Turkey struggles to prop up the lira, British regulators warn banks about the threat of Russian-backed cyberattacks, Fitch downgrades El Salvador's sovereign rating丨 Overseas is to participate today

21st Century Business Herald reporter Hu Tianjiao comprehensive report

1. Global financial markets

Turkey struggled to prop up the lira

Turkish Finance Minister Nureddin Nebati told investors during a visit to London that the country would step up next week to pass a plan to inject billions of dollars worth of gold "hidden under mattresses" into the banking system to entice depositors to reuse the lira. Nureddin Nebati, who made his first trip to the UK this week since his appointment late last year, said the government hoped 10 percent of the gold the Turks kept at home worth about $250 billion would be converted into lira in the scheme. Nebati said 30,000 gold stores will play a central role in the plan, which will build on a broader package of emergency measures unveiled in December to stem the free fall of the lira, which lost 44 percent of its value against the dollar in 2021. He added that the government has signed contracts with five gold refineries to convert jewelry handed over under the scheme into gold bars, which will help the country's central bank reserves.

The Bank of England's chief economist warned against "aggressive" rate hikes

Huw Pill, chief economist at the Bank of England, said on Wednesday that policymakers should raise interest rates gradually rather than take "aggressive" positive measures. He added that the year ahead will not be able to avoid painful income crunch. Huw Pill stuck to the tough message sent by Bank of England Governor Andrew Bailey last week. Bailey's warning that real wages need to fall this year in order to control inflation drew a backlash from the government, business groups and unions. Huw Pill said at an online conference that wage growth of nearly 5 per cent this year, according to the Bank of England's latest forecast, would be "stronger than the level consistent with the medium-term inflation target". If inflation slows from 2023, inflation could subside and the UK will not fall into recession.

Australia's largest pension fund will inject £23 billion into the UK and Europe

Australia's largest pension fund, Australian Super, plans to invest £23 billion in the UK and Europe over the next five years, along with other large global funds, to further tap into the private market in search of returns. AustralianSuper manages $244 billion (£128bn) of assets on behalf of its 2.5 million members and expects the company's assets in the UK to more than double from the current £7 billion to more than £15 billion by 2026. Damian Moloney, head of international investment at Australian Super, said the company plans to increase its investment in Europe from £12.6 billion to £28 billion over the same period. The planned purchase scheme will stabilize the share of UK and European assets in the fund's total assets. But its global assets are expected to swell to more than $570 billion by 2026. The fund's rapid growth has been driven by unique factors in the Australian market. In Australia, employers are paying more and more mandatory pensions (or pensions) as a result of mergers between savings plan providers, and the number of members is increasing.

2. International Regulatory Developments

The SEC seeks to strengthen disclosure rules for private equity and hedge funds

Wall Street's top regulator is seeking to force hedge funds and private equity groups to disclose quarterly results, as well as fees charged to investors. The U.S. Securities and Exchange Commission (SEC) voted Wednesday to pass a series of proposed rules that require annual audits of private funds, prohibit acquirers from charging certain fees and prohibit preferential terms from being offered to certain investors. The regulator has also put forward a proposal that would speed up the finalization of stock and bond trading. The SEC said it is stepping up regulation of private fund advisors at a time when hedge funds, private equity groups and venture capital funds have amassed more than $18 trillion in total assets to protect investors. Right now, with the outlook for public market returns bleak, large investors such as pension funds and endowments are racing to invest in alternative assets, including real estate and infrastructure.

3. Global Commodities

Crude oil inventories fell and oil prices rose

Oil prices edged higher in Asia after an unexpected decline in U.S. crude inventories tightened the market further, with signs of strong demand from the world's largest economy. New York futures rose nearly $90 a barrel on Thursday, up 0.3 percent the previous session. U.S. crude inventories fell by about 4.8 million barrels last week, while surveys show U.S. crude inventories are expected to increase, U.S. government data shows. Investors are also closely watching progress in resuming the nuclear deal with Iran. White House press secretary Jen Psaki said Wednesday that a deal to address the concerns of all parties was in sight.

4. Green finance is related to ESG

The New York Pension Fund plans to limit investment in oil and gas companies

New York State's $280 billion pension fund, the New York State Mutual Pension Fund, will divest more than $238 million of stocks and bonds from oil and gas companies, including Pioneer Natural Resources Co., Hess Corp. and Diamondback Energy Inc. According to a statement from the company's audit department, an internal review previously determined that the two companies had failed to come up with a viable net zero transition plan. The New York State Mutual Pension Fund holds stakes in 42 oil and gas companies. Auditor General Thomas P. DiNapoli said in a statement: "As market forces and new policies drive the energy transition, we must combine our investments with a profitable and dynamic future. The shale oil and gas industry will face many obstacles in the future that pose risks to its financial performance. ”

5. Fintech and virtual currency, etc

Fitch: Bitcoin risk has plunged El Salvador into a deeper spiral

Fitch Ratings on Wednesday downgraded El Salvador further to junk, citing the risks of the country's adoption of bitcoin as fiat currency last year. Fitch also said that "increased reliance on short-term debt has led to increased financing risks" ahead of the maturity of its $800 million global bond due in January next year, which also affected its decision to downgrade El Salvador's rating from B-to CCC. El Salvadoran President Nayib Bukele's unorthodox policies — from deposing Supreme Court justices to trading bitcoin on mobile phones with public money — have increased the risk to the United States in the eyes of investors and rating agencies. "The weakening of institutions and the concentration of presidential power have increased policy unpredictability, while the adoption of Bitcoin as fiat currency has increased uncertainty about the possibility of the IMF's plans to launch financing in 2022-2023," Fitch said in a statement. Moody's Investors Service downgraded the country last year and expressed concern about bitcoin's use.

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