Headlines

Australia's central bank on Thursday cautioned borrowers against taking on excessive debt when interest rates start to fall and risking a boom/bust cycle, though it judged the financial system remained resilient overall, Reuters reported. In its semi-annual Financial Stability Review, the Reserve Bank of Australia (RBA) again highlighted the resilience of households, businesses and banks in the face of decade-high interest rates and painful inflation.

While the ATO and major banks are still major drivers of insolvencies, insolvency firms are beginning to see more closures triggered by cash flow issues, the Accounting Times (Australia) reported. The latest credit risk data from Alares suggests that the rate of insolvencies had eased slightly in August despite insolvency numbers remaining 33 per cent above average. In its insights report, Alares said that this could suggest that the “insolvency catch-up” could finally begin to slow down. Alares said the ATO remains the dominant driver of the insolvency catch-up.

Germany’s government decided to keep its stake in Commerzbank until further notice, after a sale of a portion of its shares to Italy’s UniCredit sparked speculation about a potential takeover, The Wall Street Journal reported. The German government — the biggest shareholder in Commerzbank — said Friday that it won’t offload any additional shares in the bank following the sale to UniCredit for 702 million euros ($783.5 million) completed last week, which reduced its ownership to 12% from 16.49%.

Sri Lanka’s new President Anura Kumara Dissanayake said Wednesday that he will soon resume discussions with the International Monetary Fund and foreign creditors to plot a way out of the worst economic crisis in the country’s history, the Associated Press reported. “We expect to discuss debt restructuring with the relevant parties and complete the process quickly and obtain the funds.,” he said. The future of the economic recovery plan drafted by former liberal President Ranil Wickremesinghe was called into question after Dissanayake, a Marxist, won the presidential election on Saturday.

First it was the central bank. Now China's top political leaders are pledging to shore up the country's moribund economy and, in particular, its battered property sector, The Wall Street Journal reported. Here's how markets reacted to the Politburo's intervention. In New York, the Nasdaq Golden Dragon Index jumped nearly 10%. U.S.-listed Chinese stocks such as Alibaba, JD.com and PDD surged. Yum China, which operates KFC in the country, rocketed 17% higher. Hong Kong's Hang Seng Index advanced 4.2%, notching its highest close since August 2023.

Shelly Lotan’s food-tech start-up in northern Israel was just a year old when Hezbollah started firing missiles across the border last October and the government advised everyone in the area to evacuate, The Washington Post reported. Two of her five employees were called up to serve in the military. Those that remained moved the company’s office to one of her employee’s parents’ basement. Investments slowed to a trickle.

China’s leaders have been drip-feeding support into their ailing economy for three years. This week, they jacked up the dose, according to an analysis in The Wall Street Journal. A major injection of stimulus from the central bank — and promises of more government support from the Communist Party’s top decision-making body — mark the beginning of a more muscular approach from Beijing to righting the economy after months of hesitancy, economists say.

Proper Group AG, the Swiss company formerly known as Utopia Music AG, has been hit with bankruptcy proceedings by a court in Switzerland, Complete Music Update reported. The “provisional announcement of bankruptcy” was filed on Tuesday after Proper Group failed to attend a court hearing relating to a debt of CHF 23,000.

Polish energy sector construction firm Rafako, based in the town of Racibórz, lodged an application for bankruptcy in a court on Thursday and its shares were suspended from trading on the Warsaw Stock Exchange, TVP World reported. “Without a deal on our debt it will be impossible to find a strategic investor for the company. It will also be impossible to continue operations or a return to trading on the stock market,” company chairman Maciej Stańczuk told the Businessinsider website, after attempts to persuade creditors to take shares in the firm in exchange for debt fell apart.

Switzerland’s central bank on Thursday cut its key interest rate for the third straight meeting as it pivots away from worries about high inflation toward concerns about the impact of a strong currency on exporters, The Wall Street Journal reported. The Swiss National Bank lowered its key rate to 1% from 1.25%, having cut borrowing costs by the same amount in June. Three months earlier, it became the first central bank from a rich, developed economy to ease policy since the start of the global inflation surge in 2021. The central bank said it might lower borrowing costs again.