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23/01/2022

22/01/2022

Cryptocurrencies tumble, with bitcoin falling 15% and ether down 20%

Bitcoin prices fell sharply on Friday, while ether prices also dived, wiping off nearly $150 billion from the crypto market.

Bitcoin fell about 15% and was trading around $36,000 late Friday, according to Coin Metrics. Ether, the second-largest cryptocurrency by market cap, dived about 20% to trade around $2,500.

The declines in cryptocurrencies follow Wall Street losses on Thursday. The Nasdaq Composite lost 7.6% this week, and the S&P 500 fell 5.7% for its third straight weekly decline.

Rising rates have prompted investors to shed positions in riskier assets. Earlier this week, the benchmark 10-year Treasury yield traded above 1.9%.
A common investment case for bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.

As yields pulled back later in the week, however, foreign exchange trading firm Oanda senior market analyst Edward Moya said it was “a little disappointing to not see bitcoin react more positively to the reversal in Treasury yields.”

Bitcoin prices have fallen sharply since November, tumbling more than 40% from a record high of about $69,000.

Some experts warn that the crypto market could be heading toward a downturn soon, as heightened regulatory scrutiny and intense price fluctuations dampened bitcoin’s prospects.

The Federal Reserve have also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.
Regulators are cracking down on cryptocurrencies too. China completely banning all crypto-related activities and U.S. authorities are also clamping down on certain aspects of the market.

In a Thursday note, Oanda’s Moya had predicted that bitcoin could tumble below $40,000 as Russia’s central bank had proposed a ban over the use and mining of cryptocurrencies on Russian territory, claiming the digital currency poses a risk to “financial stability and monetary policy sovereignty.”

Russia is among the top three countries for bitcoin mining, he noted.

20/01/2022

China’s central bank cuts key lending rates, including one for the first time in nearly 2 years.

China’s central bank cut its benchmark lending rates again on Thursday amid concerns about an economic slowdown in the world’s second-largest economy.

The People’s Bank of China reduced the one-year loan prime rate by 10 basis points from 3.8% to 3.7%. In December, the PBOC cut the one-year loan prime rate for the first time since April 2020.

The five-year loan prime rate was lowered by 5 basis points from 4.65% to 4.6% — it was the first cut since April 2020, at the height of the coronavirus pandemic in the country.

Loan prime rates (LPR) affect the lending rates for corporate and household loans in the country.

Most new and outstanding loans in China are based on the one-year LPR, but the five-year rate influences the pricing of home mortgages, according to Reuters. A snap poll by Reuters had showed that most participants expected China to slash both the lending rates on Thursday.
The rate cuts continue the PBOC’s efforts to push down borrowing costs, according to Capital Economics.

“Mortgages will now be slightly cheaper which should help shore up housing demand. The PBOC has already pushed banks to increase the volume of mortgage lending,” Sheana Yue, China economist at the firm, said in a note following the announcement.

“Targeted support for property buyers does appear to be limiting one of the more severe downside risks facing the economy,” Yue added.

However, Nomura’s Chief China Economist Ting Lu said the impact of the LPR cuts “will be quite limited, as these cuts are too small to have a material impact.”

“They are unlikely sufficient to clear up the real bottlenecks, and because rates on existing mortgage loans will not be reset this year,” he wrote.

Nomura expects further cuts to the one-year and five-year LPR as well as the reserve requirement ratio, and a “significant rise in FX purchases to add liquidity and limit [renminbi] appreciation over the next few months.”
Though China was the first major economy to shake off most of its pandemic-driven economic shock, concerns grew last year around the sustainability of growth. They came as a result of muted consumer spending, tighter regulations, a struggling property sector as well as Beijing’s zero-tolerance Covid policy.

On Monday, the central bank defied market expectations and lowered borrowing costs of medium-term loans for the first time since April 2020.

The PBOC said it was reducing the interest rate on 700 billion yuan ($110.33 billion) worth of one-year medium-term lending facility loans by 10 basis points from 2.95% to 2.85%.

Bruce Pang from China Renaissance noted that the central bank’s cuts to different rates would help both the slumping property market and struggling small businesses.
The varying cuts send a rather strong signal for policy direction, he said. They reflect how the central bank is responding more quickly with efforts to lower financing costs, ease pressure on the property market and spur consumption and investment.

The Chinese economy grew by 8.1% in 2021 as steadily growing industrial production offset a drop in retail sales. Still, that figure fell short of economists’ expectations for an 8.4% growth.

19/01/2022

Sony shares tank over 12% after Microsoft and Activision’s $68.7 billion tie-up plan.

Sony shares fell more than 12% in Tokyo on Wednesday after Microsoft announced plans to buy Activision.

Investors likely fear rising competition to Sony’s PlayStation division as well as the potential for Microsoft to pull some popular games from the Japanese entertainment giant’s platforms.

For some time, Sony has been ahead of Microsoft with its portfolio of first-party games, allowing it to stay ahead in the console wars. But should Microsoft close the acquisition of Activision, it will have a strong portfolio of hit games from the Call of Duty franchise to World of Warcraft.

That content can help power Microsoft’s subscription strategy around Game Pass, a pay-monthly service that allows users to access a library of games across different devices. It is a rival to Sony’s “PlayStation Plus” and “PlayStation Now” services.

When console makers own the gaming studio, they often make those games exclusive to their platforms. Games like Call of Duty are currently available on both PlayStation and Xbox.

But investors fear Microsoft could take those games off of PlayStation’s platforms, giving the U.S. company more attractive content to rival Sony.

“There is no doubt that this deal weakens Sony position in the market,” Piers Harding-Rolls, games research director at Ampere Analysis, said in a note published Wednesday.

“Whether or not Activision Blizzard’s content is progressively made exclusive to Xbox platforms and services, inclusion of new releases into Xbox Game Pass for several major games franchises, including Call of Duty, will undermine Sony’s third-party business. Sony has benefitted from the ability to negotiate timed exclusive content for Call of Duty but this is now under threat.”

Overreaction?
Sony has been investing heavily in first-party exclusive content for some years which has allowed it to bring exclusive hit games such as Spider-Man and The Last of Us to the PlayStation.

Meanwhile, it has been investing in virtual reality and this month took the wraps off its second-generation headset called the PlayStation VR2.
Serkan Toto, CEO of Tokyo, Japan-based consultancy Kantan Games, said Sony will likely continue to focus on strong content.

“Sony will still continue to push out blockbusters, there can be no doubt about that,” Toto said.

“I think the market has totally overreacted in Japan today,” he added.

Sony itself is no stranger to acquisitions albeit nowhere near the size of Microsoft. Last year, the Japanese firm swallowed up a handful of small studios including Valkyrie Entertainment, the maker of hit game God of War. Toto said Sony will likely hunt for further acquisitions.

“Sony can of course fight back: they still have their own top in-house studios spread around the world, PlayStation remains a powerful brand in gaming, and acquisitions are in the cards for Sony as well,” he said.

18/01/2022

Netflix raises prices in U.S. and Canada, stock pops.

Netflix raised monthly prices for its streaming service in the U.S., sending the stock up as much as over 3% during trading on Friday.

Netflix stock ultimately rose 1.25% to close at $525.69 on Friday.

The monthly cost for the basic plan rose $1 to $9.99, the standard plan jumped from $13.99 to $15.49, and the premium plan rose from $17.99 to $19.99, according to Netflix’s website. Canadian prices increased as well.

A Netflix spokesperson confirmed the change. “We’re updating our prices so that we can continue to offer a wide variety of quality entertainment options,” the spokesperson said in a statement.

Netflix has been raising prices in previous years and it is part of the company’s long-term strategy. Netflix previously raised prices for U.S. customers in 2019 and 2020.

Wall Street has been counting on Netflix to increase prices as customer growth wanes. Netflix’s price increases also reflect confidence from the company that its plans are entrenched in its customers’ lives and that they will not cancel or churn because of price increases.

Netflix said on Friday that customers will receive an email about the price increases 30 days before they see the increase.

Netflix is facing more competition than ever, especially from newer streamers including Disney+, HBO Max, Amazon’s Prime Video, and Apple TV+. Netflix said last fall it had over 213 million subscribers around the world, which is much higher than the subscription count of its new rivals. As a result, Netflix has been investing heavily in producing content for its service, and said it expected to spend $17 billion on content in 2021.

Netflix reports quarterly earnings next week.

18/01/2022

10-year Treasury yield jumps to 2-year high, topping 1.83%.

The yield on the benchmark 10-year Treasury note soared 5 basis points to 1.8305% at 3:40 a.m. ET. The yield on the 30-year Treasury bond climbed 3 basis points to 2.1492%. Meanwhile, the 2-year rate topped 1% for the first time in two years, hitting 1.0364%.

Yields move inversely to prices and 1 basis point is equal to 0.01%.

The move, which comes after a market holiday in the U.S. Monday, indicates that investors are preparing for the possibility of more aggressive tightening by the Federal Reserve.
Last week, Fed Chair Jerome Powell told the U.S. Senate that he expected to see a series of interest rate hikes this year, along with a pullback in other pandemic economic support measures.

Philadelphia Fed President Patrick Harker told CNBC last week that the central bank could raise rates three or four times this year. He noted that inflation is “more persistent than we thought a while ago.”

James Athey, senior investment manager at Aberdeen Standard Investments, told CNBC that the sudden spike in yields couldn’t be explained by any one new piece of news.

“The reality is that the market is still adjusting to the Fed’s ongoing hawkish evolution,” he said via email.

Athey referred to JPMorgan CEO Jamie Dimon’s comments on Friday, when he said the Fed could hike rates as many as seven times this year, according to multiple reports.

These comments, along with speculation that the Fed may hike rates by 50 basis points as soon as March, “are driving the front end to reprice which is dragging all yields up – though notably still the curve is flattening,” Athey said.

“Technically we look a little bit stretched given the pace of this repricing so I expect to see some consolidation around here – especially as the Fed is in blackout and they are the main driver of higher yields at the moment,” Athey explained.

Fed officials have gone into a no-comment “blackout” period ahead of the next central bank meeting on Jan. 25-26.

In terms of data releases due out on Tuesday, the January National Association of Home Builders housing market index is expected out at 10 a.m. ET.

Auctions are scheduled to be held for $60 billion of 13-week bills and $51 billion of 26-week bills.

02/01/2022

23/12/2021

Amazon among key tech firms to drop CES plans on Covid-19 concern.

Amazon, Facebook parent Meta, Twitter and Pinterest will not send teams to the Consumer Electronics Show (CES) in Las Vegas as concerns grow about Omicron, the firms said on Tuesday.

CES, which serves as an annual showcase of new trends and gadgets in the technology industry has attracted more than 180,000 people from around the world to a sprawling array of casinos and convention spaces in the past.

Amazon and its smart-home unit Ring said they would not be onsite at next month’s event due to the “quickly shifting situation and uncertainty around the Omicron variant” of coronavirus, the firm’s spokesperson told Reuters in an email.

Bloomberg News first reported that Amazon and Ring had decided against in-person presence at the show.

U.S. wireless carrier and conference sponsor T-Mobile also said the vast majority of its contingent would no longer be going and its chief executive would not deliver a keynote speech.

“We are prioritizing the safety of our team and other attendees with this decision,” T-Mobile said, while expressing confidence that CES organizers were taking exhaustive protective measures.

The other companies had not planned large in-person gatherings.

The Consumer Technology Association, which runs CES, said on Tuesday the show would run from Jan. 5 to Jan. 8. Health precautions would include vaccination requirements, masking and the availability of COVID-19 tests, it added.

Twitter had planned to have some employees attend, to participate on panels. However, both Twitter and Facebook have said they are now exploring online opportunities.

Pinterest, before canceling, had planned a scaled-down meeting area for its sales and partner teams, compared to years past.

But many companies, such as Qualcomm, Sony Electronics and Alphabet’s Google and self-driving vehicle unit Waymo have said they are sticking with plans to attend and show off new hardware or host meetings.

On Tuesday, General Motors said Chief Executive Mary Barra is still set to introduce the U.S. automaker’s electric Silverado pickup truck and discuss company strategy in person at the conference on Jan. 5.

Other companies had long ago planned for virtual presences, among them chipmaker Nvidia, which is having two executives deliver a keynote address by video.

22/12/2021

From a bitcoin crash to regulatory crackdowns: Analysts give their top predictions for crypto in 2022.

All things considered, bitcoin has had a pretty good year. The digital currency is up nearly 70% since the start of 2021, driving the entire crypto market to a combined $2 trillion in value.

It’s a year that’s seen the first major crypto company go public with the debut of Coinbase in April, increased participation from Wall Street banks like Goldman Sachs, and the approval of the first U.S. exchange-traded fund linked to bitcoin.

However, heightened regulatory scrutiny and intense price fluctuations have dampened bitcoin’s prospects lately. And experts warn the market could be heading toward a downturn.
With next year already looking like another rollercoaster period for digital currencies, CNBC takes a look at analysts’ biggest predictions.

Crypto crash
Some experts believe bitcoin is due for a sharp decline in the coming months.

Bitcoin surged to a record high of almost $69,000 in November. It’s now sitting below $50,000, down almost 30% from its peak. Wall Street wisdom defines bear markets as a decline of 20% or more from recent highs, but it’s worth noting bitcoin is notorious for its volatility.

Carol Alexander, professor of finance at Sussex University, said she expects bitcoin to tank as low as $10,000 in 2022, virtually wiping out all of its gains in the past year and a half.

“If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year,” Alexander said. Her bearish call hinges on the notion that bitcoin “has no fundamental value” and serves as more of a “toy” than an investment.
Alexander warns bitcoin could nosedive, as it has done in the past, after a big run-up in the price. In 2018, bitcoin tumbled close to $3,000 after climbing to a high of nearly $20,000 a few months earlier. The cryptocurrency’s backers often say that things are different this time, as more institutional investors are jumping into the market.

“Without question, Bitcoin’s price chart appears to track many historical asset bubbles and busts and is carrying a ‘this time it’s different’ narrative just like other bubbles,” said Todd Lowenstein, chief equity strategist of Union Bank’s private banking arm.

A common investment case for bitcoin is that it serves as a hedge against rising inflation caused by government stimulus. Lowenstein said there’s a risk that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.

“Goldilocks conditions are ending and the liquidity tide is receding which will disproportionately harm overvalued asset classes and speculative areas of the market including cryptocurrencies,” he said.

Still, not everyone is convinced the crypto party will end in 2022. “The biggest risk factor, namely [quantitative tapering] by the Fed, has been decided and likely priced in already,” said Yuya Hasegawa, crypto market analyst at Japanese exchange Bitbank.

First spot bitcoin ETF
A big development crypto investors are on the lookout for in 2022 is approval of the first spot bitcoin exchange-traded fund in the United States.

Although the Securities and Exchange Commission greenlit the launch of ProShares’ Bitcoin Strategy ETF this year, the product tracks bitcoin futures contracts rather than giving investors direct exposure to the cryptocurrency itself.
Futures are financial derivatives that oblige an investor to buy or sell an asset at a later date and for an agreed-upon price. By tracking futures prices instead of bitcoin itself, experts say, ProShares’ ETF could be too risky for novice traders, many of whom are invested in crypto.

“The Bitcoin Futures ETF that launched this year has been widely regarded as not very retail-friendly given the high costs involved of rolling over contracts which amounts to around 5-10%,” said Vijay Ayyar, vice president of corporate development and global expansion at crypto exchange Luno.

“Increasing pressure/evidence… points to a Bitcoin Spot ETF being approved in 2022 mainly because the market is now large and mature enough to support one.”

Grayscale Investments has filed to convert its bitcoin trust, which is the world’s biggest bitcoin fund, into a spot ETF. And there are plenty of other bitcoin ETF applications waiting in the wings.

Rotation into ‘DeFi’
As the crypto industry has evolved, bitcoin’s share of the market has waned, with other digital currencies like ethereum playing a much larger role. This is something analysts expect to continue into next year, as investors increasingly look to smaller pockets of crypto in the hope of big gains.

Sussex University’s Alexander flagged ethereum, solana, polkadot and cardano as coins to watch in 2022.

“As retail investors begin to realize the dangers of trading bitcoin, especially on unregulated venues, they will switch to…other coins belonging to blockchains which actually serve an essential and fundamental role in decentralized finance,” she said.

“This time next year I predict that bitcoin’s market cap will be half the combined cap of smart contract coins” like ethereum and solana, Alexander added, “or even less.”
Emerging crypto developments such as decentralized finance and decentralized autonomous organizations are “likely to be the highest growth areas of crypto,” said Bryan Gross, network steward at crypto platform ICHI. DeFi aims to recreate traditional financial products without middlemen, while DAOs can be thought of as a new type of internet community.

Total money deposited into DeFi services surpassed $200 billion for the first time this year, and experts expect demand to grow further in 2022.

Web3, a movement calling for a new, decentralized iteration of the internet, is also expected to gain more traction next year. Web3 encompasses DeFi and other blockchain technologies such as non-fungible tokens. It has already found skeptics in the likes of Elon Musk and Jack Dorsey.

‘A big year on the regulatory front’
Regulators flexed their muscles on cryptocurrencies this year, with China completely banning all crypto-related activities and U.S. authorities cracking down on certain aspects of the market. Analysts widely expect regulation to be a key issue for the sector in 2022.

“2022 will be a big year on the regulatory front, no doubt,” Luno’s Ayyar said. “The interest from various governments, and especially the U.S., to bring regulation into the crypto space has not been higher.”

Ayyar said he expects to see some clarification on the legal “gray zone” of cryptocurrencies other than bitcoin and ethereum, which the SEC has said are not securities.

Blockchain company Ripple is locking horns with the U.S. watchdog over XRP, a cryptocurrency it is closely associated with. The SEC alleges XRP is an unregistered security and that $1.3 billion worth of the tokens were illegally sold by Ripple and two of its executives. For its part, Ripple says XRP should not be considered a security.

21/12/2021

Elon Musk says he will pay over $11 billion in taxes this year.
Elon Musk faces a hefty tax bill this year — possibly the biggest in U.S. history.

“For those wondering, I will pay over $11 billion in taxes this year,” the Tesla CEO tweeted on Monday.
That’s close to a CNBC estimate that Musk was set to pay a total of $12 billion in taxes in 2021.

Musk has sold off $14 billion worth of Tesla stock since early November, after asking his followers in a Twitter poll if he should sell 10% of his holdings. The response to that poll was a resounding “yes.”

But it’s likely Musk would have begun selling anyway. That’s because he faces a massive tax bill on Tesla stock options.

Stock options Musk was awarded in 2012 are set to expire in August next year. In order to exercise them, he has to pay income tax on the gain.

Rather than take a salary or cash bonus, Musk’s wealth comes from stock awards and gains in Tesla’s share price.

Though Tesla shares have taken a tumble since Musk’s Twitter poll, they remain incredibly valuable — the stock is up 28% year-to-date.

When Musk wants cash, he can simply borrow money using his company’s stock as collateral. However, this practice has been criticized by some politicians as a tax loophole for the mega-rich.

Earlier this year, ProPublica published an investigation showing Musk and several other billionaires paid no federal income taxes in 2018.

Between 2014 and 2018, Musk paid $455 million in taxes on $1.52 billion of income, according to ProPublica, despite his wealth growing by $13.9 billion over that period.
According to Forbes, Musk is worth over $244 billion on paper, making him the world’s richest man.

Musk could have waited until next year to pay the tax bill, but that would have meant potentially getting hit by higher tax rates under the Democrats’ Build Back Better bill.

The Tesla and SpaceX chief has been sparring with prominent Democrats on Twitter lately over the issue of tax avoidance.

Last week, he fired back at Senator Elizabeth Warren after she questioned Time Magazine’s decision to name Musk its Person of the Year, tweeting: “I will pay more taxes than any American in history this year.”

And if Musk does end up paying the huge sum he said he would, there’s a chance he may be right.

20/12/2021

World Economic Forum postpones Davos meeting on Covid uncertainty.
The annual January get-together of world leaders, billionaires and executives in Davos, Switzerland will be postponed due to health and safety concerns over Covid-19.

“The World Economic Forum will defer its Annual Meeting in Davos, Switzerland, in the light of continued uncertainty over the Omicron outbreak,” the group said in a release Monday. “It is now planned for early summer.”

The in-person event had been scheduled from Jan. 17 to Jan. 21 with the aim of addressing “economic, environmental, political and social fault-lines exacerbated by the pandemic.”

Organizers say an online series of “State of the World” sessions will be held instead, “to focus on shaping solutions to the world’s most pressing challenges.”

WEF said pandemic conditions had made it “extremely difficult” to stage a global in-person meeting next month, adding that the transmissibility of the omicron Covid variant and its impact on travel and mobility had made deferral necessary.

The event is held annually in Davos, a picturesque Alpine ski resort, and is regarded by many as a cornerstone of international relations. It typically draws heads of government, business executives and activists from around the world to discuss global issues — although it is often criticized for being out of touch with reality.

U.S. President Joe Biden had been expected to skip the January meeting, Bloomberg reported last month, citing two unnamed sources familiar with the matter.

Former President Donald Trump attended WEF twice while in office, in 2018 and 2020. He had planned to attend in 2019 but canceled this trip due to a partial government shutdown.

The postponement of the January meeting comes at a time when the omicron Covid variant is spreading rapidly worldwide, prompting concerns that health services in some places could soon be overwhelmed.

The World Health Organization, which designated the strain as a variant of concern on Nov. 26, said over the weekend that omicron had been detected in 89 countries so far and the number of cases is doubling every 1.5 to 3 days in areas with community transmission.

The U.N. health agency stressed that much is still unknown about the variant and more data is required to understand the severity of the illness it causes.

WEF had delayed its January 2021 meeting until the summer of this year, before eventually canceling the postponed meeting that had been set to take place in Singapore in August.

A virtual conference was held earlier this year.

17/12/2021

TECH
‘Buy now, pay later’ stocks tumble after U.S. consumer watchdog launches probe

Shares of several “buy now, pay later” firms sank sharply after the U.S. consumer watchdog opened an investigation into the sector.

The Consumer Financial Protection Bureau said Thursday it was seeking information from Affirm, Afterpay, Klarna, PayPal and Zip on the risks and benefits of their products.

BNPL services let shoppers defer payment for items, typically over a period of monthly installments and with no interest attached — though some do charge hefty late payment fees.
The CFPB said it was especially concerned by the ability for consumers to quickly accumulate debt through BNPL plans, as well as a lack of sufficient regulatory disclosures and the harvesting of data.

Multiple BNPL companies saw their stock price tumble following the announcement. U.S.-based Affirm’s shares closed down by 11% Thursday, while Australian companies Afterpay, Zip and Sezzle on Friday dropped 8%, 6% and 10%, respectively.

Investors flocked to BNPL stocks last year after the growth of the sector was supercharged by the coronavirus pandemic.

A shift in consumer habits toward e-commerce and flexible loans, coupled with huge government stimulus packages, heavily benefited companies like Klarna, Affirm and Afterpay.
This, in turn, has led to major tech companies like PayPal and Block jumping into BNPL, hoping to capitalize on the growth of the industry.

PayPal launched its own BNPL offering late last year, while Block, the company formerly known as Square, recently announced a $29 billion deal to snap up Afterpay.

But the tide has been turning in 2021. Afterpay shares have plunged over 30% since the start of the year, while Zip is down 25%. Sezzle’s stock price has more than halved in value year-to-date. Affirm, which debuted at the start of the year, is one of the few BNPL firms still in the green.

Market players have been alarmed at mounting losses from firms in the sector.

Zip’s pre-tax loss ballooned to 724 million Australian dollars ($518 million) in its 2021 financial year, up from 20.6 million Australian dollars a year earlier. Afterpay lost 194 million Aussie dollars in its full-year results, compared to 26.8 million in 2020.

Meanwhile, analysts have warned regulation could be a major headwind for the space going forward. Christopher Brendler, analyst at D.A. Davidson, told CNBC in September that a regulatory response “could slow the growth” of the BNPL sector.

In the U.K., the government is planning to introduce regulation of BNPL. Firms in the nascent industry would come under the supervision of the Financial Conduct Authority, which regulates financial services firms in the country.

Britain’s Treasury Department is consulting with BNPL firms and other stakeholders to inform its plans. The consultation will close on Jan. 6, 2022.

15/12/2021

Climate tech investment is soaring this year — but might not be going to the right areas, PwC says.

Investment in companies developing technology to try to combat the climate crisis grew to $87.5 billion in the year leading up to Jun. 30, according to new research from PwC published Wednesday.

That’s up 210% on the $24.8 billion that was invested in climate tech in the same period the year before, the financial services firm said in its PwC “State of Climate Tech 2021” report, adding that 14 cents of every venture capital dollar now goes to climate tech.

But venture capital and private equity companies aren’t necessarily backing the right climate tech companies, according to PwC.

The firm focuses on what it says are the five leading technology solutions: solar power, wind power, food waste technology, green hydrogen production, and alternative foods/low greenhouse gas proteins. It says these five received just 25% of the climate tech investment between 2013 and Jun. 2021, despite technologies in these areas representing over 80% of the emissions reduction potential by 2050.

The lion’s share of climate tech funding, some $58 billion, went to mobility and transportation companies, PwC said. That includes companies focused on e-scooters, electric vehicles and flying taxis.
The average size of a climate tech deal almost quadrupled to $96 million in the first half of 2021, up from $27 million one year prior, PwC said, adding that the number of active climate tech investors rose from less than 900 in the first half of 2020 to over 1,600 in the first half of 2021.

Climate tech SPACs (special purpose acquisition companies) raised $25 billion in the first half of 2021, accounting for more than a third of all the climate tech funding during the period.

While overall growth is up, the number of early stage, seed and series A investments in climate tech has remained largely stagnant since 2018, PwC said, adding that there’s a need to fund more young climate tech start-ups that have the potential to become companies worth $1 billion or even $10 billion.

On Tuesday, French climate tech start-up Sweep announced that it has raised a $22 million series A round led by Balderton Capital, a venture firm based in London that has also backed urban navigation app Citymapper, e-scooter firm Voi and on-demand car service Virtuo.

In terms of geography, U.S. climate tech companies are attracting the most venture capital funding, with $56.5 billion going to start-ups in the country in the year leading up to Jun. 30. PwC said Chinese climate tech companies raised the second highest amount, with $9 billion.
“Innovation is critical to meeting the challenge and the good news is that climate tech investment is up significantly across the board,” Emma Cox, global climate leader at PwC U.K., said in a statement.

“However, our research has found there is potential to better channel and incentivize investment in technology areas that have the greatest future emissions reduction potential. This raises the question of why these sectors are missing out — are investors missing a value opportunity or is there an incentive problem that needs the attention of policy makers?”

Over the decades, many investors have chosen not to back climate tech start-ups over concerns that they may not deliver a suitable financial return. There was a period of rapid growth between 2013 and 2018 but climate tech investment plateaued between 2018 and 2020, according to PwC, which attributed the slowdown to macroeconomic trends and the global pandemic.

However, investment rebounded sharply in the first half of 2021 as environmental, social and corporate governance (ESG) was thrust into the spotlight and companies committed to net-zero strategies.