Staff sort express deliveries at China Post’s Zaozhuang branch in east China’s Shandong province on November 10, 2024
Nurphoto | Nurphoto | Getty Images
BEIJING — China’s Singles’ Day shopping festival saw consumers spend more than expected in what has otherwise been a tepid retail environment, consulting executives told CNBC.
The country’s version of Black Friday kicked off this year on Oct. 14, more than a week earlier than in 2023, and wrapped up Monday. Major e-commerce companies used to report gross merchandise value, an industry measure of sales over time, but did not for a third consecutive year amid weak consumer sentiment.
“I do think for many brands it probably will have turned out a bit better than they thought, but on a low level. Probably nobody would say we hit it out of the ballpark,” said Chris Reitermann, CEO of Ogilvy APAC and Greater China. He is also president of WPP China.
Many multinational corporations that sell consumer products in China are more cautious on the market, if not struggling, Reitermann said. But he pointed out many of the companies are still “very profitable” in the country, even if their growth has slowed to the low single digits, instead of high double digits.
For this year’s Singles Day, Alibaba claimed “robust growth” in GMV and a “record number of active buyers,” while JD.com said the number of shoppers on its platform rose by more than 20% year-over-year.
The shopping season that celebrates single people, also known as Double 11, came as the Chinese government has announced a series of stimulus measures since late September, fueling a stock market rally.
“There seems to be an uptick” in consumer sentiment over the last six weeks, said Daniel Zipser, senior partner at McKinsey and leader of its Asia Pacific consumer and retail division. It’s “hard to predict what that means going forward.”
Singles Day exceeded expectations for most brands, Zipser said. But rather than sales rising across the board, he pointed out pockets of growth in categories such as outdoors, pet care and “blind box” toys — in which consumers buy uniformly marked boxes for a chance at winning a new collectible.
He noted that the blind box category is one that went from $0 before Covid-19 to an industry more than $2 billion in size, reflecting the potential speed of consumer adoption in China.
China’s retail sales for October are expected to have risen by 3.8% from a year ago, according to a Reuters poll. That would be an improvement from 3.2% growth in September.
“We saw people spending more this year,” Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBC on Tuesday. The company helps foreign brands — such as Vitamix and IS Clinical — sell online in China and other parts of Asia.
He estimated 16% growth in GMV for the shopping festival from last year, in likely the strongest performance in years. Cooke added that brands didn’t have to cut prices as much.
Research firm Syntun said Tuesday it estimated 20.1% year-on-year growth in sales over the Singles Day period to 1.11 trillion ($150 billion) for Alibaba’s Tmall, JD.com and PDD.
Investors could get more details on China consumption later this week. JD.com is scheduled to release quarterly results Thursday, followed by Alibaba on Friday.
“We’ve seen consumers who have, if you will, save for a rainy day, and they’ve purchased on this Double 11 shopping festival,” Deborah Weinswig, founder and CEO of Coresight Research, said Tuesday on CNBC’s “Squawk Box Asia.”
She said the company’s weekly survey has indicated some “differences” in consumer sentiment over the last month.
Hopes for a recovery in 2025
China’s consumer spending has come under pressure since the Covid-19 pandemic as households grapple with economic uncertainty. A real estate slump has cut into household wealth, while economic growth has slowed.
While premium or mid-tier brands are “disappearing very fast,” higher-end brands such as Lululemon can do well, Reitermann said. He noted generally that local brands are often lower-priced and able to go to market faster.
He expects some rebound in consumer confidence in the second half of next year, after additional stimulus is likely announced in the first half.
China’s Ministry of Finance last week indicated more fiscal support could come in 2025. While China did not hand out cash to consumers during the pandemic, this year, the country did roll out a trade-in program to subsidize a portion of car and home appliance purchases.
U.S. Securities and Exchange Commission Chair Gary Gensler testifies before a House Financial Services Committee oversight hearing on Capitol Hill in Washington, D.C., on Sept. 27, 2023.
Jonathan Ernst | Reuters
Securities and Exchange Commission Chairman Gary Gensler spoke this morning at the Practising Law Institute’s 56th annual conference on securities regulation.
It sounded awfully close to a farewell speech.
“It’s a remarkable agency,” Gensler said of the SEC, which he has led since April, 2021.
“It’s been a great honor to serve with them, doing the people’s work, and ensuring that our capital markets remain the best in the world.”
Gensler reviews accomplishments
Gensle offered a review of what he has accomplished.
Most notably, Gensler highlighted the many disclosure rules the SEC has enacted, including disclosure on data breaches, executive pay versus performance and additional disclosures on those seeking to control and buy more than a 5% stake in a company.
Gensler made only passing reference to his most controversial disclosure rule, on climate change, which has been challenged in court.
“Congress put in place important provisions about disclosure because information about securities creates a public good,” he said.
On market structure, Gensler noted he had put in place new rules on central clearing of Treasuries and shortening of the settlement cycle for stocks from two days to one day, and had recently passed rules that allow stocks to be quoted in increments of less than a penny.
Defense of crypto stance
Gensler offered a full-throated defense of his approach to crypto.
Gensler repeated his assertion that while he bitcoin is not a security, the SEC’s focus ” has been on some of the 10,000 or so other digital assets, many of which courts have ruled were offered or sold as securities” and are therefore subject to the SEC’s purview.
He again asserted anyone offering to sell securities needs to register, and that intermediaries such as broker-dealers, exchanges and clearinghouses also need to be registered.
He said that the failure to properly police the crypto industry had resulted in “significant investor harm” and that “the vast majority of crypto assets have yet to prove out sustainable use cases.”
Proud to serve
Gensler did not say he was resigning, but the tone was clear.
“I’ve been proud to serve with my colleagues at the SEC who, day in and day out, work to protect American families on the highways of finance,” he said at the end of his speech.
Check out the companies making headlines before the bell. Disney – Shares popped more than 9% after the company’s fiscal fourth-quarter results beat analysts’ estimates . For the period, Disney earned $1.14 per share, after adjustments, on revenue of $22.57 billion. That’s above earnings of $1.10 per share on revenue of $22.45 billion that analysts were expecting, according to LSEG. Cisco Systems – The networking stock dropped slightly. The company topped Wall Street’s quarterly estimates and lifted its full-year guidance, but posted its fourth consecutive quarter of declining revenue. Capri , Tapestry – The luxury apparel stocks were moving in opposite directions after the companies called off their planned merger , citing regulatory hurdles. Shares of Tapestry jumped 8%, while Capri slid more than 5%. Campbell Soup – Shares rose more than 1% after Piper Sandler upgraded the stock to overweight from neutral . The firm cited “continued strong growth” expectations for the Rao’s brand. BWX Technologies – The nuclear fuel stock advanced more than 4% on the back of Bank of America’s price target hike . The firm now sees shares hitting $160, which reflects upside potential of more than 20%. Bank of America also said the stock’s recent rally can be attributed to the “scarcity premium” in the small modular reactor market. Super Micro – Shares plummeted more than 11%, extending losses from the previous session. On Wednesday, the stock fell more than 6% on the heels of the company saying that it would delay the filing of its report for the period ended Sept. 30 . ASML – The Dutch semiconductor supplier rose more than 3% after confirming its 2030 targets at its 2024 Investor Day. ASML confirmed potential scenarios for its annual revenue to fall between 44 billion and 60 billion euros ($42.14 billion to $63.22 billion), while gross margin could be between 56% and 60%. Ibotta – The stock plunged about 20% despite the cashback rewards platform’s third-quarter results beating on the top and bottom lines. Ibotta earned 51 cents per share on revenue of $98.6 million, while analysts surveyed by LSEG were expecting a profit of 35 cents per share on revenue of $94.1 million. CNH Industrial – The agricultural equipment stock rose nearly 6% after Greenlight Capital’s David Einhorn revealed at CNBC’s Delivering Alpha conference that he took a medium-sized position in the company . Sonos – The stock rose nearly 7% in the wake of the audio equipment maker’s fourth-quarter results. Sonos reported a loss of 44 cents per share on revenue of $255.4 million. — CNBC’s Alex Harring, Samantha Subin, Jesse Pound and Lisa Kailai Han contributed reporting.
Edith Yeung, general partner at Race Capital, and Larry Aschebrook, founder and managing partner of G Squared, speak during a CNBC-moderated panel at Web Summit 2024 in Lisbon, Portugal.
Rita Franca | Nurphoto | Getty Images
LISBON, Portugal — It’s a tough time for the venture capital industry right now as a dearth of blockbuster initial public offerings and M&A activity has sucked liquidity from the market, while buzzy artificial intelligence startups dominate attention.
At the Web Summit tech conference in Lisbon, two venture investors — whose portfolios include the likes of multibillion-dollar AI startups Databricks Anthropic and Groq — said things have become much more difficult as they’re unable to cash out of some of their long-term bets.
“In the U.S., when you talk about the presidential election, it’s the economy stupid. And in the VC world, it’s really all about liquidity stupid,” Edith Yeung, general partner at Race Capital, an early-stage VC firm based in Silicon Valley, said in a CNBC-moderated panel earlier this week.
Liquidity is the holy grail for VCs, startup founders and early employees as it gives them a chance to realize gains — or, if things turn south, losses — on their investments.
When a VC makes an equity investment and the value of their stake increases, it’s only a gain on paper. But when a startup IPOs or sells to another company, their equity stake gets converted into hard cash — enabling them to make new investments.
At the same, however, there’s been a rush from investors to get into buzzy AI firms.
“What’s really crazy is in the last few years, OpenAI’s domination has really been determined by Big Techs, the Microsofts of the world,” said Yeung, referring to ChatGPT-creator OpenAI’s seismic $157 billion valuation. OpenAI is backed by Microsoft, which has made a multibillion-dollar investment in the firm.
‘The IPO market is not happening’
Larry Aschebrook, founder and managing partner at late-stage VC firm G Squared, agreed that the hunt for liquidity is getting harder — even though the likes of OpenAI are seeing blockbuster funding rounds, which he called “a bit nuts.”
“You have funds and founders and employees searching for liquidity because the IPO market is not happening. And then you have funding rounds taking place of generational types of businesses,” Aschebrook said on the panel.
As important as these deals are, Aschebrook suggested they aren’t helping investors because even more money is getting tied up in illiquid, privately owned shares. G Squared itself an early backer of Anthropic, a foundational AI model startup competing with Microsoft-backed OpenAI.
Using a cooking analogy, Aschebrook suggested that venture capitalists are being starved of lucrative share sales which would lead to them realizing returns. “If you want to cook some dinner, you better sell some stock, ” he added.
Looking for opportunities beyond OpenAI
Yeung and Aschebrook both said they’re excited about opportunities beyond artificial intelligence, such as cybersecurity, enterprise software and crypto.
At Race Capital, Yeung said she sees opportunities to make money from investments in sectors including enterprise and infrastructure — not necessarily always AI.
“The key thing for us is not thinking about what’s going to happen, not necessarily in terms of exit in two or three years, we’re really, really long term,” Yeung said.
“I think for 2025, if President [Donald] Trump can make a comeback, there’s a few other industries I think that are quite interesting. For sure, crypto is definitely making a comeback already.”
At G Squared, meanwhile, cybersecurity firm Wiz is a key portfolio investment that’s seen OpenAI-levels of growth, according to Aschebrook.
Wiz is now looking to reach $1 billion of ARR in 2025, doubling from this year, Roy Reznik, the company’s co-founder and vice president of research and development, told CNBC last month.
“I think that there’s many logos … that aren’t in the press raising $5 billion in two weeks, that do well in our portfolios, that are the stars of tomorrow, today,” Aschebrook said.