• Fasanara Capital

China's Virtual Control, Gap in Trade Finance, Visas for UK Fintech Workers & Other News and Topics



Happy Wednesday!



At this time:


  • Virtual control: the agenda behind China’s new digital currency

  • Why exporters need to mind the trade finance gap

  • UK to unveil new visa scheme for fintech workers

  • China imposes further caps on online lending

  • A new epoch for retail investors is just beginning




Virtual control: the agenda behind China’s new digital currency



Celebrations in China to mark the lunar new year of the Ox, which began on February 12, have been somewhat muted because of the coronavirus pandemic. The numbers of people travelling to visit relatives this year are down sharply, depriving family gatherings of a measure of joy.


But it is not all gloom. Authorities in several cities have given away tens of millions of renminbi as new year “red packets” that can be downloaded on to a smartphone. Beijing and Suzhou alone have doled out 200,000 red packets worth Rmb200 ($31) each in a public lottery.


Such philanthropy conceals a harder-hitting agenda. By handing out the traditional red packets in the form of “digital renminbi”, China’s authorities are conducting trials for a crucial new technology that could lead the world’s adoption of digital currencies and set global technical standards.


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Why exporters need to mind the trade finance gap



When it comes to cross-border trading, entrepreneurs know that access to trade finance is crucial to success. Exporters want to be paid upon shipment, while importers want to pay when they receive goods.


For centuries, bankers have filled this time gap through trade finance, or credit that covers the risk of non-payment. This risk is small – 0.2% on average globally with little variation across countries – making trade finance a low-cost source of funding. Today, an estimated 80% of global trade is covered by credit or a short-term payment guarantee, with over $10 trillion in annual flows, according to the Bank of International Settlements.

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UK to unveil new visa scheme for fintech workers



Rishi Sunak will reportedly unveil a new UK visa scheme to help London’s fintech firms attract more global talent in the wake of Brexit.


The new visa fast track scheme will give priority access to professionals in the tech industry to live and work in the UK as a part of the country’s new post-Brexit immigration system.


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China imposes further caps on online lending



CHINA'S banking regulator imposed new restrictions on banks and financial institutions working with online microlenders including those led by Jack Ma's Ant Group, dealing further blows to one of the fastest-growing business segments for financial-technology behemoths.


The new restrictions add to draft rules issued on the booming sector late last year, which heralded a sudden shift in the regulatory stance on fintech, scuttling Ant's US$35 billion share sale just days before it was due to go public in Shanghai and Hong Kong. The move upended one of China's biggest business success stories and was followed by crackdowns on technology juggernauts in every-thing from e-commerce to credit-scoring and payments.


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A new epoch for retail investors is just beginning



For nearly a fortnight, the world was mesmerised by the fortunes of GameStop. Shares in the beleaguered brick-and-mortar purveyor of video games soared from a few dollars in 2020 to above $480 on January 28th, before sinking as low as $81 on February 2nd. A firm that was worth $200m in April last year was briefly valued at $30bn before falling back to Earth. The gyrations, fuelled by an army of day traders that dwells on forums on Reddit, a social-media site, have been chronicled on every front page and ruffled the feathers of regulators and politicians in Washington, dc.


Look beyond the memes and the mania, though, and the story tells you something about the deep structural changes in financial markets. The fact that the fast-paced frenzy was possible is a testament to just how frictionless trading stocks has become, aided by technological advances. Shares can be bought on an app while you queue for a coffee, at a price that is whisker-close to the wholesale price.


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Thank you for the time!




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