Market Beats | U.S. Credit Card Debt Nears $1 Trillion; Fast Fashion Giant Shein Plans IPO; Hermès Profit Jumps 38%; Binance Ends Partnership with U.S. Affiliate; China Renaissance Founder Reported Missing
1. U.S. Credit Card Debt Nears $1 Trillion
According to the Federal Reserve Bank of New York’s Household Debt Report, total U.S. credit card balances reached an all-time high of $986 billion in Q4 2022, up $61 billion from the previous quarter—the largest increase since 1999.
In addition, the credit card delinquency rate also rose, with loans overdue by more than 90 days accounting for over 4%.
Beyond surging prices for essentials like food and gasoline, the Fed’s interest rate hikes have driven credit card APRs to nearly 20%.
From December 2021 to December 2022, total U.S. credit card balances increased by $130 billion, marking the largest annual jump on record.
Rising credit card debt and soaring interest rates are delivering a double blow to consumers.
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2. Fast-Fashion Giant Shein Plans IPO
In a recent investor presentation, Chinese fast-fashion e-commerce company Shein projected gross merchandise volume of $58.5 billion by 2025—more than double the $22.7 billion recorded in 2022 and greater than the combined volume of H&M and Zara.
Additionally, Shein expects total retail sales to reach $80.6 billion by 2025, up 174% from 2022.
This year, Shein aims to complete a large-scale IPO in the U.S. Although it is hugely popular among Gen Z consumers, analysts warn that its target demographic has low brand loyalty.
In its April 2022 funding round, Shein was valued at $100 billion, making it the world’s third most valuable private company at the time. Now, amid market corrections, Shein is targeting a $64 billion IPO valuation with plans to raise about $3 billion.
Shein’s lofty revenue projections in its pitch deck may be intended to hype up valuation ahead of the IPO.
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3. Hermès Profit Surges 38%
According to the latest earnings report from French luxury group Hermès, the company posted €11.6 billion in 2022 revenue, up 23% year-on-year, driven by strong sales in leather goods, watches, and jewelry. Net profit rose 38% to €3.4 billion.
CEO Axel Dumas said China’s reopening significantly boosted sales in the region.
Although Hermès did not disclose specific revenue for mainland China, sales in the Asia-Pacific region excluding Japan rose by 25%.
This week, rivals Kering and LVMH reported declining Q4 revenues due to China’s COVID restrictions. In contrast, Hermès, focused on a single brand, outperformed.
Hermès’s iconic Birkin bags can cost upwards of €10,000. Buyers must often purchase multiple other items and wait months to obtain high-demand products—reflecting strong brand loyalty and purchasing power.
Hermès’ loyal customer base is willing to purchase add-on products and wait to get coveted items like the Birkin bag.
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4. European Natural Gas Prices Plunge
Recently, European natural gas prices have fallen 85% from their peak in August 2022 to below €50 per megawatt-hour, the lowest level in 18 months.
Henning Gloystein of consultancy Eurasia Group said Europe has seemingly weaned itself off Russian gas. While prices remain high, the risk of supply disruptions has significantly declined.
Russian oil is now sold at steep discounts, and even higher gas prices can’t offset the decline in export volume.
With the energy crisis easing, both European governments and consumers are showing resilience. In the near term, the region’s economic outlook may be better than previously expected.
During the Russia–Ukraine war, gas was a major revenue source—but those revenues have now plummeted.
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5. Binance Ends U.S. Partnerships
Amid intensified scrutiny of the crypto sector by the U.S. SEC, Chinese crypto giant Binance is considering severing ties with its U.S. business partners.
To date, Binance has been under investigation by the SEC, the Department of Justice, the IRS, and the Commodity Futures Trading Commission.
Sources say Binance may break ties with U.S. partner banks and financial services firms and is even considering halting venture capital investments in the U.S.
Facing regulatory pressure in the U.S., Binance is weighing disengagement and potential delisting of certain tokens.
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6. China Renaissance Founder Missing, Stock Plunges 50%
Bao Fan, founder of China’s leading investment bank China Renaissance, has gone missing. When markets opened today, the company’s stock plunged 50%, later narrowing to a 28% decline.
This morning, the head of the investment banking division tried to calm employees, urging them not to panic or believe rumors and to trust in the company’s leadership.
Bao, known as the “Unicorn Hunter,” helped elevate China Renaissance to prominence during the rise of new-economy tech unicorns.
China Renaissance staff were reassured after Bao Fan’s disappearance, but investor confidence remains shaken.
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7. UK’s Purplebricks Puts Itself Up for Sale
Online real estate brokerage Purplebricks, founded in 2014, warned that the cost of its turnaround may exceed expectations—it now projects an EBIT loss of £15 million to £20 million for the fiscal year ending in April.
In recent years, Purplebricks failed to successfully expand internationally. Restructuring costs surged, and its CEO resigned unexpectedly last year.
The company stated that its board believes the current leadership is unlikely to achieve a meaningful recovery. It is now exploring a sale, though no potential buyers have yet come forward.
After listing in 2015, Purplebricks’ stock quadrupled in the following years. In 2018, German media giant Axel Springer invested heavily in the company.
Purplebricks expects steep losses this year and admits that current leadership lacks the capability to turn the business around.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.