Finance

Vladimir Putin is spending big on his war in Ukraine. The Russian president has disbursed over $200bn, or 10% of GDP, on the invasion, according to America’s Department of Defence. He now plans to invest heavily in infrastructure that will enable his country’s economy to flourish even while cut off from the West. Over the next decade, the Russian state expects to funnel $70bn into construction of transport routes to connect the country to important trade partners in Asia and the Middle East. Russia’s far east and high north will receive the lion’s share. A smaller sum will go on the International North-South Transport Corridor (INSTC), a project designed to link Russia and the Indian Ocean via Iran. Officials promise growth in traffic along all non-Western trade routes. More

U.S. government researchers recently visited a South Korean mine to assess progress towards boosting supply of a critical metal called tungsten from areas outside China, the mine operator said Wednesday.
The Sangdong Mine, owned by a subsidiary of Canada-based Almonty Industries, is set to resume operations this year.
With China dominating over 80% of the metal’s supply chain, Almonty claims the mine could potentially produce 50% of the rest of the world’s supply of tungsten — an extremely hard metal used for making weapons, semiconductors and industrial cutting machines.

Workers in July 2019 expand a mine in Germany intended to increase supplies of tungsten and fluorspar. 
Picture Alliance | Picture Alliance | Getty Images

BEIJING — U.S. government researchers recently visited a South Korean mine to assess progress towards boosting supply of a critical metal called tungsten from areas outside China, the mine operator said Wednesday.
The Sangdong Mine, owned by a subsidiary of Canada-based Almonty Industries, is set to resume operations this year. Tungsten is an extremely hard metal used for making weapons, semiconductors and industrial cutting machines.

With China dominating over 80% of the metal’s supply chain, Almonty claims the mine could potentially produce 50% of the rest of the world’s tungsten supply.
The U.S. has not commercially mined tungsten since 2015, according to the latest annual report from the U.S. Geological Survey, a government agency that analyzes the availability of natural resources.
Four mineral resource scholars visited the Sangdong Mine in a trip led by Sean Xun, assistant chief at the agency’s National Minerals Information Center, the report said.
The U.S. Geological Survey would make a “significant update” on its assessment of the mine in its 2025 report due out in the first three months of next year, it added.

The agency did not immediately respond to a request for comment made outside of U.S. business hours.

The Biden administration has identified critical minerals and announced tariffs on tungsten and others as part of a broader effort to bolster national security.
“Of the 35 mineral commodities deemed critical by the Department of the Interior, the United States was 100 percent reliant on foreign sources for 13 in 2019,” according to the U.S. Geological Survey.
Almonty has said it’s spending at least $125 million to reopen the Sangdong Mine, which closed in the 1990s.
China, in the past year and a half, has started to use its leverage in parts of the global critical mineral supply chain to control exports.
Beijing has so far avoided any restrictions on tungsten. But forthcoming rules to limit exports of a similar metal called antimony have raised expectations that tungsten will soon be subject to more Chinese export restrictions.
“If Donald Trump wins the US presidency and follows through on his threat to dramatically hike tariffs on China, Beijing might respond with new export controls on critical minerals or deploy existing controls more forcefully,” Gabriel Wildau, managing director at consulting firm Teneo, said in a note Tuesday.
“Chinese regulators may also apply controls selectively, denying minerals to specific foreign companies that are viewed as supporting Washington’s technological containment agenda.”
He added that the U.S. Energy Department has already awarded $151 million in grants to encourage domestic mining and processing of critical minerals, and western nations are expected to respond to Beijing’s “calibrated weaponization of critical minerals by accelerating efforts to reduce dependence on China.” More

Shares of JD.com inched up about 1.2%, outperforming the Hang Seng Index’s decline of 0.82% on Wednesday.
The announcement is JD.com’s second buyback this year, after announcing a $3 billion buyback in March.

JD.com set up an Innovative Retail division that houses its grocery business 7Fresh.
Bloomberg | Bloomberg | Getty Images

Hong Kong-listed shares of Chinese online retailer JD.com climbed 1.2% on Wednesday, outperforming the decline on the Hang Seng index after the firm announced a $5 billion buyback late Tuesday.
U.S. listed shares of the firm rose 2.24% on Tuesday after the announcement. Both JD.com’s Hong Kong and U.S. shares have dropped about 20% year to date.

In comparison, Hong Kong’s benchmark Hang Seng index was down about 0.82% Wednesday, but is up about 4% for the year so far.

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The announcement is JD.com’s second buyback this year, after announcing a $3 billion buyback in March.
In response to the move, Chelsey Tam, senior equity analyst at Morningstar, said that the decision to announce the share buyback is “not surprising.” She explained, “It is a common theme in China when share prices and growth are low.”
Tam also pointed to Vipshop, another Chinese e-commerce player that has increased its own share buyback program last week.
China’s e-commerce sector has been dogged by a slow domestic economy.

Earlier this month, Alibaba’s second-quarter results missed expectations on both the top and bottom lines. On Monday, Temu-owner Pinduoduo saw its worst ever session after its second-quarter results missed both revenue and earnings per share expectations.
Back in February, Alibaba announced a $25 billion share buyback after it missed revenue targets for the fourth quarter of 2023. More

Xpeng shares rose after the Chinese electric car company said prices for its new mass-market Mona brand would start as low as $16,812, far below that of Tesla’s Model 3.
The Chinese automaker said orders for the Mona M03 electric coupe exceeded 10,000 just 52 minutes after the car’s formal launch Tuesday evening in Beijing.
Xpeng shares remain more than 45% lower for the year so far.

He Xiaopeng, founder of Chinese EV company Xpeng, said on Aug. 27 that the startup’s next ten years will focus on integrating artificial intelligence.
CNBC | Evelyn Cheng

BEIJING — Xpeng shares rose after the Chinese electric car company launched its new mass-market Mona brand on Tuesday with prices starting as low as $16,812, far below that of Tesla’s Model 3.
The Chinese automaker said orders for the Mona M03 electric coupe exceeded 10,000 just 52 minutes after the car’s formal launch in Beijing.

Xpeng’s U.S.-listed shares closed up 6.5% in New York trading on Tuesday, while its Hong Kong-traded shares rose nearly 2% early Wednesday morning.
“With cars priced under $20,000, China is further cementing its new position as the world center for automotive manufacturing,” Michael Dunne, founder and CEO of consulting firm Dunne Insights, said Wednesday on CNBC’s “Squawk Box Asia.”
“China can produce cars more cheaply than anyone else in the world,” he said.

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Xpeng shares extended gains from Monday after a filing showed the company’s founder and CEO, He Xiaopeng, bought at least 1 million shares each of the company’s stock traded in the U.S. and Hong Kong.
The total U.S. purchase was worth nearly $10 million, according to the filing, giving He about 18.8% of the company’s total issued share capital.

Xpeng shares have lost more than 45% so far this year.
Tesla shares closed nearly 2% lower on Tuesday. Shares of Chinese electric car companies Zeekr and Li Auto rose, while those of Nio closed mildly lower.
— CNBC’s Sheila Chiang contributed to this report. More

Dollar General, Dollar Tree and Kroger have charged customers who ask for cash back in recent years.
Their cash-back fees amount to more than $90 million a year, Consumer Financial Protection Bureau reports.
Such fees may disadvantage those in banking deserts, where they don’t have easy access to cash for free. Retailers say they offer a lifeline to such consumers, who may not otherwise be able to get cash.

A Dollar General store in Germantown, New York, on Nov. 30, 2023.
Angus Mordant/Bloomberg via Getty Images

Three of the nation’s largest retailers — Dollar General, Dollar Tree and Kroger — charge fees to customers who ask for “cash back” at check-out, amounting to more than $90 million a year, according to the Consumer Financial Protection Bureau.
Many retailers offer a cash-back option to consumers who pay for purchases with a debit or pre-paid card.

But levying a fee for the service may be “exploiting” certain customers, especially those who live in so-called banking deserts without easy access to a bank branch or free cash withdrawals, according to a CFPB analysis issued Tuesday.
That dynamic tends to disproportionately impact rural communities, lower earners and people of color, CFPB said.
Not all retailers charge cash-back fees, which can range from $0.50 to upwards of $3 per transaction, according to the agency, which has cracked down on financial institutions in recent years for charging so-called “junk fees.”
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Five of the eight companies that the CFPB sampled offer cash back for free.

They include Albertsons, a grocer; the drugstore chains CVS and Walgreens; and discount retailers Target and Walmart. (Kroger proposed a $25 billion merger with Albertsons in 2022, but that deal is pending in court.)
“Fees to get cash back are just one more nickel and dime that all starts to add up,” said Adam Rust, director of financial services at the Consumer Federation of America, an advocacy group.
“It just makes it harder and harder to get by,” he said. “It’s thousands of little cuts at a time.”

Luis Alvarez | Digitalvision | Getty Images

A spokesperson for Dollar General said cash back can help save customers money relative to “alternative, non-retail options” like check cashing or ATM fees.
“While not a financial institution, Dollar General provides cashback options at our more than 20,000 stores across the country as a service to customers who may not have convenient access to their primary financial institution,” the spokesperson said.
Spokespeople for Kroger and Dollar Tree (which operates Family Dollar and Dollar Tree stores) didn’t respond to requests for comment from CNBC.
Kroger, Dollar General and Dollar Tree were respectively the No. 4, 17 and 19 largest U.S. retailers by sales in 2023, according to the National Retail Federation, a trade group.

Cash back is popular

The practice of charging for cash back is relatively new, Rust explained.
For example, in 2019, Kroger Co. rolled out a $0.50 fee on cash back of $100 or less and $3.50 for amounts between $100 and $300, according to CFPB.
This applied across brands like Kroger, Fred Meyers, Ralph’s, QFC and Pick ‘N Save, among others.
However, Kroger Co. began charging for cash back at its Harris Teeter brand in January 2024: $0.75 for amounts of $100 or less and $3 for larger amounts up to $200, CFPB said.

Cash withdrawals from retail locations is the second most popular way to access cash, representing 17% of transactions over 2017-22, according to a CFPB analysis of the Diary and Survey of Consumer Payment Choice.
ATMs were the most popular, at 61%.
But there are some key differences between retail and ATM withdrawals, according to CFPB and consumer advocates.
For instance, relatively low caps on cash-back amounts make it challenging to limit the impact of fees by spreading them over larger withdrawals, they said.
The average retail cash withdrawal was $34 from 2017-22, while it was $126 at ATMs, CFPB said.

Banking deserts are growing

However, retailers may be the only reasonable way to get cash for consumers who live in banking deserts, experts say.
More than 12 million people — about 3.8% of the U.S. population — lived in a banking desert in 2023, according to the Federal Reserve Bank of Philadelphia.
That figure is up from 11.5 million, or 3.5% of the population, in 2019, it found.
Generally speaking, a banking desert constitutes any geographic area without a local bank branch. Such people don’t live within 10 miles of a physical bank branch. The rise of digital banking, accelerated by the Covid-19 pandemic, has led many banks to close their brick-and-mortar store fronts, according to Lali Shaffer, a payments risk expert at the Federal Reserve Bank of Atlanta.
These deserts “may hurt vulnerable populations” who are already less likely to have access to online and mobile banking, she wrote recently.

Retailers blame banks

Retail advocates say banks are to blame for cash-back fees.
Merchants must pay fees to banks whenever customers swipe a debit card or credit card for purchases. Those fees might be 2% to 4% of a transaction, for example.
Since cash-back totals are included in the total transaction price, merchants also pay fees to banks on any cash that consumers request.

The “vast majority” of retailers don’t charge for cash back, and therefore take a financial loss to offer this service to customers for free, said Doug Kantor, general counsel at the National Association of Convenience Stores and a member of the Merchants Payments Coalition Executive Committee.
“Banks have abandoned many of these communities and they’re gouging retailers just for taking people’s cards or giving people cash,” he said.
But consumer advocates say this calculus overlooks the benefit that retailers get by offering cash back,
“You’d think they’d see this as a free way to get customers: coming into [the] store because the bank branch isn’t there,” Rust said. “Instead they’re going ahead and charging another junk fee.” More

At the annual gathering of central bankers in Jackson Hole, Wyoming, attendees enjoy R&R: research and recreation. The latter usually involves a pleasant hike by the lake, but last year a rainstorm soaked the assembled economists. When they returned on August 23rd a remarkably accurate weather forecast helped them dodge a shower and enjoy some sun. This was apt. A year ago inflation was still too high and investors were placing bets that interest rates would have to stay “higher for longer”, the economic equivalent of a drenching. This year inflation looks all but subdued and central bankers—whose optimistic prognostications have also come to pass—have started cutting interest rates. More

Klarna said it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months through June 2024, up from a loss of 456 million krona in the same period a year ago.
The company said it was focused on “sustainable, profitable growth and leveraging AI to lower costs.”
After leaning into AI, Klarna said its average revenue per employee increased 73% year-over-year, to 7 million Swedish krona.

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

Klarna said it posted a profit in the first half of the year, swinging into the black from a loss last year as the buy now, pay later pioneer edges closer toward its hotly anticipated stock market debut.
In results published Tuesday, Klarna said that it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months through June 2024, up from a loss of 456 million krona in the same period a year ago. Revenue, meanwhile, grew 27% year-on-year to 13.3 billion krona.

On a net income basis, Klarna reported a 333 million Swedish krona loss. However, Klarna cites adjusted operating income as its primary metric for profitability as it better reflects “underlying business activity.”
Klarna is one of the biggest players in the so-called buy now, pay later sector. Alongside peers PayPal, Block’s Afterpay, and Affirm, these companies give consumers the option to pay for purchases via interest-free monthly installments, with merchants covering the cost of service via transaction fees.
Sebastian Siemiatkowski, Klarna’s CEO and co-founder, said the company saw strong revenue growth in the U.S. in particular, where sales jumped 38% thanks to a ramp-up in merchant onboarding.

“Klarna’s massive global network continues to expand rapidly, with millions of new consumers joining and 68k new merchant partners,” Siemiatkowski said in a statement Tuesday.

Using AI to cut costs

The company achieved its adjusted operating profit “by focusing on sustainable, profitable growth and leveraging AI to lower costs,” he added.

Klarna has been one of the forerunners in the corporate world when it comes to touting the benefits of using AI to increase productivity and cut operating costs.
On Tuesday, the company said that its average revenue per employee over the previous twelve months increased 73% year-over-year, to 7 million Swedish krona.
It comes as Klarna tries to pitch itself as a primary banking provider for clients as it approaches a much-anticipated initial public offering.
The firm earlier this month launched its own checking account-like product, called Klarna balance, in a bid to persuade consumers to move more of their financial lives onto its app.

The move highlighted how Klarna is looking to diversify beyond its core buy now, pay later product, for which it is primarily known.
Klarna has yet to set a fixed timeline for the stock market listing, which is widely expected to be held in the U.S.
However, in an interview with CNBC’s “Closing Bell” in February, Siemiatkowski said an IPO this year was “not impossible.”
“We still have a few steps and work ahead of ourselves,” he said. “But we’re keen on becoming a public company.”
Separately, Klarna earlier this year offloaded its proprietary checkout technology business, which allows merchants to offer online payments, to a consortium of investors led by Kamjar Hajabdolahi, CEO and founding partner of Swedish venture capital firm BLQ Invest.
The move, which Klarna called a “strategic” step, effectively removed competition for rival online checkout services including Stripe, Adyen, Block, and Checkout.com. More

The basic version of the Mona M03 electric coupe starts at 119,800 yuan ($16,812), with a driving range of 515 kilometers (320 miles) and some parking assist features.
A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.
In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.

Chinese electric car company Xpeng displays its mass-market Mona M03 coupe inside a headquarters’ showroom in Guangzhou, China, on Aug. 26, 2024.
CNBC | Evelyn Cheng

BEIJING — Chinese electric car company Xpeng on Tuesday announced that its mass-market brand Mona will start selling some models for less than $17,000.
The basic version of the Mona M03 electric coupe will be listed at 119,800 yuan ($16,812), with a driving range of 515 kilometers (320 miles) and some parking assist features.

A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.
In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.
Xpeng CEO He Xiaopeng did not specify a launch date for the standard version of the car in his presentation on Tuesday. The company told investors last week on an earnings call that mass deliveries would begin shortly after Tuesday’s announcement.
Presales of the Mona M03 began on Aug. 8.

The Mona M03 standard driver-assist supports parking, including parallel parking. The company says it uses a range of automatic sensors, cameras and light detection and ranging sensors.

The Max version of driver assist includes features such as automatically backing up a car to a designated position in a dead-end street with the push of a button. Xpeng also plans for it to support the remote control of entering and exiting a narrow parking spot.
That Max version is set to begin deliveries after the Lunar New Year holiday in 2025, CEO He said. The Chinese holiday runs from late January to early February next year.
Xpeng’s driver-assist technology is widely considered one of the best currently available in China. Tesla’s version, marketed as “full self-driving,” isn’t fully accessible in China, although it is widely expected to be released in the coming months.
The Xpeng CEO’s presentation on Tuesday also commemorated the 10th anniversary of Xpeng’s founding. Chinese smartphone company Xiaomi’s founder Lei Jun was among those in attendance
CEO He said the brand name Mona stands for “Made of new AI.” He emphasized that over the next decade, Xpeng would focus on developing artificial intelligence for cars.
The company also said Tuesday that it plans to reveal its second-generation humanoid robot in October. It also revealed its own chip, but did not specify what nanometer process — or level of production technology — is used in its manufacturing.
Premium Chinese electric car startup Nio in late July said it had finished designing a five nanometer automotive-grade chip, the NX9031. The company had teased the chip in December, and plans to use it in its high-end ET9 sedan, set for delivery in 2025.

Collaboration with Didi

Xpeng built Mona using tech it acquired from ride-hailing company Didi in August 2023.
Wu Zhefeng, a Mona project manager, told reporters Monday that the basic version of driver-assist technology in the M03 comes from Didi, while the more advanced version was made by Xpeng.
Since the battery is the priciest component of an electric car, he said Xpeng was able to bring the cost down for Mona thanks in part to efforts to boost energy efficiency. The coupe uses BYD’s popular “blade battery,” Wu said.
He said the brand is focused on young people, two or three years after graduation.
Nearly half of similar cars available in China within this price range are used for ride-hailing, according to Wu. While electric car companies such as BYD have worked with Didi to promote their cars among drivers on the ride-hailing platform, he said Mona would remain focused on consumer drivers.
BYD, which has quickly become a giant in China’s electric car industry, sells cars across a range of prices and models, including many hybrid-powered versions. Consumers in China have increasingly preferred hybrids to battery-only cars as anxiety persists over how far they can drive on a single charge.
Geely-owned electric car company Zeekr announced earlier this month that it would launch its first hybrid car next year.
Other Chinese companies have launched cars this year in direct competition with Tesla.
Nio, which has focused on premium electric cars, in May announced a lower-priced brand Onvo. Its first car, the L60 SUV, is set to begin deliveries in September. The L60 starts at 219,900 yuan (US$30,439) versus the Model Y’s 249,900 yuan (US$34,617), according to prices shared in May. 
Chinese smartphone company Xiaomi, meanwhile, in March released its first electric car, the SU7 sedan for 215,900 yuan.
— CNBC’s Sonia Heng contributed to this report. More