Amidst a decline in foreign funding, China’s banking and corporate elite have increasingly turned to domestic capital sources.
An intriguing approach to accessing these funds has surfaced, aptly dubbed “throwing eggs,” a term that refers to Guandan, a card game reminiscent of poker.
This interest was piqued by the game’s popularity among affluent local government officials in the eastern provinces.
China’s bankers and business executives have become increasingly reliant on domestic capital in recent years as foreign funding has dried up, but a popular way to unlock that cash may very well involve “throwing eggs”.
The term refers to Guandan, a poker-like card game that has been around for decades, but has gained fresh life among venture capitalists a few years ago as they awoke to its popularity among wealthy local government officials in eastern regions.
“Officials like this game, so we play along,” said Yang Yiming, an investment banker whose job involves canvassing government funding for projects linked to semiconductors and defence.
The growing interest in business circles has spawned a craze for the game nationwide, driven partly by financial constraints stemming from souring ties with China’s biggest trade partner, the United States.
This month U.S. President Joe Biden barred some investment in semiconductors and set controls on other sensitive sectors, aiming to curb trade and funding that could give rival Beijing an edge in technology.
Total U.S.-based venture-capital investment in China plummeted to $9.7 billion last year from $32.9 billion in 2021, PitchBook data shows.
Domestic private capital has also dwindled as President Xi Jinping signalled his preference for a bigger state presence in the economy by launching crackdowns over the last few years in areas from technology to real estate and private tutoring.
As investment prospects darken, financiers increasingly view the game as a way to build ‘guanxi’ or connections with officials who hold the purse strings on local projects, especially those overseas investors might consider too risky.
“In finance, information is currency,” said Yang, for whom a game of guandan has become a standard gambit before wining and dining local officials.
“During a game which can stretch for hours, we are bound to chit-chat, and sometimes useful information gets passed around after people feel comfortable and trust you.”
Finance professionals learn how to play guandan, a poker-like card game, during a training session in Beijing, China, on Aug. 6, 2023. (REUTERS/Yew Lun Tian/File photo)
Yu Longze, a broker based in Beijing, said his boss this month ordered all staff to learn the game.
Like bridge, the classic staple, the game is played among four players paired up in teams. Using two decks, players must throw down poker and other special card combinations to clear their hands before opponents.
“From observing someone’s playing style, you can tell if he is smart, aggressive or a team player. This can help you decide if you want him as a business partner,” said a businessman surnamed Huang, who runs a private clubhouse where the game has become a favourite pastime of officials and company executives.
But not everyone treats guandan as a business tool.
Many players say they simply enjoy the mental stimulation from a game that is cheap, convenient to play and allows them to socialise – aspects that, taken together, explain its appeal to all walks of life.
Customers ranged from retired people to young professionals seeking to build new social ties, said Hua Min, who this year opened the first bar dedicated to hosting guandan games in Beijing, the capital.
Li Keshu, a lawyer, said playing with his friends in a park helped get through the social isolation and economic frustration of the COVID-19 years, when China threw up strict barriers against infection.
“It’s cost-free. Unlike ‘Texas Hold’em’ or mahjong, this game doesn’t need to be played with money to be fun. On the contrary, money spoils the friendship and the game.”
While the players Reuters spoke to said they do not gamble, Chinese officials have been censured in the past for receiving bribes through the playing of card games or the traditional tile pastime of mahjong.
In April, the ruling Communist Party’s anti-graft watchdog censured one of its officials in the eastern province of Anhui for playing guandan during a training course, among other misdeeds.
In a sign that Beijing is not perturbed by the growing interest in the game, however, China’s national sports authority has organised the first nationwide guandan competition this year.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
