Weekly Market Links [25-31 Oct 2021] - Tech Earnings Rise, China Back In Cross-Hairs, Crypto's Place In The World
Earnings season is here! Tech is doing really well despite Semicon scares, while blockchain use cases are starting to ramp up.
Tech
Apple’s made 83.4Bn in Q4, but there was an opportunity cost of 6Bn in sales due to supply chain issues. iPhone 12, Macs and Ipads did really well, driven by the WFH trend. China specifically had its sales up 83%.
Amazon’s AWS is starting on the blockchain too. It aims to onboard its first users with a more user-friendly process with its existing cloud offerings.
Microsoft posted earnings - Cloud compute growth as expected, though XBOX and Surface could not sell as well as they hoped due to supply constraints. Azure cloud service revenue grew 48%, as compared to Google Cloud’s 45%, more than offsetting their hardware arm.
Windows is still growing 10% y-o-y, with total revenue rising 22% to a cool 45BN in the last quarter.
Alphabet is laughing to the bank too. Profit rose to 18B. Compared to last year’s quarter, revenue was a 41% difference.
Podcasts are taking centre stage, where the YouTube app will start supporting background music (and soon podcasting) listening for free users. I’m definitely looking forward to this, as my Spotify and Apple Music trials are due soon.
Hertz, the rental car company, is ordering 100K Tesla Model 3s, while Uber made a deal with Hertz to use 50K Tesla vehicles for Uber drivers. Great news for Tesla, and also a strong move into the EV space, with semi-autonomous driving capabilities built in.
Fintech / Crypto
Walmart starts introducing Bitcoin ATMs (200 of them!), and will further expand to 8000 throughout its retail stores in the US. The ATMs have an 11% surcharge, made of a 4% fee for Bitcoin, and a 7% cash exchange. This is in collaboration with Coinstar and CoinMe.
A listed Fintech company in Hong Kong, PAX Global, dropped 43% after a report on a warehouse raid was released. Seems that its terminals were being used for cyberattacks.
For context, PAX is the 3rd largest electronic payment terminals provider, having over 60M terminals in 120 countries. Imagine a portion of those devices being used for DDOS attacks...and they could be.
More importantly, the US is motivated to have these “systems..unplugged one by one”, according to Paul Schulte, formerly from the US National Security Council. We might be seeing more of such moves to ringfence and close off China from business opportunities as a form of ‘proxy’ to their trade / cold war.
China is also releasing their blockchain standard next year. As part of its Five-Year Plan, blockchain will be used for government and enterprise use, while clamping on cryptocurrencies at the same time. It remains to be seen if the Digital Yuan would connect with the Crypto ecosystems at some point, as other countries are looking to embrace, rather than deny crypto.
For the US, plans are to regulate stablecoins very much like a deposit, or treat stablecoin issuers as if they are a bank. If so, conducting audits would be an interesting proposition, as the space is entirely new, and has interconnected, complex systems.
For Singapore, the chairman of the Monetary Authority of Singapore (MAS) stated that “there may be a role for crypto in future finance that extends beyond pure speculation and illicit finance”. This is a vote of confidence in the nascent space, as it is possible traditional and decentralized finance systems can come together, albeit with some regulation.
Recent developments in Singapore include granting crypto trading licenses to DBS’s Brokerage arm, an Australian crypto exchange, and payment infrastructure providers such as FOMOPay. As more come aboard, we’ll start to see crypto being used in daily life, and that would be an interesting space to watch.