When Berat Albayrak was asked earlier this year about his relationship with his father-in-law, Turkey’s president Recep Tayyip Erdogan, the young finance minister was gushing. Their bond was not about politics, he told the state broadcaster TRT, adding: “The relationship is about an ideal, about soul.”
Six months later, after his shock resignation on November 8, that relationship — and Albayrak’s political career — appears to have gone up in flames. Like his friend Jared Kushner, the son-in-law and senior adviser of Donald Trump, who will soon be forced to leave the White House, the 42-year-old now finds himself out of a job.
The abrupt departure of the second most powerful man in the Turkish government has triggered a shake-up in the country’s economic management after months of mounting alarm about a plunge in the lira and plummeting foreign currency reserves. It has also stunned Turkey’s political elite, many of whom believed that Erdogan was grooming his influential and widely resented son-in-law as his political heir in the Justice and Development Party (AKP). “If you were a [ruling party] member of parliament, Berat represented the ultimate power. He was alpha and omega,” says a former AKP MP. “Now he doesn’t exist . . . It’s over.”
Albayrak’s stratospheric rise — and dramatic fall — is as much a story about how Turkey has changed under Erdogan’s watch as it is about the man himself. “It’s very emblematic of an authoritarian country,” says Daron Acemoglu, a Turkish-born professor at MIT and co-author of Why Nations Fail. “Because of his father-in-law’s position, he was able to be very influential and build a team around him that acted autonomously and very destructively. Those are things that you shouldn’t have in functioning democracies.”
The fact that the country is reeling from a government bust-up that was also a family drama is a source of anger and shame for some who once worked alongside Erdogan — and a sign, they say, of how the country has changed during his time at its helm.
“In normal democracies, everybody talks about cabinet quarrels, political struggles, party struggles,” says a former government official. “But what is happening here is that we are discussing family matters. What kind of a country are we?”
Erdogan is a populist firebrand who has ruled over the country of 83 million people for almost 20 years while taking it down an evermore authoritarian path. The ascent of his son-in-law took place in parallel with the steady consolidation of power by the Turkish leader. In the early years, the AKP, which Erdogan co-founded in 2001, represented broad views. Though the former mayor of Istanbul’s roots were in Islamist politics, he sought to present his party as pluralistic, pro-European and business-friendly by drawing party officials and members of parliament from across Turkish society.
The AKP, which swept away the old order when it won an outright majority in elections in 2002, was never trusted by some of Turkey’s secularists and leftists. But it won support from the country’s poor, conservative underclasses, in part by lifting a ban on wearing the headscarf that had deterred observant young Muslim women from attending university. It gained plaudits from Kurdish voters by easing curbs on the use of the Kurdish language and, later, launching talks to end a decades-long conflict between the Turkish state and Kurdish militants. The economy boomed, and the AKP invested in infrastructure and overhauled the country’s healthcare system. Foreign direct investment reached a peak of $19bn in 2007.
Erdogan’s family members were visible at this time, occasionally accompanying the then prime minister on trips or appearing at public events. But they were not seen as a vital part of government decision making. Suat Kiniklioglu, a former ruling party MP, remembers that Erdogan balked at media speculation 10 years ago that his youngest daughter, Sumeyye, could become a paid adviser. “He didn’t like those false reports,” he says. “At the time, he seemed reluctant to appoint family members to such positions.”
Former senior officials from the AKP complain that, as Erdogan racked up a series of electoral triumphs and faced an array of threats to his hold on power, his style of leadership changed. He grew bolder, more domineering and less willing to hold internal debates. Over time, those traits became interlaced with paranoia and fear. “There was a slow evolution of both the party and of Erdogan,” says one person who has known him for decades.
In 2013, the country was rocked by the huge Gezi Park protests, when millions took to the streets across Turkey shouting “Tayyip, resign!” Months later, Erdogan’s inner circle was targeted by a corruption probe spearheaded by former allies who had turned against him. The prime minister, who had long feared the Turkish military and the country’s notorious “deep state”, called it a “coup attempt” and grew convinced that he was under siege from a murky alliance of domestic and international foes. “I think that, finally, he thought there was no one to trust except his family,” adds the longtime friend.
In the years that followed, many of the old allies who had held top government positions were either sidelined or quit. Abdullah Gul, a co-founder of the AKP who served as president until 2014, retreated after Erdogan took the job. Ali Babacan, who ran the economy during its heyday in the 2000s and led Turkey’s negotiations to join the EU, left the cabinet in 2015. Ahmet Davutoglu, who served two years as prime minister, quit in 2016 after clashing with the president. Mehmet Simsek, a respected former Merrill Lynch banker who struggled against Erdogan’s wishes as deputy prime minister, left politics two years later.
Many of these figures were known for speaking their mind to Erdogan and acted as a counterweight within the AKP. Without them, the president himself became more and more central to the party and the state. This intensified after the defining moment of his leadership — a violent July 2016 attempted coup where tanks mowed down civilians and fighter jets dropped bombs near the presidential palace as a rogue faction within the military sought to topple him by force.
This failed putsch set in motion a chain of events that allowed the Turkish leader to create a new presidential system of governance, granting him unprecedented powers. It accelerated a hollowing-out and politicisation of national institutions, thanks in part to a vast purge that has led to 95,000 people being jailed and at least 130,000 sacked or suspended. Hundreds of journalists and human-rights campaigners were also arrested. So were two co-leaders of the country’s main Kurdish opposition party as Erdogan teamed up with the rightwing Nationalist Movement party, which supports the death penalty and is hawkish on the Kurdish issue.
Today, the upper echelons of the Turkish state are stuffed with loyalists, many with close personal connections to the AKP. Internal critics have largely vanished, leaving the president surrounded by yes-men and oddballs. One of the president’s economic advisers, Yigit Bulut, is famed for saying that he believed unnamed enemies were seeking to kill the president using telekinesis. Another, Cemil Ertem, vowed in 2018 to do the “exact opposite” of advice from the IMF. “His advisers are idiots,” laments a government official. “We need Erdogan . . . But he should leave some of the technical decisions to people who know what they’re doing.”
The president himself is notorious for believing, contrary to mainstream economic thinking, that high interest rates cause inflation rather than acting as a brake on it, referring to them as “the mother and father of all evil”. He has long railed against what he calls the “interest-rate lobby”, a shadowy group of speculators that he believes are seeking to stifle Turkey’s growth prospects for their own financial gain.
It was against that backdrop that Albayrak, who married Erdogan’s daughter Esra in 2004, was placed in charge of the world’s 19th largest economy in 2018. He was then just 40. Turkish opposition parties mockingly referred to the president’s protégé as the damat — meaning son-in-law or bridegroom — and held him up as the ultimate example of AKP nepotism. Foreign investors complained that he was out of his depth. The wider public never warmed to him. Even within the ruling party, many bristled at the power and prominence that this man with family ties to the centre of Turkish politics had achieved.
Yet his father-in-law seemed to hold him in the greatest esteem. Erdogan liked that he was fluent in English and had earned an MBA from New York’s Pace University. Most importantly, he was a family member he could trust. The decision to grant such prominence to his son-in-law appears to have been at least partly driven by the question of his own future and legacy. The 66-year-old leader still has millions of admirers, who revere his tough-guy demeanour and his efforts to assert Turkey’s role on the world stage. In theory, he could serve as president until 2033 if he keeps finding a way to win elections. But support for his party has been gradually eroding since its electoral zenith in 2011.
Most analysts believe that Erdogan wants to continue for as long as possible, driven partly by a deep sense of ideological purpose but also a fear of losing power — and the prospect that he could face retribution after leaving office. However implausible it was that Albayrak, who lacks the strong charisma of his father-in-law, could successfully take over, that fear explains why many political observers entertained the idea that the president was grooming him as part of a handover plan. “The legitimacy of Erdogan and his regime has been weakening and [the question of succession] had become very salient,” says Sinem Adar, a researcher at the German Institute for International and Security Affairs in Berlin. “More and more people are talking about a post-Erdogan world.”
Albayrak — whose father, an Islamist writer and intellectual, had known Erdogan for decades — entered parliament in 2015 and joined the cabinet the same year. His first brief was energy, but from the outset he refused to allow himself to be constrained by his official portfolio. Albayrak came across as “very, very ambitious”, says a former official. The one-time business executive built up huge clout across government and beyond, from foreign policy to the judiciary to the media. “He’s like an octopus,” one government official complained last year. “His tentacles are everywhere.”
He also worked to appoint loyalists to key positions in the state and the AKP machine and clashed frequently with cabinet colleagues, including the country’s macho interior minister, Suleyman Soylu, who was seen as the finance minister’s main rival to one day take over the party.
Albayrak and his older brother, Serhat, were widely believed to be linked to a group of social-media attack dogs known as the Pelican group that launched co-ordinated assaults on opponents of Albayrak, the president and their allies. Aydin Unal, a former AKP member of parliament, has described it as an “insidious” parallel structure within the ruling party that “brands every friendly warning as treachery and obstructs any voice that is different”. Albayrak did not respond to questions on his alleged links to the group and other topics.
Lawyers acting for the minister, whose father spent nine months in the notorious Silivri Prison for his writing in the early 1980s, responded heavy-handedly to journalists who reported about allegations of corruption and tax avoidance against him and the company he used to head. These were denied by Albayrak.
Throughout his time in government, the young minister was dogged by accusations of arrogance and an unbridled sense of entitlement. “He’s a very difficult person,” says a powerful businessman who has a close relationship with the president — but never got on with his son-in-law. “He thinks he knows everything.”
Like so many before him, it was that hubris that was at the root of his downfall. “If he had stayed at the energy ministry, right now he would be a hero,” argues one government official, pointing to Turkey’s discovery this year of a multibillion-dollar gas reserve in the Black Sea that was a win from Albayrak’s stint as energy minister. “He would have been the guy who devised and implemented this policy of energy independence.”
But Albayrak wanted to run the country’s economy. In July 2018, after Erdogan took the helm of his new presidential system, he stunned the international finance community by granting his son-in-law his wish. He merged the treasury and finance ministries and put Albayrak in charge of the combined brief. The lira fell as much as 3.8 per cent on the news. One foreign investor who met Albayrak during the early weeks described the encounter as “the worst minister of finance meeting in my career”.
His two-year stint in the role was marred by crises and characterised by unconventional, even coercive methods of managing the economy.
After a dramatic depreciation in the lira in August 2018 caused soaring inflation, he announced a campaign asking retailers to hold down their prices. He interfered in the running of private banks, according to several former bankers, pressuring them to lend in order to support a drive for credit-fuelled economic growth and meddling in their hiring and firing. And, under his watch, authorities imposed curbs on trading the currency — driving vital foreign investors out of Turkish stocks and bonds as Albayrak declared that he didn’t want their “hot money”.
The most contentious policy of all was his approach to managing the lira. In 2019, the central bank embarked on a drive to cut interest rates. The bank was acting under orders from Albayrak and the president, who sacked its governor that July because he “wouldn’t follow instructions”. Experts warned that, if they went too far, it would put fresh pressure on the currency and trigger the need for rates to rise again. But instead of halting or reversing the rate cuts, Albayrak set out to defy the laws of economics. As the lira came under pressure, the central bank began burning through tens of billions of dollars of foreign currency reserves. “It was all Albayrak’s idea,” says a former official familiar with the inner workings of the scheme.
This September, the rating agency Moody’s sounded the alarm, warning that the country’s FX reserves were at a 20-year low and that its institutions seemed either “unwilling or unable” to take the steps needed to avert a full-blown crisis. Goldman Sachs estimates that, over the past two years, Turkey has spent $140bn on currency intervention. But the initiative ultimately failed. From August onwards, the lira tumbled its way through a succession of record lows. By early November it had lost 30 per cent of its value against the dollar since the start of the year, piling pressure on Turkish businesses that were saddled with foreign currency debt and fuelling rising inflation in a country heavily dependent on imported goods.
Yet even as economists, investors and figures within the AKP grew alarmed, Albayrak continued to insist that everything was fine. He argued that the cheaper lira, which lost 46 per cent of its value against the dollar during his 28 months as finance minister, would make the country more competitive and support a shift towards an export-focused economic model.
His critics countered that ordinary people were paying a heavy price, with a rise in unemployment and a decline in living standards. Gross domestic product per capita fell to $9,000 last year, down from $12,500 in 2013. Having built much of its early success on the back of rising economic prosperity, the AKP suffered the consequences of the decline. In local elections last year, it lost control of Ankara, the Turkish capital, and Istanbul, where Erdogan began his political career. A disastrous decision to rerun the Istanbul contest, which backfired when the opposition candidate won by a landslide, is blamed by many in the party on Albayrak.
In recent months, as the currency spiralled and Turkish citizens struggled with the economic fallout from the coronavirus pandemic, discontent within the AKP had been mounting. Yet still Erdogan did nothing. “I know many MPs who were very, very disturbed because of the economic situation,” says Davutoglu, the former prime minister who last year established his own party.
With hindsight, some in the corporate world believe that there were signs in recent weeks that all was not well between Albayrak and Erdogan. Speaking at the Istanbul headquarters of the media group run by his brother late last month, the finance minister told business executives about a series of planned projects that he said he was excited about, whether he was there to see them into fruition or not. Some of those present interpreted it as an allusion to the fleetingness of life by Albayrak, who friends say is deeply religious. But others thought he was hinting that he was on his way out.
Then, in the early hours of Saturday November 7, a notice in Turkey’s official gazette announced that the president, for the second time in just over a year, had sacked the central bank governor. He replaced him with Naci Agbal, a critic of Albayrak’s policies who party and government insiders claim had helped Erdogan to understand the true scale of the challenges facing the country. “Naci Agbal briefed him,” says one senior AKP official, that “the ship had run aground.”
According to their narrative, the president, who last year publicly attacked the Financial Times for revealing how the central bank was hiding the scale of its reserve losses, finally realised that the coffers were not just empty but, in net terms, negative — the bank owed more foreign currency than it possessed.
Albayrak appears to have been furious. The next day he posted a resignation announcement on Instagram that even his closest advisers had no idea was coming. He said that he was standing down for health reasons; the message gave only cursory mention of his father-in-law and pointedly said that he planned to spend more time with “my mother, my father, my wife and my children”. Many Turks viewed the statement as veiled criticism of Erdogan. It alluded in coded terms to internal conflict before signing off with a phrase that, loosely translated, means: “Good luck to us all.”
The message was followed by 27 hours of silence from the president and a surreal media blackout as state-owned and pro-government outlets chose to ignore the fact that one of the country’s most important officials had declared his intention to stand down. In the vacuum, with no one in charge of the country’s economy, the lira enjoyed its best day of trading in two years. Erdogan eventually announced that he had accepted Albayrak’s “request to be relieved of his duties”. Albayrak failed to turn up for the traditional handover ceremony where departing ministers wish their successors well.
Some are sceptical that the president could really have been unaware of the true state of the country’s foreign reserves. “Erdogan has a very good memory and he likes to micromanage,” says one defender of Albayrak. “He follows the euro and the dollar every day but not the central bank? That just doesn’t make sense to me.”
But several government and party insiders insist that the president was getting much of his information from his son-in-law, who lives in the same Istanbul compound and had unique access to him. Atilla Yesilada, a high-profile Turkish commentator, believes the finance minister had convinced the president that everything was under control. “It had been said to me that Albayrak actually had fenced Erdogan off and people could not get through to him,” Yesilada says. “If you control who people see, you control their information. I think Albayrak was pulling the wool over his eyes.”
Babacan, the former economy minister who recently quit the AKP to establish his own party, says that whether Erdogan was aware of the economic reality or not, either prospect is astonishing. “There are two scenarios here,” he said last week. “The first is that he really is not aware of how bad the situation is and is being presented with a completely different picture. If that’s the case, then we should be very worried. The second is that he knows what was going on but is giving a different story to the public. That is also a calamity.”
In the days since the implosion of Albayrak’s political career, some of his supporters have tried to keep alive the idea that he could reinvent himself. Others believe that a return is impossible. “By now, it’s become very clear to everyone that the Erdogan family isn’t going to be a big factor after Erdogan,” says Selim Koru, a non-resident political analyst at Tepav, a think-tank in Ankara.
It is possible that Erdogan has bought himself some more political room for manoeuvre by overhauling his economic management team and showing himself willing to sacrifice a family member. In a striking change of tone, the president last week vowed to work to win back the trust of investors and said that the country would “swallow a bitter pill” if necessary to set the economy back on track. He has appointed a market-friendly former bureaucrat to fill his son-in-law’s shoes. Investors are expecting the president to allow the central bank to raise interest rates at a critical meeting on Thursday.
While Koru argues that future elections are likely to be even less fair and less free than previous votes, he says that the economy still matters for a president who he believes is “not quite popular enough to win in a competitive political landscape”.
Others warn of the danger that, after a brief pivot, Erdogan will return to his default setting of putting pressure on the central bank to slash rates. “Rather than interpreting this as a shift towards central bank independence, I view it more like Erdogan giving his blessing for a rate hike in an attempt to contain the financial crisis,” says Selva Demiralp, director of the Koc University-Tusiad Economic Research Forum. “Once the exchange rate stabilises, he will most likely return to low-interest policies to stimulate growth.” That would risk propelling Turkey into yet another crisis.
While Erdogan also promised judicial reforms to improve human rights and the rule of law, it is unlikely that any meaningful change will be enacted by a man who needs to keep pressure on opposition parties and the media in order to retain his grip on power. The same applies to Turkey’s bellicose foreign policy, which he has used for domestic political purposes in recent years, although some diplomats are hopeful of at least a short-term softening in rhetoric following Joe Biden’s victory in US elections.
As the dust settles from Albayrak’s departure, Kerim Rota, a former banker who suspects that Albayrak blocked his appointment as chief executive of the private Odeabank in 2017, argues that the Turkish corporate and finance community should examine its own role in the country’s current predicament: “I personally think the banking system and businessmen have some responsibility for Turkey becoming such a family state,” he says. When Albayrak meddled in hiring and firing at private banks, “none of the bank owners or CEOs said anything”, adds Rota, who last year became a founding member of Davutoglu’s new political party. “They just said yes and fired those people.” Odeabank did not respond to a request for comment.
Opposition parties see the recent drama as a sign that the Erdogan regime is crumbling. Mustafa Yeneroglu, a former AKP MP who quit the party in 2019, wrote on Twitter last week that the “end of the road is in sight”.
Kemal Kilicdaroglu, the leader of Turkey’s largest opposition party, insists that the president will be defeated at the next election, currently scheduled for 2023, and will have no choice but to stand down. “For the first time in our history, we are going to bring down an authoritarian regime through democratic means,” he declared last month.
Others take a gloomier view, arguing that the departure of Albayrak puts the president in more of a quandary than ever. “He’s not going to be voted out,” says Sinan Ciddi, a political scientist based at Marine Corps University in the US. “There is no situation under which Erdogan will hold some kind of electoral process, lose and say, ‘Here are the keys to the country.’” With the Albayrak project now over, he adds, “Erdogan is probably in a bind in terms of who can be appointed in his stead . . . It’s not clear to me that there is a grand strategy in terms of how to transition power and to whom.”
Erdogan, who has survived countless crises over his 18 years in power, has put on a brave face in the aftermath of this month’s debacle. The episode is a reminder of the ruthless pragmatism of a man for whom holding on to power still seems more important than anything. But that pragmatism was only necessary because of the gamble he took in appointing Albayrak in the first place — one of several decisions in recent years, most notably the calamitous Istanbul rerun, that demonstrate that the savvy political operator is far from infallible.
Some AKP figures are sympathetic to the uniquely challenging aspects of a political crisis that was also a family one. “This is a very difficult situation for the president,” says the senior party official. “He [Albayrak] has your daughter. Your four grandchildren.” He praised the president for doing “the right thing” in the end and insisted that Turkey would come through this crisis, as it has others in the past. But he adds: “He should never have had a family member in that position in the first place.”
Laura Pitel is the FT’s Turkey correspondent
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South Korea looks to fintech as household debt balloons to $1.6tn
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After her family business of ferrying drunk people home was hit by closures of bars due to Covid-19 curfews and social distancing, Lee Young-mi* found herself juggling personal debts of about Won30m ($26,000).
The 56-year-old resident of Suncheon in South Korea was already struggling to pay off or refinance four credit cards, but now faces the prospect of those debts rapidly multiplying after her husband was diagnosed with cancer.
“We’ve had little income for more than a year as not many people are out drinking until late into the night,” said Lee. “Now my husband won’t be able to work at all for the next three months after his surgery.”
Lee’s story is playing out across Asia’s fourth-largest economy as self-employed workers, who make up nearly a third of the labour force, have seen their incomes reduced sharply due to coronavirus restrictions. Now, after struggling for years to keep a lid on household debts that hit a record Won1,765tn ($1.6tn) in March, Seoul is looking to fintech companies and peer-to-peer lenders for answers.
Among them is PeopleFund, which touts tech-based investment products backed by machine learning that allow borrowers to refinance their higher-interest loans from banks and credit card companies.
The company has loaned at least $1bn to more than 7,500 customers since it was established in 2015. Its products allow borrowers to switch their debts to fixed-rate, amortised loans at annual interest rates of about 11 per cent, a change from the riskier floating rate, interest-only loans common in South Korea.
PeopleFund has received about Won96.7bn in financing from brokerage CLSA, and along with Lendit and 8Percent is one of the first among the country’s 250 shadow banks to win a peer-to-peer lending licence.
“The country’s most serious household debt problem is with unsecured non-bank loans, whose pricing has been too high. We can offer more affordable loans to ordinary people unable to receive bank loans,” Joey Kim, chief executive of PeopleFund, told the Financial Times.
The proliferation of digital lenders and fintechs in South Korea, where higher-risk borrowers are often cut off from bank financing, has been encouraged by the country’s government.
“We hope that P2P lenders will help resolve the dichotomy in the credit market by increasing the access of low-income people to mid-interest loans,” said an official at the Financial Supervisory Service.
South Korea’s household debt situation has become more pressing since the onset of the pandemic, with increases in borrowing for mortgages, to cover stagnating wages and to invest in the booming stock market. South Korean households are among the world’s most heavily indebted, with the average debt equal to 171.5 per cent of annual income.
South Korea’s household debt-to-GDP ratio stood at 103.8 per cent at the end of last year, compared with an average 62.1 per cent of 43 countries surveyed by the Bank for International Settlements.
Much of the new debt has been risky. Unsecured household loans from non-bank financial institutions were Won116.9tn as of March, up 33 per cent from four years ago, according to the Bank of Korea, much of it high interest loans taken out by poorer borrowers.
Getting on top of the problem has taken on national importance. In a rare warning in June, the central bank said the combination of high asset prices and excessive borrowing risked triggering a sell-off in markets and a rapid debt deleveraging.
“If financial imbalances increase further, this could dent our mid-to-long-term economic growth prospects,” BoK governor Lee Ju-yeol said in July.
The country’s economic planners, however, are struggling to contain debt-fuelled asset bubbles without undermining South Korea’s fragile economic recovery.
The government has attempted to address the danger by tightening lending rules. Regulators in July lowered the country’s maximum legal interest rate that private lenders can charge their customers from 24 to 20 per cent.
Economists caution that rising debt levels increase South Korea’s vulnerability to an economic shock.
They also warn that the asset quality of financial institutions could be hit by a jump in distressed loans when the BoK rolls back monetary easing, expected in the fourth quarter.
“Monetary tightening is needed to curb asset bubbles but this will increase the household debt burden, holding back consumption further,” said Park Chong-hoon, head of research at Standard Chartered in Seoul. “The government is facing a dilemma.”
For Lee Young-mi, however, the 11 per cent rate offered by the PeopleFund is still too high. “I am not sure how to pay back the debt.”
*The name has been changed
European and Chinese stocks rise after calming words from Beijing
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European shares chased gains in China after calls from Beijing for greater co-operation with Washington helped sooth jitters over a regulatory crackdown in the world’s biggest emerging market.
Europe’s Stoxx 600 index rose 0.7 per cent on Monday to hit new all-time highs, while the UK’s FTSE 100 rose 1 per cent led by economically sensitive stocks including banks and energy groups. London-listed lender HSBC gained 1 per cent after it reported second-quarter figures that easily beat analysts’ expectations.
The gains came after the China Securities Regulatory Commission, Beijing’s market regulator, called on Sunday for closer co-operation with Washington, stressing the country’s efforts to improve transparency and predictability after a crackdown on tutoring groups obliterated the market value of the $100bn sector’s biggest companies.
Chinese listings in the US have become a geopolitical flashpoint as Beijing has sought to exert greater control over the country’s powerful tech sector. The US Securities and Exchange Commission said on Friday that Chinese groups that sought to sell shares in America would be subject to stricter disclosures.
Shares in China rebounded after their worst month in almost three years, with China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed blue-chips rose 2.6 per cent on Monday, while Hong Kong’s Hang Seng index added 1.1 per cent. The city’s Hang Seng Tech index, which tracks big internet groups including Tencent and Alibaba, reversed early losses to rise 1 per cent. Futures tracking Wall Street’s benchmark S&P 500 index climbed 0.6 per cent.
Last month, China’s cyber-security regulator announced plans to review all foreign listings by companies with data on more than 1m users after top leaders in Beijing called for an overhaul of how the country regulates initial public offerings in the US. The crackdown came just days after the $4.4bn listing of ride-hailing group Didi Chuxing.
The intensifying scrutiny of how Chinese groups access capital markets has pummelled stocks, delivering the worst month for China tech groups listed in the US since the global financial crisis. The Hang Seng Tech index fell 17 per cent last month.
“While we do not consider it prudent to completely avoid investments in China, further volatility can be expected until the first quarter of 2022, by which time we believe most regulatory changes may already be in place,” analysts at Credit Suisse wrote in a note on Monday.
Meanwhile, data released by China at the weekend showed that factory activity grew at the slowest pace in 15 months in July as demand contracted for the first time in more than a year.
Government bonds were steady with the yield on the benchmark German 10-year Bund, which moves inversely to its price, gaining 0.01 percentage points to minus 0.45. The equivalent US 10-year yield was steady at 1.234 per cent.
Bond yields have been falling in recent weeks, despite higher than expected inflation readings in the US and indications from the US federal Reserve last week that it was moving a step closer to the day when it would start tapering its $120bn in monthly asset purchases.
The euro rose 0.1 per cent against the dollar to $1.1885, while the pound gained 0.1 per cent to purchase $1.3924. Prices for global oil benchmark Brent crude fell 1 per cent to $74.66.
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Turkey battles to quell wildfires as residents and tourists flee
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Turkey has contained more than 100 wildfires after a series of blazes near its Mediterranean coastline killed six people and forced thousands of residents and foreign tourists to flee holiday resorts, the government said on Sunday.
Winds gusting at 50km per hour, low humidity and temperatures hovering near 40C have made controlling the fires difficult, Bekir Pakdemirli, the forestry minister, said on Twitter and in comments reported in state-run media.
The fires began on July 28, and the simultaneous start of so many conflagrations raised suspicions they may have been deliberately set, Pakdemirli said, although he did not offer evidence of arson.
About 100 Russian nationals were evacuated from the Bodrum peninsula in western Turkey on Saturday and moved to hotels elsewhere, the Russian consulate in the city of Antalya said in a statement, according Sputnik, a Russian state media outlet. Local tourists were also among the evacuees, with some forced to leave by sea as the blaze cut off other escape routes.
Flights from Russia, Turkey’s biggest source of tourists, only resumed in late June after Moscow suspended charter trips amid a record outbreak of Covid-19 cases in Turkey in the spring. Coronavirus-related travel restrictions to Turkey have hammered its tourism sector, which directly and indirectly accounts for about 13 per cent of gross domestic product.
The forestry ministry website showed at least 15 active fires on Sunday. Villagers and forestry workers were among the six people who died, according to Turkish media. Mehmet Oktay, mayor of the resort town of Marmaris, said one volunteer firefighter had died and another 100 people had been injured in a spate of fires that have scorched more than 10,000 hectares near the town.
A half-dozen fires continued to sear areas mostly inaccessible by road, and the number of blazes across Turkey meant not enough firefighting planes were available, he said. “It’s heartbreaking, and I am fighting back tears to concentrate on the emergency at hand. It will take more than a decade to restore this land,” he said.
Thousands of farm animals and untold numbers of wild animals also perished in the fires, which one meteorologist estimated reached 200C.
Wildfires are an annual occurrence in south-west Turkey’s pine forests, and one expert told CNN Turk television that 95 per cent are deliberately or accidentally sparked by people.
Yet the scale of the current conflagration is remarkable, and some are blaming climate change for the disaster. Turkey recorded its highest ever temperature in a south-eastern town last month, and much of the country has been gripped by drought this year, while deadly floods struck north-east Turkey last month.
Several other Mediterranean countries are battling blazes this summer, including Cyprus, Greece, Lebanon and Italy, and scientists have said the extreme weather events across the globe this summer may be the result of global warming.
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