Regulation, restriction, state control pressure on technology and game companies in China and problems in particular for Evergrande seem to grow. The regulatory authority called Tencent, NetEase and other game companies to meet, reminding about issues such as children’s limiting game time and controlling video game content. In addition, China puts pressure on these companies to avoid unfair competition and monopolies. China’s market regulator said last month that all internet companies must avoid unfair competition and published draft rules targeting such practices. The companies have not stated a problem with the rules for now. But there are concerns that the regulations could hit firms’ income-generating business models. Tencent said only a small amount of gaming revenue came from young gamers in China. In 2Q21, 2.6% of gross gaming revenues in China came from players under the age of 16. As for fresh news; China will stop approval of new online games. It is said that Didi wanted to be brought under state control to a certain extent by the Beijing administration.
Evergrande, which had a major liquidity problem, missed the payment of some of its loan debts, and the transactions of some of its bonds were stopped. The regulatory agency allowed Evergrande to negotiate debt restructuring and rollover with its creditors. It is a matter of curiosity how the debt of 300 billion USD will be structured…
Producer inflation in China, on the other hand, remains high due to high input costs despite the Beijing administration’s attempts to cool commodity prices. The PPI, which was announced as 9.5% in August, is at its highest in 13 years. In July, the PPI was announced as 9%. This shows that the cost pressure continues to increase. The coal, chemical and metals industries drove most of the price increases in August. CPI, on the other hand, is relatively low at 0.8%, well below the government’s 3% target. The core consumer price index, which excludes volatile items such as food and energy, remained at 1.2% year-on-year, compared to an increase of 1.3% in July. Declines in airfare, travel and hotel room prices slowed consumer inflation on a monthly basis as social restrictions tightened to curb the Covid-19 delta variant, including travel limits that curtailed services sector demand.
Cost increases are many times higher than consumer prices and there is a lot of unreflected potential. Due to profit sustainability, it is possible for companies to reflect this to the consumer in the future, but this may not be so fast in a mixed economic model. As you know, central pressure.. In terms of economic growth; The Chinese economy has rebounded strongly from last year’s coronavirus decline, but has been losing strength lately due to domestic Covid-19 outbreaks, higher raw material prices, tighter real estate restrictions and a campaign to cut carbon emissions. The PBOC had cut RRR in July, which freed about CNY 1 trillion (USD 6.47 trillion) in long-term liquidity. To boost growth, the Central Bank may cut further the amount of cash banks need to hold as reserves later this year.
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Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı