onsdag den 19. december 2018

Steen’s Chronicle: The global police panik

 

Dear Friends

 

Please find my latest macro piece titles: The Global Policy Panic

 

The main thesis being that Q1 will see politicians and central bankers panic extending the pretend-and-extend cycle one final time

 

Safe travels

 

Steen

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tirsdag den 27. november 2018

Steen's Weekly Macro Chart: Theme? Stress, stress and more stress

Attached the Weekly chart – partly from Saxo Macro-mania, partly from best of Twitter likes this week…

 

Themes:

 

  • UK – Our biggest NEGATIVE view – not only is credit impulse collapsing but REAL WAGES in UK below ITALY since 2008! This almost guarantee a run for PM Corbyn!!!!
  • US – Inflation well below 200 pc now – (FED SF agrees this morning) setting up OVERWEIGHT in US Fixed Income @ or just after December hike – REMEMBER Powell speaks tomorrow
  • Global Monetary base lowest -smallest – since 2006…….
  • US – Credit falling out of bed – any the Mortgage market price home owners @ 500 bps almost..! Cycle end is near..
  • The Illusion of Capitalism  - most markets in the world driven and operated as MONOPOLIES – the exact opposite of capitalism with market allocated freely priced goods – Wonder why we have no growth and no productivity – this chart shows you why!

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

 

 

 

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søndag den 25. november 2018

Macro Digest: The Brexit deal which keeps giving…

Macro Digest: The Brexit deal which keeps giving…

 

Full text of "Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community as endorsed by leaders at a special meeting of the European Council on 25 November 2018"

 

Our analysis:

This was the 'easy part' of the Brexit deal – agreeing with a desperate EU. The vote is unlikely to carry in the UK Parliament setting up additional nervousness and volatility - PM May looking to get vote in Parliament before Christmas.

We remain serious concerned about the UK economy – our Credit Impulse in UK has collapsed to unheard lows, which tells us UK economy could be recession driven by summer of 2019.

 

We deem the vote to be a loss for PM May as of now (with 70% probability)

Any rally in GBP should be sold (Critical support sits @ 1.2660), as the UK parliamentary system is working its way towards a non-solutions and as such risk a handover of control in Parliament despite the lack of alternative. The ultimate price could be a split of the Tory Party before 2019 is over.

EU officials was "crying" this morning as they after more than 20 month of negotiation gave their ok after less than an hour's discussion.

EU described it as a "orderly withdrawal". The EU immediately returned to their old ways of intimidating the opposition by having the EU Commission President JC Juncker say: "….anyone in Britain who the bloc might offer improved terms if MPs rejected the deal would be "disappointed"" (Source: BBC - https://www.bbc.com/news/uk-46334649)

Reuters carried the British opposition response which was not kind:

BRUSSELS (Reuters) - Britain's main opposition Labour Party will oppose the government's Brexit deal in parliament, its leader Jeremy Corbyn said on Sunday, describing the agreement approved in Brussels as "a miserable failure of negotiation".

"This is a bad deal for the country. It is the result of a miserable failure of negotiation that leaves us with the worst of all worlds. It gives us less say over our future, and puts jobs and living standards at risk," Corbyn said in a statement.

"That is why Labour will oppose this deal in parliament. We will work with others to block a no deal outcome, and ensure that Labour's alternative plan for a sensible deal to bring the country together is on the table."

The "easy part" for PM May was to make a deal with an EU desperate to close the talks, now the focus is on Parliament. Already this Sunday the deal has been met with a no thank you from Labor (see above) and the 10 Northern Ireland – The Democratic Unionist Party - mandates which secures May her majority in Parliament.

British media also insists that up to 90 lawmakers of her own party have said they will vote against the deal. PM May hopes to have a vote before Christmas.

Links

https://www.theguardian.com/politics/eu-referendum+tone/comment

https://www.ft.com/brexit

https://www.economist.com/brexit

Safe Travels,

Steen Jakobsen

Chief Investment Officer, Saxo Bank

 

 

 

 

 

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onsdag den 10. oktober 2018

Macro Digest: Re-introducing Saxo Stress Indicator

Dear All,

 

A few years back we used to publish our WEEKLY STRESS INDICATORS and some clients/readers have requested as return of it

 

There is some restriction in using STRESS INDICATORS in terms of data feed, so in its place I will introduce this format: SJ's Weekly Charts. A collection of chart I have seen / produced over the last week.

 

Enjoy,

 

Steen

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

 

This email may contain confidential and/or privileged information. If you are not the intended recipient - or have received this email by mistake - please notify the sender immediately and destroy the email. Any unauthorised copying, disclosure and/or distribution of the contents and/or attachments in this email is strictly prohibited.

Email transmission security and error-free delivery cannot be guaranteed as information could be intercepted, corrupted, destroyed, delayed, incomplete and/or contain malware (virus). The sender of this email, therefore, does not accept liability for any errors and/or omissions in the contents of this message, which may arise as a result of email transmission.

tirsdag den 25. september 2018

Macro Digest: FOMC Preview: Biggest meeting this year (Data vs Vision of monetary policy needs to be resolved)

 

FOMC meets tomorrow to revise its Fed Dots and projection for the economy & it could be the most important meeting this year (and last three year) as we have reached level of yield which is beginning to hurt the economy, but without Federal Reserve looking to pause. Combine this with this week break higher in energy prices and we have two very strong forces taxing the consumer (Price of money + Price of energy) or as I tweeted earlier:

 

 

 

 

The market is very bullish on change and higher DOTS – I remain somewhat skeptical as the recent Beige Book is very defensive and on the border of being dovish….

I did words count on the Beige Book:  Moderate, moderately mentioned 97 – ninety-seven times! Hardly work of bullish reading of economic activity…?

Having said that I do realize data could be less relevant as the discussion will be on technical factors like Terminal Rate and as such is more of an academic discussion on vision of "normal" and "exit" strategy

 

Conclusion:

 

Tomorrow's meeting and the potential change of FED Dots can change short-term outlook for all asset classes – The odds of a RISK OFF is rising into this event.

 

 

 

We consider tomorrow meeting critical for a number of reasons which I will try illustrate through charts:

 

·        Critical discussion – What is the "terminal rate"? (The rate at which the economy is balanced and humming – not too cold / not too hot)

·        Governor Brainard – a neutral in FOMC has changed her tone: She sees the recent fiscal expansion as potentially raising the terminal rate, which means Fed DOTS could rise in 2019 and 2020.

·        Fed right now thinks "terminal rate" is somewhere between 2.65 and 3.50. An increase in terminal rate will move FED Dots into "restrictive monetary policy" medium and long-term and could lead to further rate increases

 

 

2 Year US government YIELD – and – FED Funds upper corridor (Fed funds @ 200 BPS vs. 2Y "money"  @ 283 BPS

 

 

 

Fed DOTS as of June, FOMC meeting (Note how a rise in FED dots for 2020 will move "policy" to restrictive….

 

 

·        Market based technical outlook:

 

 

10 Year US interest rates – broken top from 2013/2014…..

 

 

 

 

 

US 30 Year Future – long-term (Monthly).

We have been in downtrend since late 2017 and now closed to oversold.

 

 

 

 

 

US 30 Year futures – Medium term (Daily chart)

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

 

This email may contain confidential and/or privileged information. If you are not the intended recipient - or have received this email by mistake - please notify the sender immediately and destroy the email. Any unauthorised copying, disclosure and/or distribution of the contents and/or attachments in this email is strictly prohibited.

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onsdag den 5. september 2018

Macro Digest: Chinese Technology stocks breaks down.....bad omen ? Meanwhile TSLA bond collaps the beginning of the end?

 

Four charts to illustrate the "pain" of the market:

 

The macro backdrop story is this:

 

The CREDIT CAKE the credit impulse + nominal debt issuance is collapsing since the GFC the world monetary growth (main debt) has risen more than nominal growth ie: World Monetary Growth / World Nominal Growth > 1 (8-10%/4-6%) now however world monetary growth is 2-2.5% against 5-6% world growth meaning significantly below 1!!!! We have, Chris Dembik, specially, again-and-again documented the collapse in the credit impulse (the change of change in credit) which leads world by 9-12 monthøs-

 

Furthermore Federal Reserve insists on "normalization" of policy rates which means rest-of-world, (read: Emerging Markets) is getting less credit at a much higher prices, meanwhile in the US this liquidity short-fall is neutralized by tax reform, which has meant US companies has taken money home increasing the liquidity for on-shore US markets, add to this the most aggressive buy-back, dividend and M&A in history to the tune of 1.200 billions-ish and you have reason US market has been and could outperform short-term………

 

Now..

 

IS contagion happening? Too early to tell, but with today's likely announce of additional 200 billion worth of tariffs and the market break-down shown below, the risk is rising..

 

Action.

 

We are still net looking to buy Emerging Market risk, but post-today's announcement. Failure to take out recent EM lows will make us dip our toes failure and we will wait..

 

Next two days of trading is critical for overall RISK On / Risk Off we will keep you posted

 

 

Comment: Tencent is the most widely owned stocks and the biggest weight in Emerging Market funds globally Trend been down since March but now it's broken recent low plus low-end of channel.

 

 

 

Comment: Alibaba Earnings were ok but stock just broke lower Omen of bad things to come?

 

 

 

In US Social Media + TSLA having a tough time TSLA Junk Bond now trading @ 8% and default risk is rising fast.. Elon Musk personal life is increasingly becoming a risk to the company itself.. Musk + Trump show is not pretty and I don't see any good exits/solutions for either of them..

 

 

 

 

Finally, India and its currency is spinning out of control the high energy prices is increasing its deficit & FX

 

 

 

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Steen's Chronicle: In Sweden, the winner takes it all

https://www.home.saxo/insights/content-hub/articles/2018/09/05/in-sweden-the-winner-takes-all

 

"The gods may throw a dice
Their minds as cold as ice
And someone way down here
Loses someone dear
The winner takes it all
The loser has to fall
It's simple and it's plain
Why should I complain?
"
— ABBA

The winner is once again populism and the loser is "samhället", a Swedish word that is often translated as 'society', but whose root is "to come together". At the moment, Sweden is doing the exact opposite and splitting down the middle over immigration and its impact on the 'Swedish model' of social democracy with a generous welfare state.

 It's simple and it's plain and there's no reason to complain….

Samhället is everything in Sweden. The concept manifests in everything from the country's famed social welfare system to its cultural insistence on near-perfect egalitarianism, and it massively shapes the way Swedes see and define themselves. 

The Swedish ideal is of a unified society, or a team, and the pursuit of this ideal is part of Swedes' DNA. In order to unify, however, negative sentiments or notes of dissonance must be carefully policed and excluded, and this is why Sweden is so politically correct.

In Sweden, one cannot be politically correct enough... until recently, at least. Now the country's pursuit of fairness and openness is forcing Swedes to be so P.C., they have become un-P.C.!

Sweden's inability to address the elephant in its well-appointed room – immigration, of course – manifested as a kind of societal self-censorship that left vast, undiscussed areas around the national consensus. In that space, the right-wing, anti-immigration Sweden Democrats party grew larger and larger as it confronted the very beast that polite society was unwilling to even acknowledge.

The more that the Swedish establishment insisted on not talking about immigrants as a group, and the more that it doubled down on its "humanitarian superpower" model, the more room it left for SD to play to voters' fear of foreigners, cultural change, and the risk to their traditional entitlements.

Until this election campaign, Sweden's major political parties maintained an unspoken consensus to avoid the topic of immigration. This was broken by SD leader Jimmie Åkesson, who in a televised debate with Prime Minister Stefan Löfven stated that "four out of five non-Swedish rapists living in Sweden are not deported. Four out of five! Why do we need to keep foreign rapists in Sweden?"

To say the PM's response was evasive would be an understatement. The event is marked by many as a key turning point, not only in SD's fortunes, but also for those of the ruling Social Democratic Party.

That was when immigration charged into the 2018 election with all the thunder of, well, an elephant.

Sweden was quickly pushed into the uncomfortable position of having to discuss a problem that had been ignored for years, a problem for which there are no good solutions, no perfect compromises, and most importantly for Sweden, a problem on which it is very difficult to be fair (unless, as Sweden did, you try and help everyone who needs it).

I think it's important to note that on Sunday, four out of five Swedes will vote for a party that is not anti-immigration; "only" one in five will make immigration their key issue. 

In the newspapers, it can feel as if it's the other way around.

The latest polling data:

Source: val.digital

The result of the election is a near-certainty. After Sunday, Sweden will have three major parties: the two old stalwarts (the Social Democrats and the Moderates) and a new, nationalistic entry in the form of SD.

There will be no sharing of power with the Sweden Democrats for now, but if history is any guide, the tone of Stockholm's political debates will become more and more immigration-focused in the years to come as the mainstream adapts to the new reality.

This is exactly what happened in Denmark, where today we have a sad alignment of lowest-common-denominator forces driving not only immigration policy but everything that comes under the umbrella of nationalism, an inward-facing focus, and the 'protection' of values and agendas.

It is ultimately reminiscent of the 1930s.

 

 

Source: val.digital

There is, however, a positive side to the Swedish story: the country's economy and social structure remains enviable. Sweden is not only one of the world's richest countries, but it is also one of the fairest and least corrupt.

 

 

Source: OECD StatLink

This a very strong economy, where relatively high unemployment is the weak point versus a strong current account, balanced budgets, and a level of competitiveness nearly unmatched anywhere in the world.

Sweden is a textbook example of how an economist would want a country to function. Its' present issues are not its economic challenges but rather the issue of retooling the Swedish model to a world dealing with immigration.

The Swedish statistics agency says that the Swedish population has increased by one million people over the past 13 years, and is set to grow by another million in the next 11 years.

Eighty per cent of this increase will come from immigration.

What really concerns me is the total lack of self-reflection by the established parties. I wrote about this prior to Brexit and prior to Donald Trump's 2016 victory, and the same thing is now happening in Sweden.

The Social Democrats have been in near-continuous power since the Second World War, and often with more than a 40% share of votes. Now their support stands at just over 20% and their agenda is entirely without vision. Their counter to immigration fears? One week of additional holiday and more tax on the rich! 

Come on, Sweden.

Structurally, the world is changing faster than ever before. The solution to Sweden's problems – and let's admit that they are relatively minor problems – is not to turn the clock back to the 1960s and '70s, when Sweden (unlike many countries) was far worse off than it is today. Instead, Sweden needs to face the situation at hand in its traditional fashion: with consensus, with respect, and in a solution-oriented manner.

A look at the market impact

There is some nervousness about Swedish assets after the election. Sweden's Erik Penser Bank, for instance, maintains a very defensive position in which it has a particular aversion to small- and mid-cap stocks due to a history of this segment underperforming in the wake of elections.

 

 

Source: Bloomberg

We believe the Swedish election is more of a political statement than a market one. It could lead to a long period without a government, but as we know from both Belgium and Spain, this often helps the economy perform rather than the opposite. 

There could also be pressure to increase fiscal spending, but overall the Swedish economy and stock market operates from a position of strength. 

We could be tempted by a weak post-election SEK as the Riksbank can't continue its present, super-dovish stance in a world of rising external financing costs and an extremely overvalued housing market. For now, though, we will simply stay watching the messy election and hope Sweden avoids becoming another country fallen to populism.

Pretend, extend, and don't comprehend

We are on presently on a road to nowhere. The political system is self-destructing, and the new "winning strategy" is to be as populist as possible, often pointing to "foreigners" and "foreign influence" as the root of all domestics evils and wrongs. 

Meanwhile, the political and media establishment are stuck on a message of "hope and change" based on spending money they don't have, accepting higher levels of debt, reversing reforms, lowering retirement ages, restricting labour market mobility, and providing more subsidies to money-losing companies.

Worse yet, they continue to promise a nation-state devoted to protecting entitlements and rights.

Yes, the nation-state is back. It disappeared for a century following the 1917 Russian revolution, after which we shifted to a world of ideologies until the fall of the Berlin Wall in 1989, but it's back... and it's talking a book that it likely can't deliver.

The Gods may throw dice, as ABBA sang, but the future is not random: the winners will be people and countries that accept the core values of the Swedish model. This can't be done, however, by ignoring – or worse yet, censoring – voter concerns.

Sweden needs to learn this lesson, and it will. 

Ultimately, the country's future will be stronger for it.

 

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tirsdag den 4. september 2018

Sweden Election Special: Winner takes it .....

Dear Team,

 

We just did an 8 minute Sweden election preview video

 

https://business.facebook.com/saxobank/videos/451089015384028/?cmpid=social_organic-twitter-global_content_swedish_election_talk_04092018

 

 

Overall

 

·         Political noise is always larger than actuals

·         Democracies works fine with multi party sharing power

·         Sweden is an AMAZING success story

·         Sweden became so politically correct it became incorrect (They refused to discuss the issues which bothered voters in the name of decency, correctness)

·         We like SEK risk, SEK stock market overall and remain impressed with Swedish model

 

For the Scandinavian's Sverige's TV did a great investigative program under the title: Länge leve demokratin Long live Democracy Confronting the REAL issue can Democracy survive in the present political model.

 

https://www.svtplay.se/video/17391362/lange-leve-demokratin/lange-leve-demokratin-hotet-inifran-sasong-1-hotet-inifran?start=auto

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

 

This email may contain confidential and/or privileged information. If you are not the intended recipient - or have received this email by mistake - please notify the sender immediately and destroy the email. Any unauthorised copying, disclosure and/or distribution of the contents and/or attachments in this email is strictly prohibited.

Email transmission security and error-free delivery cannot be guaranteed as information could be intercepted, corrupted, destroyed, delayed, incomplete and/or contain malware (virus). The sender of this email, therefore, does not accept liability for any errors and/or omissions in the contents of this message, which may arise as a result of email transmission.

torsdag den 30. august 2018

Macro Digest: Italy, Tencent and Trade war.......the beginning of the end (?)

There is Trump vs. China with the imminent raise of 200 bln. of tariffs on China on September 6th, but here in Europe EU "Finance minister" Moscovici is hitting the headline this morning with harsh and confrontational interview in Italian papers:

 

 

EU'S MOSCOVICI SAYS IF EU'S 3 PERCENT DEFICIT/GDP LIMIT IS BROKEN IT WOULD CREATE DIFFICULTIES "THAT I DON'T EVEN WANT TO IMAGINE"

 

http://www.askanews.it/economia/2018/08/31/moscovici-italia-non-pu%C3%B2-lamentarsi-corregga-conti-2019-top10_20180831_023657/

 

The interview ask for a clear commitment for budget deficit reduction of 0.6% and keeping inside the 3% - he also points out that Italy been main beneficiary already on "flexibility"…. This is a very tough line which is also

Followed up by announcement that PM Conte won't seek second mandate (You can't blame him for that…)

 

Unlike Greece 180-degree turn there seems to be a deep routed wish for the Populist parties in Italy to seek confrontation with the EU and now for EU to take them one… This DOES NOT bode well for Italian assets and probably will spill-over into the EUR as well. This is the start of the "budget season" for all countries – it's always full of headlines, strikes and trouble, but this year the stake are higher..

 

 

Italy – Germany 10 Y Government Yield spread…

 

 

 

Italian 10 YR BTP Yield vs. 5 YR CDS

 

 

 

Tencent dropped 5% in Hong Kong trading hours yesterday on this:

 

Tencent's online gaming problems in China just got worse (CNN)

 

https://www.bloomberg.com/news/articles/2018-08-30/china-to-control-number-of-new-online-games-for-children-s-eyes

 

 

China is cracking down on online gaming, adding to worries for Tencent.

Shares in the top Chinese internet company plummeted more than 5% in morning trading in Hong Kong on Friday, after Beijing announced plans to limit the number of new online games and restrict the amount of time kids spend playing on electronic devices.

Tencent (TCEHY) is the world's biggest gaming company with a huge part of its business in China, a market where it was already facing other problems caused by regulators. Its stock has plunged nearly 30% since January, wiping out more than $160 billion in market value.

Chinese authorities will "control the number of new online games, explore an age-appropriate reminder system in line with national conditions, and take measures to limit the use time of minors," the Education Ministry announced in a statement late Thursday. It said the measures are part of a government effort to reduce nearsightedness in children and adolescents.

Tencent is already hurting from increased regulation of the gaming industry. The company reported a rare decline in profit earlier this month, blaming the drop mainly on regulators not approving licenses that allow companies to make money from new mobile games.

During an earnings call, Tencent President Martin Lau assured investors that the restrictions were temporary. But the latest government announcement adds to concerns about an increasingly restrictive environment for tech firms in China.

China is the world's largest gaming market.

Tencent has still not gained approval from Chinese authorities to make money from some of its most popular mobile games such as "PlayerUnknown's Battlegrounds." Regulators also blocked a game called "Monster Hunter: World" for which big sales were expected. Another game, "Honor of Kings," came under intense scrutiny last year for allegedly causing addiction in young people.

Tencent and Netease (NTES), another major game developer, should be more resilient to the new restrictions than smaller firms, according to Karen Chan, an analyst at investment bank Jefferies. The industry heavyweights have already introduced control systems to regulate how much time children spend playing their games, she said in a note to investors.

But Chan acknowledged that the impact of the new measures on Tencent and others won't become clear until more details are announced. Questions remain over what the limit will be on the number of new games, how it will be implemented and whether it will further delay the approval process, she said.

The ministry's announcement also took aim at parents and educators, saying they should reduce the time kids spend on smartphones and tablets and encourage children to play and exercise outside for at least an hour a day.

China is the world's largest gaming market, accounting for a quarter of global revenue, according to market research firm Newzoo. The firm forecasts China's total gaming revenue will reach $38 billion in 2018.

-- Catherine Wang contributed to this report.

 

 

https://nordic.businessinsider.com/us-china-trade-war-trump-wants-tariff-on-200-billion-of-chinese-goods-2018-8?r=US&IR=T

 

 

 

 

 

 

This email may contain confidential and/or privileged information. If you are not the intended recipient - or have received this email by mistake - please notify the sender immediately and destroy the email. Any unauthorised copying, disclosure and/or distribution of the contents and/or attachments in this email is strictly prohibited.

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