Lafferty daily briefing

The financial media is marvelling over Amazon shares breaking the $1,000 barrier, with Apple and Alphabet not far behind, but we’ve been keeping a close eye on Tencent, and here’s another interesting piece on the roots of WeChat’s success: “It’s a familiar story for students or businessmen on their first-ever visit to China. After rounds of beer and baijiu with potential clients, or a karaoke gathering through a university exchange program, the foreigner will ask the Chinese person sitting next to her for his email address.”

But Chinese people much prefer WeChat, with 900 million monthly users, over email (indeed, many people in China lack an email address). Tencent recently became one of the world’s ten most valuable companies. The company it replaced in the Top Ten? Wells Fargo.

It also became the first Chinese, and first non-American, company to join the list, which includes Apple, Amazon, Microsoft, Alphabet, JP Morgan, Johnson & Johnson, Berkshire Hathaway and Exxon Mobil. Tencent started WeChat as a desktop-based messaging service, but the mobile app WeChat has proved far more pliable, and is now the engine of a giant mobile payments system.

Barclays is speeding up divestment of its share in Barclays Africa, announcing earlier today that it has sold a further 33 percent stake in the business. “It is a key step towards drawing the curtain on more than a century of Barclays owning its own operations in the African continent. The bank said the sale of shares in Barclays Africa Group Limited at SAR132 per share, which raised £2.2bn, would result in its African business being deconsolidated from its accounts,” writes the FT.

In preparation for the changes, Barclays Africa is restructuring its management, and is expected to concentrate its focus on digitalisation. The remaining Barclays stake is about 15 percent of the South African listed business.

The first two paragraphs of a story in Inc42.com about Amazon’s alignment with the digital payments push in India is so chock full of
keywords that it’s worth reproducing here in full: “Amazon Pay is all set to scale up its wallet business in India with the help of Indian govt. to expand its horizons in the Digital Payments space. The moves come in just a few months after Amazon secured a prepaid payment instrument (PPI) license from the Reserve Bank of India (RBI) for Amazon Pay. To this end, it is planning to enter into strategic partnerships with government bodies such as electricity and insurance companies, to increase the user base of Amazon Pay beyond its online marketplace.” The long-mooted Payments Banks are now steadily rolling out their services, and many will function primarily as wallets, which is not surprising as many were conceived as joint ventures between banks and telecoms companies. Amazon Pay will join Paytm, Freecharge, Flipkart and several others in the latest battle for Indian consumers.

Much of the fervour over the new administration is subsiding in the US, and the bump in bank confidence on Wall Street that followed the election of President Donald Trump is also deflating. “Shares in Goldman Sachs dropped 3.3 per cent on the day, bringing the total fall from its closing high on March 3 to 16.5 per cent — within reach of the 20 per cent drop that normally denotes a bear market,” reports the FT today.

“Wells Fargo is off more than 14 per cent since the start of March, while Bank of America and JPMorgan are both down about 12 per cent from their March closing highs and Morgan Stanley has fallen almost 11 per cent.” High hopes for tax reform and a push to deregulate the banking system now look a far worse bet than they did in a post-election phase that saw Wall Street banks swallow their disappointment at Hillary

Clinton’s loss. The President’s rapid entanglement in the realities of healthcare politics disabused many of their confidence that the former dealmaker would be able to cut through the Gordian knot of financial regulation.