Headlines

Turkey’s central bank sharply raised interest rates—defying President Recep Tayyip Erdogan’s demand to cut them—in an attempt to counter the country’s economic problems and reverse growing investor aversion to emerging-market economies, The Wall Street Journal reported. The central bank increased its main interest rate to 24% from 17.75% on Thursday, citing concerns over price stability and saying it would maintain a tight monetary-policy stance until the inflation outlook improves significantly.

China agreed to extend a $5 billion credit line to cash-strapped Venezuela, said the Venezuelan finance minister, as President Nicolas Maduro headed to Beijing. Minister Simon Zerpa told Bloomberg News that Venezuela would pay back the loan with either cash or oil, Bloomberg News reported. The countries were expected to sign what Zerpa described as a strategic alliance on gold mining. “Venezuela has a great alliance with China,” Zerpa said on Thursday.

Moody’s has issued a stark warning that the risk of a no-deal Brexit has “risen materially” in recent months, spelling out the extent of the possible damage on the UK economy from crashing out without an agreement, the Financial Times reported. Britain would risk entering recession, according to the rating agency. While the UK and the EU would “likely take swift steps to limit short-term disruption”, a disorderly exit would “clearly pose more significant challenges than a negotiated exit”, the chief author of Moody’s report, Colin Ellis, said.

While the war in Ukraine’s east continues to rage four years on, the battle between Russia and Ukraine is returning to the calm and order of a London courtroom. There, British judges, unwilling to play diplomat, are this week set to rule on an appeal by Ukraine that it must repay part of a $3 billion bond in default, Bloomberg News reported. The Court of Appeal will rule on the case after Russia won an early verdict last spring in a lower court. The dispute “has multiple venues, and courtrooms are one of them," said Orysia Lutsevych, a research fellow at the Chatham House thinktank in London.

An interest rate hike by Turkey’s central bank on Thursday might just be the lesser of two evils for the country’s beleaguered companies, Bloomberg News reported. On the one hand, a steep rate increase could stem the slide in the lira that has boosted dollar-debt costs by more than 40 percent this year. On the other, pausing would spare the already bruised balance sheets of companies, which have had to contend with a near doubling in local borrowing costs.

The Indian infrastructure finance firm behind a rare default last month that is reverberating through the nation’s credit markets is delinquent on more borrowings, people familiar with the matter said. Infrastructure Leasing & Financial Services Ltd., which helped fund India’s longest tunnel, is in default on 3 billion rupees ($41 million) of short-term borrowings taken through so-called inter-corporate deposits from Small Industries Development Bank of India, the people said.

Rating agency S&P has downgraded seven Chinese local-government financing vehicles (LGFVs), on the view that local governments are less likely to provide bailouts if these companies verge towards default, highlighting the punishing impact of Beijing’s austerity campaign, the Financial Times reported. For the last decade, Chinese local governments have used such off-budget vehicles to finance infrastructure projects that skirt restrictions on direct borrowing, prompting warnings from global watchdogs and China’s finance ministry. In 2014, China’s parliament legalised dire

Italy’s industrial sector hit a rough patch in July with total industrial output decreasing 1.3 per cent on the year, the first decline since June 2016, according to new data released on Wednesday, the Financial Times reported. Economists polled by Reuters had expected output growth to remain stable, rising at 1.4 per cent. Monthly figures — which are often volatile — showed a 1.8 per cent decrease in output, far more than the 0.4 per cent dip forecast in a Thomson Reuters poll. Italy is not the only eurozone economy suffering a production slump.

In a related story, the Financial Times reported that a wide-ranging measure of eurozone industry unexpectedly dipped in July, setting a gloomy tone for the third quarter. Industrial production in the eurozone fell by 0.1 per cent on the year, according to data published by the EU’s official statistics office. It was the first drop on this basis since January 2017. Economists polled by Reuters had expected the measure to go up by 1 per cent.

Developers in Hong Kong are offering perks such as free rail tickets and early move-in dates in a further sign one of the world’s hottest property markets may finally be cooling, Bloomberg News reported. In a bid to shift apartments, CK Asset Holdings Ltd. is giving away high-speed rail holiday and travel packages, including accommodation, worth HK$280,000 ($35,700) for people who agree to purchase one of its four-bedroom units at a development in Hong Kong’s west.