economies have escalated in recent years, spilling over from trade into finance and technology.
The Chinese leader said Thursday that he hopes the U.S. would view China’s economic growth “in a positive” light and “work with China to find a right way for two major countries to get along with each others,” according to Beijing. China surpassed Japan in 2010 to become the world’s second-largest economy, behind the United States.

The last official trip to China by a U.S. president’s national security advisor was in 2016, when Susan Rice traveled to Beijing under the Obama administration.
While the outcome of November’s U.S. presidential election remains unclear, being tough on Beijing is a rare issue that both U.S. political parties agree on.
Harris’ current national security advisor, Phil Gordon, said in May at a Council on Foreign Relations event that the “China challenge” is much greater than Taiwan, and requires ensuring that Beijing “doesn’t have the advanced technology, intelligence and military capabilities that can challenge us.” More