Headlines

The end of China Evergrande is near, and foreign investors face a long, and likely bumpy, road trying to recover billions of dollars of their investments in the beleaguered property developer. The process will serve as a lesson for fund managers of the potential risks in investing in China’s distressed assets, WSJ Pro Bankruptcy reported. On Monday, Hong Kong’s high court ordered the liquidation of Evergrande, putting an end to repeated extensions trying to save the company from being dissolved.

China’s finance ministry promised more proactive government spending this year, as Beijing doubles down on boosting the economy amid a deepening property slump, while wary economists say bolder moves are needed to rejuvenate growth, the Wall Street Journal reported. Fiscal expenditure in 2024 will be maintained at the necessary intensity and fiscal transfers to local governments will remain at certain levels, officials from the Ministry of Finance said at a press conference on Thursday, signaling more financial support from Beijing to local governments struggling with piling debt.

Thousands of Canadian small businesses face the risk of bankruptcy after the government ended pandemic-era support last month with the economy slowing at a time of high interest rates, Reuters reported. Small firms that employ fewer than 100 people are critical to the Canadian economy as they give jobs to almost two-thirds of the country's 12 million private workers. A spike in bankruptcies, which jumped 38% in the first 11 months of 2023, would weigh on economic growth, lobby groups and economists warn.

Small, loosely-regulated lenders in Canada who rode a pandemic housing boom to offer mortgages at high interest rates are now showing signs of stress as a spike in living costs pushes some homeowners toward a default, Reuters reported. Canada's C$2 trillion ($1.5 trillion) mortgage market is dominated by the "Big Six" major banks that include Royal Bank of Canada and TD Bank.

India's fast-growing airline industry faces higher leasing bills unless the country clarifies its insolvency laws, the head of major leasing firm Aviation Capital Group (ACG) said on Wednesday, Reuters reported. Foreign lessors, including an Irish subsidiary of U.S.-based ACG, were blocked from recovering jets caught up in the bankruptcy of budget carrier Go First last year and many are still embroiled in a legal battle to recover their assets.

Chile’s central bank slashed its key interest rate by a full percentage point, speeding up the pace of monetary easing for the second meeting in a row after inflation slowed more than expected last month, Bloomberg News reported. Four of the five policymakers voted to cut borrowing costs to 7.25% late on Wednesday, with the other backing a reduction of 125 basis points. The decision was forecast by 17 of 21 analysts in a Bloomberg survey, with three others predicting 75 basis points and one seeing 125 basis points.

Colombia maintained the pace of monetary policy easing with a second straight quarter-point cut to interest rates as consumer price increases remain above target and inflationary threats abound, Bloomberg News reported. The central bank cut its key rate to 12.75%, Governor Leonardo Villar told reporters in Bogota on Wednesday. Ten of 26 economists surveyed by Bloomberg correctly forecast the move, while 15 expected a half-point cut and one a cut to 12.25%. The board voted 5-2 for the 25 basis-point cut, with the minority favoring a larger half-point reduction.

The International Monetary Fund’s executive board approved a $4.7 billion disbursement to the government of Argentine President Javier Milei, Bloomberg News reported. The payments are part of a refinanced $44 billion program, the lender’s largest, that was beset by uncertainty for months during the election campaign that saw Milei oust the Peronist government of Alberto Fernandez. The board’s decision Wednesday follows a staff-level agreement reached in Buenos Aires earlier this month.

The Bank of England left its key interest rate unchanged but signaled it is likely to lower borrowing costs this year for the first time since 2020, though perhaps not as soon as investors expect, the Wall Street Journal reported. The U.K. central bank’s move followed a similar pivot by the Federal Reserve, which Wednesday signaled it was thinking about when to lower interest rates but hinted a cut wasn’t imminent when it held rates steady. Last week, the European Central Bank left its key rate at a record high but kept open the door to cuts as soon as the spring.

A former member of the Bank of Canada’s governing body says that he believes the central bank will start cutting interest rates in about six months if inflation pressures ease as expected, Bloomberg News reported. Policymakers will wait until they see underlying price pressures cool, even if the economy has entered a period of excess supply, former Deputy Governor Paul Beaudry said. “I wouldn’t see the potential of rate cuts until probably the July decision,” Beaudry said in an interview with Avery Shenfeld, the chief economist at Canadian Imperial Bank of Commerce.