Finance

UBS CEO Ermotti says it is too early to talk about a U.S. recession

Published

3 months ago

August 14, 2024

Business Finance News

Sergio Ermotti, chief executive officer of UBS Group

Stefan Wermuth | Bloomberg | Getty Images

ZURICH, Switzerland ꟷ UBS CEO Sergio Ermotti said Wednesday that market volatility could intensify in the second half of the year, but he does not believe the U.S. is heading into a recession.

Global equities saw sharp sell-offs last week as investors digested weak economic data out of the U.S. which raised fears about an economic downturn in the world’s largest economy. It also raised questions about whether the Federal Reserve needed to be less hawkish with its monetary policy stance. The central bank kept rates on hold in late July at a 23-year high.

When asked about the outlook for the U.S. economy, Ermotti said: “Not necessarily a recession, but definitely a slowdown is possible.”

“The macroeconomic indicators are not clear enough to talk about recessions, and actually, it’s probably premature. What we know is that the Fed has enough capacity to step in and support that, although it’s going to take time, whatever they do to be then transmitted into the economy,” the CEO told CNBC on Wednesday after the bank reported its second-quarter results.

UBS expects that the Federal Reserve will cut rates by at least 50 basis points this year. At the moment, traders are split between a 50 and a 25 basis point cut at the Fed’s next meeting in September, according to LSEG data.

Speaking to CNBC, Ermotti said that we are likely to see higher market volatility in the second half of the year, partially because of the U.S. election in November.

“That’s one factor, but also, if I look at the overall geopolitical picture, if I look at the macroeconomic picture, what we saw in the last couple of weeks in terms of volatility, which, in my point of view, is a clear sign of the fragility of some elements of the system, … one should expect definitely a higher degree of volatility,” he said.

Another uncertainty going forward is monetary policy and whether central banks will have to cut rates more aggressively to combat a slowdown in the economy. In Switzerland, where UBS is headquartered, the central bank has cut rates twice this year. The European Central Bank and the Bank of England have both announced one cut so far.

“Knowing the events which are the unknowns on the horizon like the U.S. presidential election, we became complacent with a very low volatility, now we are shifting to a more normal regime,” Bruno Verstraete, founder of Lakefield Wealth Management told CNBC Wednesday.

“In the context of UBS, [more volatility is] not necessarily a bad thing, because more volatility means more trading income,” he added.

Finance

China’s Tencent sees opportunity in female Honor of Kings mobile gamers

Published

5 hours ago

November 18, 2024

Business Finance News

Tencent’s Honor of Kings mobile game drew a record 33,000 fans to watch a final competition in Beijing on Nov. 16, 2024.

CNBC | Evelyn Cheng

BEIJING — Chinese gaming giant Tencent is betting on a rise in female players worldwide for its mobile game Honor of Kings, which rolled out to the U.S. and other countries in June.

Already a hit in China, the game drew a record 33,000 fans to a Beijing stadium on Saturday to watch two teams compete for a $3 million grand prize.

Surprisingly, many in the crowd were young women, reflecting how interest in mobile games has broadened out from the stereotypical male player in the days of console and PC gaming.

Launched in China in November 2015, the game’s appeal lies in its easy learning curve and relatively short sessions of around 15 minutes. Anyone with a smartphone can play for free in real time, on the go.

“Honor of Kings became an important way for me to socialize,” said Tianyun Gao, according to CNBC’s translation of her spoken Mandarin. She started playing the game in 2017 as a sophomore in college and became a professional commentator for the game’s competitions a year later.

Gao, an English major from Shanghai, has moderated Honor of Kings’ competitions in two languages, including an international event held in Riyadh, the capital of Saudi Arabia, in August. She said her hope is to see esports become as mainstream as traditional sports, noting that one of her inspirations is a Chinese soccer commentator.

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Tencent ramped up its global expansion plans for Honor of Kings this year, with its subsidiary, Level Infinite, in February announcing a $15 million investment in developing the game’s tournament worldwide.

An international version of the game has been available since 2016 under different names such as Arena of Valor, but the latest global push for Honor of Kings began in 2022. The game didn’t reach the Middle East until earlier this year and only launched in the key markets of North America, Europe and Japan in June.

Less than a month later, the game topped 50 million downloads outside China, according to the company.

Overwhelmingly mobile-focused

Growth in gaming among women stems largely from their preference in playing on their smartphones, without having to invest in consoles and other technology.

“Nearly half of female players play only on mobile platforms so we have a huge addressable audience,” said Jackie Huang, head of the Honor of Kings global esports division within Tencent Games’ TiMi L1 Studio. “Women make up a significant part of our player base but we want to see this continue growing.”

He said that 45% of gamers globally are women, and that the gender composition of Honor of Kings’ users is “relatively balanced. “We strive to provide users, no matter how they identify, with [a] high quality gaming experience,” Huang said.

Gaming is Tencent’s biggest revenue driver, with international games accounting for around 28% of the its overall gaming business in the third quarter.

The company also owns Riot Games, a developer whose PC-based League of Legends has become one of the most popular names in global esports with its own annual competition. Honor of Kings, which claims 100 million players a day, uses a similar format with two teams of five players each.

Such multiplayer games are the second-most popular category for female gamers, behind puzzles, said Xiaofeng Zeng, China-based vice president at gaming research firm Niko Partners. His analysis found that 95% of women prefer mobile games.

If Honor of Kings can hold first place in China, and achieve that position overseas, then Tencent can generate half its revenue from international markets, Zeng said. He said the game’s top overseas markets by revenue are the U.S., India, Malaysia, and Indonesia.

And in the key market of Southeast Asia, Zeng said that due to a low base, female players are growing two to three times more quickly than male gamers. A newly branded Honor of Kings global championship was held last month in Jakarta, Indonesia’s capital, with Malaysian team Black Shrew Esports winning the $300,000 first prize.

Early stages

For now, no matter how popular Honor of Kings may be among women, the competitions remain dominated by men. The two teams competing in Beijing on Saturday consisted only of male players.

Huang pointed out that the global championship this year featured a female player from France’s Team Vitality, which is also managed and coached by women.

He attributed the Honor of King’s popularity among women to the game’s playable characters that are also female. Many of the figures, each with different powers, are based on Chinese historical or mythological figures.

In 2021, organizers of the Honor of Kings competition in China also launched a tournament for female players. This year’s womens finals are set to take place in December, with a prize of around $41,000 for the winning team.

“The pandemic was a large accelerator of females into the games space and we have continued to see increased engagement from female gamers,” said Chirag Ambwani, SVP, gaming and entertainment, at SensorTower, which focuses on mobile games.

Reasons include specialized and easy to access content, he said, adding that gaming participation grew overall.

As for Honor of Kings’ global expansion, Ambwani said SensorTower research showed “healthy growth,” with average revenue of more than $5 per user in the U.S. and Canada.

Finance

Druckenmiller bought regional banks but health-care pick is his biggest bet

Published

10 hours ago

November 18, 2024

Business Finance News

Key Points

Billionaire investor Stanley Druckenmiller built a sizable position in regional banks and made one health-care name his biggest position last quarter.
Druckenmiller bought $115 million worth of shares in the SPDR S&P Regional Banking ETF in the third quarter, making it the firm’s seventh-biggest holding.