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Today's big stories

China proposed new regulations for online payments firms, and Ant Group and Tencent should be nervous
You could discover some tidy opportunities if you alter the way you think about inflation – Read Now
United Airlines reported worse-than-expected earnings, and its outlook is just as grim

Divided And Conquered

What’s Going On Here?

The Chinese central bank proposed new regulations earlier this week that could break up the biggest players in the online payments industry, and… well, investors have done the math.

What Does This Mean?

The new rules would mean China’s central bank could advise regulators to break up a “non-bank payment company” if it controls more than half the market, or any two that hold two-thirds of the market between them. That’s not ideal news for Ant Group and Tencent, whose respective payment platforms – Alipay and WeChat Pay – control an estimated 55% and 40% of China’s mobile payments sector.

It’s not the first time that China – worried that a slip-up from one dominant company could hurt the country’s entire financial system – has cracked down on fintech. The country’s central bank urged regulators to investigate Alipay and WeChat Pay last year, while Ant Group’s initial public offering – which would’ve been the world's biggest – was put on hold in November.

Why Should I Care?

For markets: Do not pass Go.
Alibaba mightn’t be too happy about the regulatory overdrive either: the Chinese ecommerce giant owns a substantial stake in Ant Group, and is itself the target of a separate anti-monopoly investigation launched in December. This new regulatory push, then, is making its investors even more nervous, which might be why the company’s shares are 10% below where they were before Ant Group’s IPO was suspended.

The bigger picture: Bide ‘n’ seek.
China isn’t the only one taking a hard line on tech companies: European and American regulators have also launched new rules for and investigations into Big Tech in recent months. And considering the new US president is likely to come down harder on those companies than the previous one was – and considering Europe has said it’ll help – things are probably going to get worse for them before they get better.

You might also like: What more reliable investment opportunities does China offer?

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2. Analyst Take

Everything You Know About Inflation Is A Myth

What’s Going On Here?

There’s a widely held idea that products and services are getting more and more expensive, and understandably so.

But veteran fund manager Mark Mobius doesn’t think that’s true – largely because what was happening in, say, 1999 isn’t happening today.

In other words, technological advancements are helping your money go a lot further.

You’d pay the same amount for a smartphone as you would a Nokia 3210, for example, but you get a lot more bang for your buck with the former than the latter.

Wages have been outgrowing inflation for years too, which means it’s not actually having much of an impact on people’s lives in real terms.

What you might think is inflation, Mark points out, is actually currency devaluation.

Mark will talk you through why the difference matters, and how to tweak your portfolio to beat currency devaluation. Spoiler: it’s not by buying bitcoin or Tesla.

Read or listen to the Insight here

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Flight Risk

What’s Going On Here?

United Airlines reported its fourth-straight quarter of losses late on Wednesday, and it’s carrying something very suspicious into the next few months too.

What Does This Mean?

United burned through $33 million a day last quarter – even more than the quarter before as staff layoff costs and interest on its mounting debt continued to spiral. The company did raise billions from investors and in US government support last year, mind you, so it’s hopeful it’ll have enough cash on hand to keep going until air travel starts to recover in earnest. And hey, at least it’s making money somewhere: United’s cargo business – which admittedly only represents 16% of its total revenue – jumped 77% last quarter compared to the same time the year before.

Why Should I Care?

The bigger picture: Out-of-business class.
United isn’t expecting a meaningful recovery until toward the end of the year, but rival Delta Air Lines – which reported its worst-ever performance last week after hemorrhaging $12 billion last year – thinks it’ll kick off in spring. They both agree on one thing though: vacations will be first to come back, while the more lucrative but Zoom-disrupted world of business travel will take a while to bounce back.

Zooming out: Must be nice.
Hold on to your monocles: fresh data out this week showed private flights from the UK are only down 42% since the start of the pandemic, compared to the 75% drop in the country’s commercial flights. Some private jet operators are reporting so many first-time clients hoping to avoid crowded terminals, in fact, that they sold more flights last year than in 2019. And while aircraft manufacturer Honeywell Aerospace predicts that private jet flights will have fully recovered by the middle of this year, commercial flights are, at best, expected to be back up to 70% of their pre-pandemic levels by the same point (tweet this).

You might also like: How to tell if a company’s headed for bankruptcy.

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💬 Quote of the day

“Never express yourself more clearly than you are able to think.”

– Niels Bohr (a Danish physicist and philosopher)

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Finimize - Is no tech company safe?

Today's big stories

Divided And Conquered

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Everything You Know About Inflation Is A Myth

🏆 You’ve got be in it to win it

Flight Risk

What’s Going On Here?

What Does This Mean?

Why Should I Care?

😭 In case you missed it…

Older messages

🤭 Apple ain't worth $2 trillion

😮 US banks.

🤓 How to trade this earnings season

💰 9 trillion.

✌️ #startuplife

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