Finance

Instead of spending or investing their money, more Chinese people wanted to save in the first three months of 2022, findings from the quarterly People’s Bank of China survey showed.
The cautious stance comes as the spread of omicron in major economic areas like Shanghai has disrupted business and daily life with lockdowns and quarantines.
Survey respondents who said they were more inclined to save in the first quarter rose to 54.7% — the most on record since the third quarter of 2002, according to data accessed through Wind Information.

While mainland China faced its worst wave of Covid-19 since the initial shock of the pandemic, a central bank survey found more Chinese wanted to save money than spend or invest it.
Costfoto | Future Publishing | Getty Images

BEIJING — Chinese consumers are becoming more cautious than they were near the start of the pandemic, according to a survey by the People’s Bank of China released Wednesday.
Instead of spending or investing their money, more Chinese people wanted to save in the first three months of 2022, findings from the quarterly survey showed.

Survey respondents who said they were more inclined to save in the first quarter rose to 54.7% — the most on record since the third quarter of 2002, according to data accessed through Wind Information.
In the last few weeks, the spread of the highly transmissible omicron variant in major economic areas like Shenzhen and Shanghai have disrupted business and daily life with lockdowns and quarantines.
As Covid-19 enters its third year, there are signs Chinese authorities are shifting their narrative away from maintaining such a stringent zero-Covid policy to “a more pragmatic approach,” Carlos Casanova, senior Asia economist at UBP, said Thursday on CNBC’s “Capital Connection.”
But he doesn’t expect those changes will take place until the second half of the year, Casanova said. His firm is cutting its second-quarter China GDP forecast, he said, without specifying a figure.

Although the central bank survey found that the share of respondents who wanted to spend money in the first quarter fell to 23.7%, that level was only the lowest in a year, data accessed through Wind showed. An even lower 22% had expressed interest in spending during the worst of the pandemic in the first quarter of 2020.

Education was the top category in which Chinese consumers planned to increase their spending over the next three months. The PBOC survey found that 28.9% expressed such an intent — up from 27.2% in the fourth quarter last year.
And despite the struggles of China’s real estate industry, the share of respondents planning to buy a house remained the same for both quarters, at 17.9%, the survey said.

Fewer interested in buying stocks

While planning to cut down on spending, Chinese consumers said they were not inclined to invest their money either.
The share of respondents wanting to invest fell to 21.6%, the lowest on record going back to the first quarter of 2009, according to Wind.
Appetite for stock investing was the lowest among the three investment categories listed, and the share of respondents wanting to buy stocks falling to 16.2% in the first quarter — down from 17.3% in the previous quarter, survey data showed.
The PBOC said its quarterly survey, conducted since 1999, covered 20,000 people with bank deposits across 50 large-, medium- and small-sized cities in the country.

Read more about China from CNBC Pro

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Stock futures were slightly higher in overnight trading Wednesday ahead of the last trading day of the month and quarter.
Futures on the Dow Jones Industrial Average was near flat. S&P 500 futures ticked up 0.1% and Nasdaq 100 futures added 0.3%.

Stocks are coming off a down session Wednesday in which the Dow and S&P 500 each snapped four-day win streaks. The Dow shed 65.38 points, or 0.2%. The S&P 500 fell 0.6% and the Nasdaq lost 1.2%.
Rising oil prices loomed over equities, with U.S. crude prices climbing more than 3% on Wednesday. Germany warned of potential rationing of natural gas due to disputes with Russia, and U.S. crude stockpiles fell.
“We’re going to be bouncing around between good news and bad news, unfortunately,” said George Mateyo, Key Private Bank chief investment officer. “That’s going to create some volatility.”
Higher oil prices boosted energy stocks, comprising the top-performing S&P 500 sector on Wednesday.

Stock picks and investing trends from CNBC Pro:

Investors are awaiting weekly jobless claims and personal income and spending data to be released Thursday morning.

Walgreens Boots Alliance also reports quarterly results before the bell Thursday.
Thursday marks the last trading day of March and of the first quarter. The S&P 500 and Nasdaq are on pace to finish the month up about 5% each, while the Dow is nearly 4% higher in March.
For the year, the Dow and S&P 500 are both down about 3% and the Nasdaq is off more than 7%.

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Vlad Tenev, CEO and co-founder Robinhood Markets, Inc., is displayed on a screen during his company’s IPO at the Nasdaq Market site in Times Square in New York City, U.S., July 29, 2021.
Brendan McDermid | Reuters

Check out the companies making headlines in midday trading.
Robinhood — Shares of the stock-trading app fell about 8.5% after Morgan Stanley initiated coverage of the company with an equal-weight rating. The Wall Street firm said Robinhood could be the younger population’s Charles Schwab as it has a firm grip over millennials and Generation Z. However, Robinhood will need to expand its product offerings if it wants to retain its appeal, the analyst said.

Lululemon – Shares rose more than 9.6% after the company announced a $1 billion stock buyback program. The athletic apparel company posted per-share earnings that were better than expected, but the company fell short of Wall Street’s revenue estimates. Lululemon also issued first-quarter and full-year guidance higher than the Refinitiv consensus expectations.
BioNTech — BioNTech’s stock rose 1.3% after the drugmaker reported better-than-expected revenue and earnings for the quarter and reiterated previous vaccine revenue guidance for the year.
Five Below — Shares of the discount retailer fell 6.5% following its lackluster earnings report. Five Below reported same-store sales of 3.4%, below estimates of 3.6%. Earnings came in one cent higher than forecasts but revenue missed estimates, according to Refinitiv.
RH — The home-furnishings retailer’s shares declined by more than 13% after the company reported a revenue miss for its most recent quarter. RH brought in $902.7 million, compared with estimates of $931.8 million. It also announced a three-for-one stock split that will take place in the spring.
Chewy — Shares of Chewy dropped more than 16% on Wednesday after a fourth-quarter report that missed expectations. The pet-focused e-commerce company reported a loss of 15 cents per share on $2.39 billion in revenue. Analysts surveyed by Refinitiv were expecting a loss of 8 cents per share on $2.42 billion in revenue. Chewy’s forward revenue guidance also came in below estimates.

Wayfair — Shares of the home decor and furniture company dipped more than 6% as Loop Capital downgraded the stock from “hold” to “sell.” Loop also indicated it expects a negative impact amid Fed tightening and the end of stimulus from the pandemic.
Pearson — Pearson’s stock dipped nearly 6% following news that private equity firm Apollo could not reach an agreement with the educational publisher about a possible takeover bid. Apollo also indicated it does not plan to make an offer on the company.
Oil stocks — Oil stocks rose on Wednesday as crude prices, which have seesawed in recent weeks, edged higher. ConocoPhillips, Occidental Petroleum and Phillips 66 gained 0.7%, about 1% and 4.7%, respectively
Freshpet — Freshpet’s stock gained 3.3% after Goldman Sachs upgraded the stock to buy from neutral as demand for fresh pet food continues to grow. The bank upped its price target on the company to $136 per share from $111.
Rivian — Shares of the automaker fell 3.4% after popping 2% in midday trading. On Wednesday, RBC analysts reiterated its outperform rating after expressing confidence that Rivian’s production ramp is improving. The company’s stock price cratered nearly 47% year to date.
Procter & Gamble — Shares of Procter & Gamble inched nearly 1% lower after JPMorgan downgraded the company to neutral from overweight amid inflationary pressures. The bank attributed rising costs and FX headwinds as the reason for the downgrade.
— CNBC’s Maggie Fitzgerald, Jesse Pound, Hannah Miao, Tanaya Macheel and Sarah Min contributed reporting.

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Traders work on the floor of the New York Stock Exchange (NYSE) on December 08, 2021 in New York City.
Spencer Platt | Getty Images

(Click here to subscribe to the new Delivering Alpha newsletter.)
A majority of Wall Street investors believe the biggest threat facing the markets right now is a policy error by the Federal Reserve as the central bank wrestles with taming decades-high inflation, according to the new CNBC Delivering Alpha investor survey. 

We polled about 400 chief investment officers, equity strategists, portfolio managers and CNBC contributors who manage money about where they stood on the markets for the rest of 2022. The survey was conducted this week.

Arrows pointing outwards

Forty-six percent of the survey respondents said a Fed misstep could have the potential to derail the bull market, while 33% said surging U.S. inflation poses a major threat. Eleven percent listed further aggression from Russia after its invasion of Ukraine as the biggest threat to the markets.
Earlier this month, the Fed approved a 0.25 percentage point rate hike, the first increase since December 2018. The central bank also signaled that it will be raise rates 10 times — in less than two years — and cut what likely will be trillions off the balance sheet.
Fed Chairman Jerome Powell recently vowed tough action on soaring prices, indicating he’s open to rate hikes more than the traditional 25 basis points.
Many notable investors are skeptical that the central bank will be able to engineer a soft landing even with a stronger economy.

Famed investor Carl Icahn recently said he sees a “rough landing” and said that there “very well could be a recession or even worse” even the sky-high inflation and elevated geopolitical tensions.
The so-called bond king Jeffery Gundlach has criticized the Fed’s role in fighting inflation, saying that the recent readings made the Fed’s 2% target look “laughable.”
The investor expects the consumer price index to peak at 10% potentially and end this year at 7.5%. The CPI for February, which measures the costs of dozens of everyday consumer goods, rose 7.9% compared with a year ago, the highest reading since 1982.

Arrows pointing outwards

As for their market outlook, most investors (58%) see flat returns for the S&P 500 in 2022, while 36% believe the equity benchmark could rise about 8% to end the year above the 5,000 level.
Only 6% sees a correction before the year-end to take the S&P 500 below 4,000. More

A select few firms, including Revolut and Copper, will be allowed to continue trading after a temporary register closes Friday, the FCA said.
The temporary register has shrunk considerably in recent weeks, with B2C2 and Wirex among those withdrawing their applications.
The deadline extension comes as British officials are set to announce a new regulatory regime for crypto as soon as next week.

A logo for the Financial Conduct Authority (FCA).
Chris Ratcliffe | Bloomberg | Getty Images

The U.K.’s Financial Conduct Authority said Wednesday it is giving some crypto companies more time to register with the regulator beyond an original Mar. 31 deadline.
A select few firms, including the fintech company Revolut and crypto start-up Copper, will be allowed to continue trading after a temporary registration regime closes, the FCA said in an update on its website.

Copper counts the former U.K. finance minister, Philip Hammond, as an advisor.
The temporary register closes on Friday “for all but for a small number of firms where it is strictly necessary to continue to have temporary registration,” the FCA said.
“This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances.”
Crypto firms operating in the U.K. are required to be registered with the FCA under money laundering regulations. But several companies have yet to make the cut. The FCA set up a temporary register to allow firms to continue trading while they sought full authorization.
The list of firms on the temporary register has shrunk considerably in recent weeks, with market maker B2C2 and trading app Wirex among the firms withdrawing their applications.

B2C2 is shifting its spot trading operations to a U.S. entity, while Wirex plans to offer crypto services to Brits from a Croatian subsidiary.

Now, just 12 businesses remain on the temporary regime, including Revolut, Copper and crypto wallet platform Blockchain.com.

Crime ‘red flags’ missed

Paysafe, a fintech firm that is on the FCA’s full register, said it welcomes “heightened regulatory oversight” of the crypto industry.
“The U.K.’s registration regime will mean that a number of companies will inevitably need to exit the U.K. market because they are unable to meet the necessary standards in terms of risk and compliance,” Chirag Patel, CEO of Paysafe’s digital wallets division, said via email.
Still, there’s been a backlash from the crypto industry over the FCA’s handling of the registration process. Industry insiders previously told CNBC the regulator is understaffed and has been slow to approve applications.
For its part, the FCA says a “high number” of crypto firms aren’t meeting the required anti-money laundering standards. Just 33 companies have made it onto the full register so far.
“While we have registered 33 firms, we have seen too many financial crime red flags missed by the cryptoasset businesses seeking registration,” an FCA spokesperson said via email. “Worse, we have seen examples where firms do not have the controls necessary to raise red flags in the first place.”
The watchdog’s deadline extension comes as British officials are set to announce a new regulatory regime for crypto as soon as next week, according to CNBC sources. The Treasury department declined to comment when asked about the plans.

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The SEC debuted new rules for SPACs that would mark one of the broadest attempts to date at cracking down on blank-check companies.
The proposed rules would amend safe harbor rules and leave SPACs open to investor lawsuits for excessively rosy business forecasts.
“Investors deserve the protections they receive from traditional IPOs, with respect to information asymmetries, fraud, and conflicts,” SEC Chair Gary Gensler said of SPACs.

A flag outside the U.S. Securities and Exchange Commission headquarters in Washington, D.C., U.S., on Wednesday, Feb. 23, 2022.
Al Drago | Bloomberg | Getty Images

The Securities and Exchange Commission on Wednesday debuted a host of new rules for SPACs that, if enacted, would mark one of the broadest attempts to date at cracking down on the hot market for blank-check companies.
SPACs, or special-purpose acquisition companies, have come under fire in recent years by investors who say that the firms often inflate the business outlooks of the firms they seek to acquire. Many of those companies include start-ups that have not yet become profitable.

With its new rules, the SEC also hopes to address complaints about incomplete information and insufficient protection against conflicts of interest and fraud. The issues are not as pervasive in a traditional initial public offering.
SPACs are typically shell firms that raise funds through a listing with the goal of buying a private company and taking it public. That process allows the often-young firms to circumvent the more rigorous scrutiny of a traditional initial public offering.
“Functionally, the SPAC target IPO is being used as an alternative means to conduct an IPO,” SEC Chair Gary Gensler said in a statement. “Thus, investors deserve the protections they receive from traditional IPOs, with respect to information asymmetries, fraud, and conflicts, and when it comes to disclosure, marketing practices, gatekeepers, and issuers.”
Some of the SEC’s proposed rules would:

Amend the definition of a “blank check company” to make the liability safe harbor for forward-looking statements, such as business forecasts, unavailable in filings by SPACs. The move would leave SPACs open to investor lawsuits if they feel like the blank-check company’s estimates were wildly bullish.
Require that the SPAC’s private business target be a co-registrant when the blank-check company files a take-public Form S-4 or F-4.
Better police conflicts of interest, fee responsibilities and the dilution of investor holdings.
Update the Securities Act of 1933 to limit the types of financial statements shell companies can make of their potential business combinations and their would-be merger targets.

Dilution is a paramount concern for individual investors, as many have complained that murky SPAC processes can leave investments open to unexpected losses if the company elects to issue more stock, the SEC told reporters.

Gensler has voiced concerns about SPACs since May, but Wednesday’s proposed rules represent the first broad rulemaking from Wall Street’s watchdog.
The SEC has nonetheless launched independent investigations into a raft of SPACs and blank-check merger deals, including one involving former President Donald Trump’s social media project, Digital World Acquisition Corp.
The U.S. SPAC market was one of the hottest trades of 2021. An explosion of hundreds of deals in the first half of the year waned as the SEC cracked down and many deals performed badly.
The proprietary CNBC SPAC Post Deal Index, which is comprised of SPACs that have completed their mergers and taken their target companies public, is down 44.8% over the past year and has declined 20% in 2022 alone.

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Check out the companies making headlines before the bell:
BioNTech (BNTX) – The drug maker’s shares jumped 5.9% in the premarket after reporting significantly better-than-expected revenue and profit for the fourth quarter. BioNTech also reiterated its prior vaccine revenue guidance for 2022.

Five Below (FIVE) – The discount retailer’s stock slid 3.4% in premarket trading following a mixed quarterly report. Five Below beat estimates by a penny with quarterly earnings of $2.49 per share, but both revenue and comparable sales came in below analyst forecasts.
RH (RH) – RH fell 2.8% in premarket trading after the high-end furniture retailer reported lower-than-expected revenue for its latest quarter, although its profit came in slightly above Wall Street forecasts. RH also announced a 3-for-1 stock split.
Lululemon (LULU) – Lululemon rallied 7.4% in premarket action despite a quarterly revenue miss. The athletic apparel company reported an adjusted quarterly profit of $3.37 per share, 9 cents above estimates, and issued upbeat guidance for 2022. Lululemon also announced a $1 billion share buyback program.
Micron Technology (MU) – Micron reported an adjusted quarterly profit of $2.14 per share, 17 cents above estimates. The computer chip maker also reported better-than-expected revenue as data center and smartphone chip sales showed strong growth. Micron issued an upbeat revenue forecast for the current quarter, and the stock jumped 4.1% in the premarket.
Chewy (CHWY) – Chewy stock was slammed by 13.5% in premarket trading after top and bottom line misses for its latest quarter. The pet products seller lost 15 cents per share, wider than the 8-cent loss that analysts were anticipating, as labor costs rose and profit margins shrunk.

Norfolk Southern (NSC) – Norfolk Southern rose 2.1% in premarket trading after the railroad operator announced a new $10 billion share buyback program.
WeWork (WE) – WeWork Chief Executive Officer Sandeep Mathrani has added the additional role of chairman at the office-sharing company. He fills the void created when former Chairman Marcelo Claure left earlier this year. WeWork added 3% in the premarket.
Pearson (PSO) – The educational publisher’s stock slumped 7.1% in the premarket after private equity firm Apollo said it was unable to reach an agreement with Pearson on a possible takeover bid, and does not intend to make an offer.
Wayfair (W) – The furniture and home decor retailer’s shares took a 4.5% hit in premarket trading after Loop Capital downgraded the stock to “sell” from “hold,” predicting a negative impact from Fed tightening and the end of Covid-related stimulus.

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An increasing number of affluent Chinese are setting up family offices in Singapore.
The trend appeared to pick up last year after Beijing’s sudden crackdown on the education industry and emphasis on “common prosperity” — moderate wealth for all, rather than just a few. 
Over the last 12 months, inquiries about setting up a family office in Singapore have doubled at Jenga, a five-year-old accounting and corporate services firm, according to its founder Iris Xu. She said the majority of inquiries come from people in China or emigrants from the country. 

As Beijing pushes for “common prosperity” and political turmoil threatens Hong Kong, Singapore has become a safe harbor for some of the region’s wealthiest tycoons and their families.
Wei Leng Tay | Bloomberg | Getty Images

More and more wealthy Chinese are worried about keeping their money on the mainland and some see Singapore as a safe haven.
Since protests disrupted Hong Kong’s economy in 2019, affluent Chinese have looked for alternative places to store their wealth. Singapore proved attractive because of its large Mandarin Chinese-speaking community and, unlike many countries, it doesn’t have a wealth tax. 

The trend appeared to pick up last year after Beijing’s sudden crackdown on the education industry and emphasis on “common prosperity” — moderate wealth for all, rather than just a few. 
That’s according to CNBC’s interviews with firms in Singapore that are helping wealthy Chinese move their assets to the city-state via the family office structure.
A family office is a privately held company that handles investment and wealth management for an affluent family. In Singapore, setting up a family office typically requires at least $5 million in assets.
Over the last 12 months, inquiries about setting up a family office in Singapore have doubled at Jenga, a five-year-old accounting and corporate services firm, according to its founder Iris Xu. She said the majority of inquiries come from people in China or emigrants from the country. 

[Wealthy Chinese] believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there.

founder of Jenga

About 50 of her clients have opened family offices in Singapore — each with at least $10 million in assets, Xu said. 

China’s rapid economic growth has minted hundreds of billionaires in just a few decades. Many more joined their ranks their last year, according to Forbes.
That brought the total number of billionaires in China to 626, second only to the United States’ 724 billionaires, the data showed.
Xu said her Chinese clients “believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there,” according to a CNBC translation of the interview in Mandarin. 

‘Common prosperity’ worries

New family office-related work is coming disproportionately from Chinese clients, said Ryan Lin, a director at Bayfront Law in Singapore. His firm also has clients from India, Indonesia and parts of Europe.
Mainland China’s tight capital controls — an official limit of $50,000 in overseas foreign exchange a year — limit those billionaires’ ability to move money out of the country, Lin said.
That cap is set by the State Administration of Foreign Exchange, which did not immediately respond to a CNBC request for comment.
Although those capital controls mean many Chinese clients are opening family offices with smaller amounts of capital, Lin said most own revenue-generating business outside the mainland. 

Family office as a way to immigrate

Covid-related restrictions on international travel also accelerated the interest of wealthy Chinese in establishing family offices in Singapore, Xu said. The country has a global investor program that allows adults who invest at least 2.5 million Singapore dollars ($1.8 million) to apply for permanent residency. 
Since the pandemic began, some Chinese citizens found that China’s government could suspend passport issuing and renewal services on grounds of virus control. 
In response to an online question in August about passport suspension, China’s National Immigration Administration said it would issue such documents only to those with essential or emergency reasons for leaving the country. 

Singapore’s family office boom

Many billionaires worldwide have used family offices to manage their wealth. Another part of Singapore’s appeal is that its location gives investors proximity to other investment opportunities in Asia.
Since late 2020, Bridgewater founder Ray Dalio and Google co-founder Sergey Brin have opened family offices in Singapore to take advantage of its friendly tax policy, according to Bloomberg reports.

How long can it last?

The ongoing war between Russia and Ukraine has brought uncertainty to Chinese citizens who want to open family offices in Singapore.
China has said it opposes sanctions. Beijing has also refused to call Russia’s attack on Ukraine an invasion, and state media often blames the U.S. for the conflict.
In contrast to China’s attempt to take a neutral stance on the war, Singapore joined the U.S. and the EU in imposing sanctions on Russia earlier this month, reportedly freezing local bank accounts held by sanctioned Russian individuals and entities. 
Jenga’s Xu said the news of the asset freeze gave some potential Chinese clients pause in their plans to open a family office in Singapore.

Read more about China from CNBC Pro

Nevertheless, Xu and Lin from Bayfront said inquiries from Chinese people looking to open family offices in Singapore have grown this year at a pace similar to that of 2021.
But it’s not clear whether the interest in Singapore means the city has gained a significant edge in longstanding competition with Hong Kong as a financial center.
Singapore is considering a broader range of wealth taxes — including tax on capital gains, dividends and net wealth tax on individuals, Finance Minister Lawrence Wong told CNBC last month.
Xu said that Hong Kong financial professionals have a more established track record of managing money and some Hong Kong asset managers are going to Singapore in search of potential customers.
“If Singapore cannot catch up in providing [quality] wealth management services, Chinese assets will still be managed by professionals from Hong Kong. After all, family offices are not restricted in where they invest,” she said.

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