Chinese investment in Germany. According to business services firm Ernst and Young, Chinese investment in German companies plummeted to $311 million in the second half of 2018 from $10 billion in the first half of the year. The number of transactions also fell, from 54 in 2017 to 34 in 2018. This may be due in part to Germany’s tightening regulations on foreign investment – it recently reduced the threshold for foreign investments in German companies that would trigger a government investigation from 25 percent ownership stakes to 10 percent. It could also be related to Beijing’s continued capital outflow controls. Either way, the fall is dramatic and an indicator of China’s decreased investment in Europe’s largest exporter.
Russia’s bad banks. In 2017, Russia nationalized three private lenders classified as systemically important that had high levels of “bad loans,” creating a bad bank that took over approximately $30 billion worth of underperforming and nonperforming assets. In a recent interview, the bank’s CEO, Alexander Sokolov, stated that roughly half of these loans are connected to recoverable sources of funding, implying that the other half would need to be covered by Russia’s central bank, which anticipates a recovery rate of 40-60 percent. According to Sokolov, many of these nonperforming loans were “sweetheart deals” that had poorly structured repayment schedules.
Turkish-Saudi competition in Sudan. According to an anonymous Sudanese source who spoke to Turkish newspaper Yeni Safak, a foreign government offered the Sudanese government funds to help bring down rising bread prices, which last week sparked protests that have continued into this week. The funds would be provided in exchange for Sudan severing or weakening ties with Turkey, Qatar and the Muslim Brotherhood. The implication is that the foreign country offering its support is Saudi Arabia, which sees growing Turkish influence on the western shores of the Red Sea – including Turkish investment in Sudan’s Suakin Port – as a threat.
- China and Japan concluded their first annual meeting to set up a defense hotline, which is meant to help avoid misunderstandings in military operations.
- After a surprise visit to the U.S. al-Asad air base in western Iraq, President Donald Trump said the U.S. has no intentions to leave Iraq and that its presence there could help U.S. forces re-enter Syria, if necessary.
- The United Arab Emirates has reopened its embassy in Damascus, which had been closed since 2011. The UAE initially supported rebels fighting against the regime of President Bashar Assad the Syrian civil war.
- Mexico will deploy 4,000 troops to guard national oil refineries and storage facilities to help prevent theft.
- China’s customs agency said it would begin to allow imports of U.S. rice for the first time ever.