Global Pulse

分类： business

  • East Africa wants to curb imports of used clothes. But it’s not easy

    East Africa wants to curb imports of used clothes. But it’s not easy

    Even torrential downpours cannot dampen the energy of Nairobi’s Gikomba Market, East Africa’s largest open-air second-hand clothing hub. When a BBC reporting team visited, flooded walkways did not stop throngs of shoppers, many donning rubber boots, from squeezing through packed aisles in search of affordable, quality second-hand garments known locally as mitumba. This bustling scene sits at the heart of a decade-long regional debate: how can East Africa grow a vibrant domestic fashion industry when its markets are flooded with cheap, imported cast-offs from the U.S., Europe and China?

    Local clothing designers across the region say they stand no chance against the price point of mitumba. “We’re competing with second-hand clothing, but we can’t compete on price,” explains Zia Bett, founder of Kenyan womenswear label Zia Africa, who supports a full ban on mitumba imports. Elizabeth Paul, owner of Kuya Creations in Tanzania’s Dar es Salaam, echoes this frustration: a single new dress in her shop costs a minimum of 50,000 Tanzanian shillings (£14.50), a price that can buy shoppers 10 pre-owned garments at local mitumba markets.

    The debate over mitumba is not new. A decade ago, the East African Community (EAC), the regional bloc counting Kenya, Uganda, Tanzania and Rwanda among its members, moved to implement a region-wide ban on second-hand clothing imports to protect local manufacturing. The plan collapsed after heavy diplomatic pressure from the U.S., a top mitumba exporter, which threatened to revoke EAC nations’ access to the African Growth and Opportunity Act (AGOA) — a trade deal that allows duty-free access to the U.S. market for thousands of African goods. Now, the conversation has reignited, with member states taking divergent approaches to regulation.

    Uganda has led the charge with a new 30% additional levy on mitumba imports, layered on top of existing 35% import duty and 18% VAT. Officials say the tax serves two goals: cutting environmental damage from textile waste and supporting domestic garment production. Uganda’s president has previously drawn controversy for describing second-hand clothing as cast-offs from deceased white people, framing the trade as incompatible with national economic development. The new tax has faced fierce pushback from mitumba traders, who note the industry supports millions of livelihoods across the region. “This has to be a free economy,” argues Ugandan mitumba trader Aaron Sekky. “The second-hand trade supports so many people.” His point is widely shared by proponents: the mitumba supply chain extends far beyond street retailers, supporting importers, wholesalers, tailors who repair damaged garments, and food vendors at markets. Industry research from the Mitumba Consortium Association of Kenya (MCAK) estimates up to 4.9 million East Africans rely on the trade for income.

    Neighboring Kenya recently saw a proposed overhaul of mitumba taxation dropped quickly after widespread public backlash over fears it would push up prices for consumers. Kenya already charges a 30% customs duty on used clothing imports, 5 percentage points higher than the tariff on new clothing imports. Current trade data confirms Kenya is Africa’s largest mitumba importer: the country brought in nearly 180,000 tonnes of second-hand clothing in 2022, a 76% jump from 2013 import volumes. A 2024 government-backed study in Uganda found mitumba is the most popular category of clothing in the country, outstripping both imported new clothing and locally manufactured garments.

    Critics of the unregulated mitumba trade argue the employment argument masks deeper economic downsides. “Retail is the most limited form of job creation you can have in an economic sector, versus production, marketing and distribution,” explains Dr Andrew Brooks, a King’s College London academic and author of *Clothing Poverty: The Hidden World of Fast Fashion and Second-hand Clothes*. “If you’re just importing things and selling things, you’re doing very, very little to contribute to your nation’s economy.” Kenya Fashion Council board member Lisa Kibutu adds that most mitumba-related jobs are low-income, hand-to-mouth roles that offer little room for upward social mobility. Still, Kibutu acknowledges mitumba fills a critical gap for low-income Kenyans: “When I left Kenya in the 80s, you would see poor people without clothing. Right now even the poorest person has decent clothing.”

    Affordability is no longer mitumba’s only draw, however. Today, shoppers across income levels seek out second-hand garments for their quality and unique style. “Most of the clothes have good quality… they last long,” says Najma Issa, a shopper at Dar es Salaam’s Ilala mitumba market. Twenty-two-year-old Juma Awadh agrees, noting he buys mitumba “because of quality and they look unique.” Even with Tanzania’s 35% import tax on used clothing, Ilala Market remains constantly crowded with shoppers.

    Rwanda is the only EAC member that held firm to its 2015 commitment to restrict mitumba, after other nations backed down to U.S. pressure. In 2016, Rwanda raised mitumba import taxes from $0.20 to $2.50 per kilogram, prompting the U.S. to impose a 30% retaliatory tariff on Rwandan clothing exports. Rwandan authorities say the policy has delivered clear results: before the tax hike, mitumba made up 26% to 32% of all garment and textile imports, a figure that dropped to just 2% to 7% in the two years after the change. Local garment exports have also grown, indicating the domestic industry is expanding, officials say. Even so, smuggling of mitumba from neighboring countries remains widespread, with police regularly seizing illegal bales of second-hand clothing. Rwanda also hit an unexpected hurdle: with mitumba supply reduced, many consumers shifted to buying cheap new fast fashion imports from Asia, rather than purchasing locally made garments.

    Environmental concerns have added new urgency to the mitumba debate. Environmental activists note that more than one in three second-hand garments shipped to East Africa are too low-quality to be resold, and end up in local landfills. A 2023 estimate from the non-profit Changing Markets Foundation confirmed this trend for Kenyan imports. “There is no infrastructure to dispose of these massive amounts of textile waste, and official dump sites have been overflowing for years,” Greenpeace says. MCAK chairperson Teresia Wairimu Njenga pushes back on this framing, arguing mitumba is actually more environmentally friendly than mass-producing new clothing: “Can you imagine what would happen to Kenya if we are manufacturing 198,000 tonnes [of new clothes] per year?”

    Global regulation could soon reshape the mitumba trade: signatories to the Basel Convention, the global treaty governing waste, are currently debating whether to reclassify used garments — most of which now contain plastic-based synthetic fibers — as controlled waste, which would lead to tighter restrictions and higher import costs globally.

    Many industry stakeholders across East Africa say a full ban on mitumba is impractical right now, given the gaps in local manufacturing capacity. Ugandan designer Joel Okalany, whose brand Ekikumba Fusion upcycles mitumba into new statement pieces, says the region’s garment sector is still underdeveloped: “The reality is, we are not yet ready for our own manufacturing to take off. In farming, the person who uses a tractor is more efficient than the person who uses the horse. In the tailoring industry, we are still at the level where we are using the horse.” Even Rwanda’s government acknowledged this reality in a 2022 report, saying it would delay implementing a full mitumba ban because of “current domestic gaps in the production of textiles and apparels.”

    A shared frustration across both mitumba traders and local designers is the flood of cheap new clothing from China and Turkey, which undercuts both sectors. Designers like Zia Bett say cheap counterfeit garments copy high-end designs and sell for a fraction of the price of authentic local pieces. Still, Bett remains optimistic about the future of East African fashion, arguing the region should focus on building premium, desirable local brands rather than just competing on price: “We need to focus on storytelling and content and quality. I think what the question should be now is: ‘How do we build brands that people choose – and not just afford?’”

    For Njenga and other mitumba proponents, the solution is not a ban, but coexistence. “We should allow them to coexist,” Njenga says. “Let’s not kill mitumba – give the consumer power of choice.”

  • Job-creating businesses punished by CGT ‘productivity tax’, Professor Richard Holden says

    Job-creating businesses punished by CGT ‘productivity tax’, Professor Richard Holden says

    Australia’s upcoming changes to the capital gains tax (CGT) regime will disproportionately penalize high-growth, job-creating small businesses while rewarding stagnant, low-productivity firms, a leading Australian economist has warned. Richard Holden, a respected professor of economics at the University of New South Wales (UNSW), has slammed the reforms as a “productivity tax” implemented at the worst possible time, as the nation grapples with a prolonged national productivity crisis. “This is the worst possible plan for a country desperate for more jobs and faster economic growth,” Holden said in his analysis, released publicly on Sunday. “It’s a productivity tax dropped right in the middle of a productivity crisis. The perverse logic of this policy is that it punishes high-productivity businesses for succeeding, scaling up, and creating new work for Australians.”

    To illustrate the inequity of the new framework, Holden modeled the tax outcome for two hypothetical small cleaning businesses launched by a husband-and-wife pair, each started with the couple’s combined $450,000 life savings, and both sold after five years of operation. The first business follows a low-growth trajectory, expanding just 3% annually and adding no new employees beyond the four founding staff over its five years. When sold, the new CGT regime imposes an effective tax rate of 26.6% on the capital gain from the sale. The second business, by contrast, grows 15% each year, scales to six employees, and delivers far stronger output and profit. When sold at the same four-times-fifth-year-profit multiple as the slower-growing business, the effective CGT rate jumps to 41.2% — more than 55% higher than the tax paid by the low-growth enterprise.

    The reforms, passed as part of the federal government’s May 12 budget, will ax the 50% CGT discount introduced in 1999, replacing it with an inflation indexation model applied to all asset classes starting July 1, 2027. The change will apply to investment properties, shares, and privately held small businesses alike. Originally, the Albanese government planned to limit CGT reform solely to residential housing to address a well-documented generational divide in Australian home ownership, a gap that has been confirmed by multiple independent inquiries including a March Senate inquiry report. But just four weeks before budget day, the Department of the Treasury advised the government to extend the changes to all asset classes, a last-minute shift that has triggered sharp criticism from Holden.

    While the CGT changes are the most controversial element of the government’s broader “productivity package”, the budget included a suite of pro-business measures alongside the tax overhaul. Officials made the $20,000 small business instant asset write-off permanent, cut redundant data requests from financial regulators, streamlined national retail tenancy rules, and eliminated Australian Standards access fees for construction, occupational health and safety, and product safety businesses, a change expected to save eligible firms up to $1,600 annually. The budget also expanded tax incentives for venture capital investment and introduced a new loss refundability provision for businesses amending prior year tax returns. In total, the government projects the full productivity package will cut business costs by $10.2 billion per year across the country.

    Many independent analysts have acknowledged the positive elements of the broader package, even as they push back on the scale and impact of the CGT changes. Analysts from the Commonwealth Bank of Australia noted in their post-budget assessment that the red tape cutting and pro-productivity small business measures are welcome changes. Still, they warned that the full suite of reforms is not large enough to materially lift Australia’s long-term economic growth ceiling or resolve the capacity constraints that are currently contributing to persistent domestic inflation.

    Holden called the skewed incentives of the new CGT regime a “profound oversight” that runs directly counter to the government’s stated goal of boosting national productivity, which has averaged just 0.8% annual growth across the last two decades. “Two identical businesses, delivering the exact same service — one highly productive, the other unproductive — will now face vastly different effective capital gains tax rates,” he explained. “Both took a risk, built a business, employed people, and paid taxes, and both sold for the same multiple of annual profit. The only difference is that one business was more productive, and in return, its owners get punished with a tax rate 55% higher than their less productive competitors. Put simply, this new system punishes the businesses most likely to create jobs and grow the economy, and rewards those that are more likely to cut positions and stagnate.”

    Treasurer Jim Chalmers has defended the full package, arguing that the reforms deliver progress on 13 of the 17 priority productivity reform areas identified by the independent Productivity Commission. Making the instant asset write-off permanent will save small businesses 376,000 hours of unnecessary tax compliance work annually, Chalmers said, while cutting duplicative regulatory data requests will save businesses a combined $181 million per year.

  • Trump wants new Fed chair to be ‘totally independent’

    Trump wants new Fed chair to be ‘totally independent’

    At a historic White House swearing-in ceremony held Friday, former President Donald Trump publicly called on newly inaugurated Federal Reserve Chairman Kevin Warsh to maintain full institutional independence from political pressure, a remark that comes amid long-simmering tensions between the Trump administration and the central bank over monetary policy.

    This event marked the first time a Fed chair has taken the oath of office at the White House since Alan Greenspan’s 1987 swearing-in, a choice that underscores the high stakes the Trump administration places on Warsh’s appointment. The new chairman replaces Jerome Powell, with whom Trump repeatedly clashed publicly over the course of his previous tenure. For months leading up to the nomination, Trump openly pressured Powell and the Fed board to cut interest rates, arguing that looser monetary policy would unlock stronger economic growth. Trump even went as far as to tie support for immediate rate reductions to eligibility for the top Fed job.

    Despite that pressure, the Federal Reserve has stood firm against the administration’s demands, holding interest rates steady between 3.5% and 3.75% in April as policymakers assess the inflationary fallout of the ongoing US-Israel conflict and escalating tensions in Iran. Current economic projections from most analysts indicate rates will remain at this level through the remainder of 2026, with a smaller share of economists even predicting a possible rate hike to combat persistent inflation. Higher interest rates work to cool overheated inflation by raising borrowing costs for households and businesses, which in turn slows excessive consumer spending.

    During Friday’s ceremony, Trump pushed back against widespread criticism of his pick, telling the audience that “no one in America is better prepared” than Warsh to steer the nation’s central bank. “I really mean this, I want Kevin to totally independent. Don’t look at me, don’t look at anybody, just do your own thing and do a great job, okay,” Trump stated. He added that he expects Warsh to guide the U.S. economy into a new period of sustained expansion, arguing that the Fed “lost its way” under Powell’s leadership. Trump specifically criticized the previous Fed leadership for devoting resources to issues outside of its core statutory mandates of stable prices, controlled inflation, and maximum employment, naming climate change and diversity, equity, and inclusion (DEI) initiatives as misplaced policy priorities.

    Critics of the appointment, however, have raised alarms that Warsh will act as a political proxy for the Trump administration. Senior Democratic Senator Elizabeth Warren was among the most prominent voices of opposition, warning that the former Wall Street banker would be nothing more than a “sock puppet” for the president. The combination of political skepticism and ongoing economic uncertainty leaves Warsh facing an extremely delicate balancing act as he takes office: he must navigate a deeply fractured U.S. economic landscape while proving to skeptical lawmakers and the public that he can keep the Fed free from White House political interference.

    For his part, Warsh struck an optimistic tone in his inaugural remarks on Friday, committing to lead a “reform-oriented” Federal Reserve. He told Trump he believes his tenure can deliver “unmatched prosperity that will raise living standards for Americans from all walks of life.”

  • Chinese fast-fashion juggernaut Shein to buy eco-friendly Everlane in an unlikely fit

    Chinese fast-fashion juggernaut Shein to buy eco-friendly Everlane in an unlikely fit

    In a surprising move that has sent ripples through the global fashion industry, ethical sustainable apparel retailer Everlane has been acquired by Chinese fast-fashion conglomerate Shein, according to internal confirmation obtained by the Associated Press. The deal unites two brands with seemingly opposing business philosophies, bringing a company built on transparent ethical production under the umbrella of the world’s leading fast-fashion empire.

    The Associated Press obtained a Friday internal memo to Everlane staff from chief executive officer Alfred Chang, which formally confirmed the acquisition agreement. Neither party has publicly disclosed the financial terms of the deal: Everlane has not released a purchase price, and Shein has declined to issue any official comment on the transaction beyond internal confirmations.

    Founded in 2011 by entrepreneurs Michael Preysman and Jesse Farmer, Everlane carved out a unique niche in the fashion market by positioning itself as a deliberate alternative to the exploitative fast-fashion model. Its core mission centered on delivering moderately priced apparel made from ethically sourced materials with lower environmental impact. The brand built a loyal millennial customer base by publishing regular third-party audits of factory working conditions, worker wage levels and its carbon footprint, pioneering the radical transparency trend that many sustainable brands now follow. What began as an exclusively online retailer expanded to physical retail in 2017, opening its first brick-and-mortar location to bring its brand mission to life for in-person shoppers.

    But Everlane’s journey has been far from smooth in recent years. Multiple media investigations have exposed deep internal controversies surrounding the company’s treatment of its own corporate and retail employees, contradicting its public image of ethical leadership. Private equity firm L Catterton first began acquiring large stakes in the company in 2020, eventually taking a majority ownership position. The firm also holds major shares in other well-known consumer brands including Boll & Branch, Etro and Birkenstock. Co-founder Preysman stepped down permanently from his leadership role at the company in 2022, and Chang took over as the new chief executive officer earlier this year in 2024.

    In his memo to employees, Chang framed the acquisition as a lifeline for the struggling brand amid a shifting retail environment. “Like many brands, we’ve faced increasing pressure in a rapidly changing retail landscape,” Chang wrote. “This partnership allows us to remain independent, and gives us the stability and resources to make a larger impact, without compromising on the quality and standards that make Everlane, Everlane.”

    Chang emphasized that the deal will unlock new capital to invest in product development, sustainable innovation and workforce support. He confirmed that Everlane will retain its independent brand identity, remain committed to its founding sustainability pledges, and keep its entire existing leadership team in place, with Chang continuing to serve as CEO.

    Industry analysts note that the acquisition comes at a critical moment for Everlane, which has been grappling with severe financial headwinds. Neil Saunders, managing director of GlobalData Retail, explained that the retailer has faced sliding sales and growing debt in recent years, leaving it in need of new capital infusion to stay operational. “The company needs new ownership to survive and Shein can provide that financial stability,” Saunders said.

    For Shein, the acquisition offers a strategic opportunity to diversify its business model beyond its core fast-fashion offerings, as growth in the ultra-low-cost apparel segment slows and regulatory headwinds mount. Everlane’s established reputation in the sustainable fashion space gives Shein an instant foothold in the fast-growing ethical apparel market, a segment that has attracted increasing consumer demand in recent years. The move also comes as longstanding trade issues have disrupted Shein’s core import model: tariffs and trade restrictions implemented during the Trump administration have created ongoing cost pressures for the cheap imported apparel that forms the backbone of Shein’s business.

    Despite the strategic benefits for both parties, Saunders described the pairing of Everlane and Shein as an unusual match, given their clashing brand identities. He added that Shein is not expected to completely overhaul Everlane’s existing supply chain and operations, but the association with a fast-fashion giant could alienate the brand’s core customer base, who chose Everlane specifically for its rejection of fast-fashion practices.

    Saunders summed up the long-term outlook of the deal: “Ultimately, the deal likely saves Everlane. But that salvation comes at a price.”

  • Oil and gas prices to remain high in Europe at least until the end of 2027, officials say

    Oil and gas prices to remain high in Europe at least until the end of 2027, officials say

    NICOSIA, Cyprus — Top European Union economic policymakers issued a sober updated forecast Friday, warning that regional energy costs are set to stay above pre-Middle East conflict levels at least through the end of 2027, dragging broader consumer prices upward across the bloc’s economy. The updated projections mark a sharp downward revision from earlier growth estimates and a notable upward shift for inflation forecasts, as the ripple effects of geopolitical instability continue to reshape Europe’s economic outlook.

    EU Economy Commissioner Valdis Dombrovskis told reporters following a gathering of eurozone finance ministers, collectively called the Eurogroup, that surging energy prices are the single biggest driver of the bloc’s revised inflation outlook. The commission now projects annual eurozone inflation will hit 3.1% this year and cool only to 2.4% in 2027, a marked jump from the earlier 2025 forecast of 1.9%. Dombrovskis noted that the inflationary pressure from energy markets is not contained to the energy sector alone, saying that “this energy inflation will gradually also trickle down to different sectors of the economy.”

    European Central Bank President Christine Lagarde echoed that long-term caution, noting that even an immediate end to the ongoing Middle East conflict would not reverse the upward pressure on prices immediately. Lagarde explained that “lagging effects” from the existing energy price shock would keep consumer and producer costs elevated for years. “And it’s probably a fact that price levels will be higher at the end of this crisis, when we see the end of the crisis,” she added. The ECB chief reaffirmed the central bank’s commitment to hitting its long-term 2% inflation target, saying the institution would take “all the necessary measures” to maintain price stability. She also noted that the bloc holds substantial strategic petroleum reserves to buffer against unexpected supply disruptions.

    For the EU, a full resolution to the current energy market uncertainty hinges on one key geographic chokepoint: the Strait of Hormuz. Eurogroup President Kyriakos Pierrakakis said a lasting end to the crisis would require a full return to unimpeded, toll-free navigation through the strait, which carries roughly one-fifth of the world’s total annual oil and gas supplies.

    On the growth front, Pierrakakis said the bloc is still set to avoid a recession despite the downward revision to output projections. The eurozone is now expected to post 0.9% economic growth this year and 1.2% growth in 2027, numbers that are lower than previous forecasts “but clearly far from a recession scenario,” he emphasized.

    While many market analysts have raised interest rate hike expectations following the higher inflation projections, Lagarde declined to tip the central bank’s hand on future monetary policy moves. She stuck to the ECB’s long-stated guidance, saying “We will continue to follow a data-dependent and meeting-by-meeting approach in order to determine the most appropriate monetary policy stance in order to deliver on our 2% medium-term target.”

  • Why thousands of stock trades tied to Trump are raising eyebrows

    Why thousands of stock trades tied to Trump are raising eyebrows

    A growing wave of scrutiny has descended on thousands of stock market transactions tied to Donald Trump, prompting questions about financial disclosure compliance and potential conflicts of interest that have captured the attention of political observers and financial regulators alike. The controversy, first explored in depth by BBC business correspondent Michelle Fleury, centers on the public disclosures of trading activity submitted by the former president, which have left analysts and ethics watchdogs raising red flags over unusual patterns and potential gaps in transparency. For years, the financial dealings of sitting and former U.S. presidents have been a flashpoint for public debate over ethical governance, with critics arguing that any failure to fully disclose market activities opens the door to accusations of improper influence or use of non-public information for personal financial gain. What makes this current development unusual is the sheer volume of trades that have come under review, far outpacing the typical level of financial activity reported by past presidents and leading ethicists to question how Trump’s business interests intersect with his political position. As the scrutiny intensifies, Washington watchdogs are calling for a full review of the transactions to determine whether any violations of federal ethics rules or disclosure requirements have occurred, while legal analysts note that the controversy adds another layer of complexity to the already fraught political and legal landscape surrounding the former president. Financial markets experts also point out that even if no rules were broken, the perception of improper activity tied to a major political figure can erode public trust in both the political system and the fairness of the stock market, highlighting the need for strict transparency standards for senior government officials.

  • ‘Disappointing’: Rex Airlines axes flights in Tasmania and Victoria as fuel costs soar

    ‘Disappointing’: Rex Airlines axes flights in Tasmania and Victoria as fuel costs soar

    Australia’s largest independent regional airline, Rex Airlines, has delivered a fresh blow to domestic regional connectivity, announcing it will eliminate and scale back several cross-state routes between Victoria and Tasmania starting later this month, citing runaway fuel costs as the primary driver of the decision.

    In a public statement released Friday, the carrier confirmed two routes will cease operations entirely from June 20: Melbourne to Devonport, and King Island to Burnie. Starting two days later on June 22, the airline will also cut weekly service frequency on three additional regional routes: Melbourne to Mildura, Melbourne to Burnie, and Melbourne to King Island.

    A spokesperson for Rex explained that the unpredictable volatility of the current operating environment, paired with persistently rising fuel expenses, left the airline with no other option to maintain operational sustainability. The company moved quickly to reassure impacted passengers that all ticketholders for canceled services will be fully supported, with full refunds or free rebooking onto alternative Rex services available with no hidden fees.

    Federal Infrastructure and Transport Minister Kerry Vincent acknowledged that the exit from the Devonport route is disappointing, but moved quickly to ease public concern, noting that competitor Qantas already maintains multiple daily services on the route that will continue to meet traveler demand. Vincent added that route adjustments have become increasingly common across the entire Australian aviation sector, especially for smaller regional services that are far more exposed to sudden cost swings than high-traffic trunk routes between major cities.

    “We understand how critical these air links are for local residents, small businesses, and the tourism economy that supports many of these regional communities,” Vincent said. “Any break in air connectivity hits regional areas disproportionately hard, and we recognize the anxiety and disruption this decision will cause for people who rely on Rex’s services.”

    Nationals Party MP Anne Webster, who represents the Mildura region, echoed that disappointment in comments to the Australian Broadcasting Corporation, noting that even a reduction in service frequency at Mildura Airport—Victoria’s largest regional air facility—creates significant inconvenience for local residents. Mildura is the most geographically isolated population center in Victoria, making reliable air service a critical lifeline for the region’s 50,000-plus residents and the broader Sunraysia agricultural district.

    Webster noted that Qantas and Rex currently operate competing schedules out of Mildura, and she called on both carriers to adjust their timetables to fill the gap left by Rex’s cuts, in order to preserve travel choice for local people.

    The cuts mark the latest round of route restructuring for Australian regional carriers, which have struggled to recover from pandemic-era travel shutdowns while absorbing sharp increases in jet fuel and labor costs over the past two years. Industry analysts note that small regional routes, which often operate with lower passenger volumes and smaller aircraft, are the first to be cut when input costs rise, as carriers are unable to pass full price increases onto consumers without driving away demand.

  • ASX posts second weekly gain in past six weeks as miners, Guzman Y Gomez lift sharemarket while telcos and utilities fall

    ASX posts second weekly gain in past six weeks as miners, Guzman Y Gomez lift sharemarket while telcos and utilities fall

    After navigating a period of volatile market conditions, Australia’s domestic sharemarket has closed out the trading week with a modest but stabilizing gain, lifted by strong performances in mining and materials stocks even as telecommunications, utilities and real estate sectors dragged on overall growth.

    The benchmark S&P/ASX 200 index climbed 0.41% on Friday alone, settling at 8,657 points for a 35.3-point daily gain. This uptick pushed the index to a 0.3% weekly increase, marking the second weekly gain the benchmark has recorded over the past six weeks. The broader All Ordinaries index matched the ASX 200’s 0.41% daily rise, while the Small Ordinaries index outperformed broader markets with a 1.1% gain by market close.

    For the full week, consumer stocks and financial services emerged as the top-performing segments. This strength was fueled by recent increases in national unemployment, which have softened market expectations that the Reserve Bank of Australia will implement additional interest rate hikes in the coming months.

    Friday’s trading session saw dramatic gains across uranium equities, with Paladin Energy rising 5.9%, Silex Systems jumping 6%, and Bannerman Energy surging 6.7%. Broader materials sector stocks also rallied, following a 9% sector-wide pullback that ran from May 12 to Wednesday’s market low, creating favorable entry points for investors. Rising global copper prices lifted mining stocks: Sandfire Resources gained 3.5% and Capstone Copper added 3.1%, after investment bank UBS upgraded its bullish outlook for copper, raising its three-year price forecasts by 13%, 4% and 3% respectively. Tight global supply, growing long-term demand from electric vehicle production, and power requirements for AI data centers are the key forces driving upward pressure on copper prices, UBS noted.

    On the downside, the telecommunications sector posted steep losses on Friday. Telecom giant Telstra dropped 1.5%, property portal REA Group fell 4.1%, and employment platform Seek declined 5.8%. The sector’s most dramatic story came from Tuas, which saw a rollercoaster week: the firm plummeted 62% on Monday after revelations it was under investigation for a subsidiary’s alleged illegal use of unlicensed radio frequencies in Singapore, and the Singaporean government blocked a planned regional acquisition. By Friday, Tuas confirmed that the acquisition conditions had not been met and all parties had mutually walked away from the deal. The stock clawed back small losses in afternoon trading to close unchanged at $2.31 for the day. (NewsCorp, the parent company of newswire service that published this report, is the majority owner of REA Group.)

    Utilities also weighed heavily on Friday’s trading: Origin Energy fell 1.8% and Mercury NZ dropped 2.8%. Financials delivered a mixed performance: Insurance Australia Group declined 3.4% after receiving a regulatory warning tied to the collapse of financier Greensill Capital, while QBE Insurance fell 1.3%. All of Australia’s big four retail banks posted solid gains between 0.5% and 0.9% for the day.

    One of the session’s most notable single-stock moves came from Mexican fast-food chain Guzman Y Gomez, whose shares surged as much as 20.6% in early trading after the company announced it would immediately close all of its underperforming United States store locations. The stock closed the day up 9.6% following the announcement.

    Josh Gilbert, market analyst at retail trading platform eToro, explained that Guzman Y Gomez had long been one of the most shorted stocks on the ASX, as investors lost confidence in the company’s US expansion strategy long before Friday’s announcement. “What markets don’t forgive is open-ended losses with no end in sight, and that’s what the company’s US operations had become,” Gilbert noted.

    Looking ahead to next week, all market eyes will turn to Australia’s monthly inflation report, due for release on Wednesday. Economists forecast that headline inflation will ease to 4.4%, though the closely watched trimmed mean measure of core inflation is expected to tick slightly higher from 3.3% to 3.4%.

  • Indonesia tightens control over key commodities in major trade takeover, influencing global exports

    Indonesia tightens control over key commodities in major trade takeover, influencing global exports

    In an unexpected policy shift that has sent ripples through global resource markets, Indonesian President Prabowo Subianto announced Wednesday a sweeping overhaul of the nation’s trade rules for its most critical natural resources, granting a newly created state-owned enterprise full control over all exports of coal, palm oil, and iron alloys by September. The sudden move has drawn comparisons from analysts to a hostile government takeover of core industries in one of the world’s most resource-rich nations, with far-reaching consequences for global supply chains and major economic powers alike.

    Prabowo framed the reform as a necessary correction to decades of systemic tax evasion by private exporters, telling lawmakers that unreported sales have cost the country as much as $908 billion in lost revenue. The policy is designed to shore up declining government foreign reserves, which have been depleted by global energy shocks stemming from the ongoing war in Iran. Beyond boosting public finances, the president said the new framework will crack down on illegal practices including under-invoicing, transfer pricing, and diversion of export earnings, while strengthening state oversight of strategic commodity trade.

    The state entity tasked with taking over these export operations, PT Danantara Sumberdaya Indonesia, was officially registered just one day before Prabowo’s public announcement. The firm is 99% owned by Danantara, the sovereign wealth fund Prabowo launched in 2023, and the new structure will give the Indonesian government direct influence over global pricing for its key commodities. Yvonne Mewengkang, a spokesperson for Indonesia’s Ministry of Foreign Affairs, described the overhaul as a critical governance reform that will boost accountability and transparency in the country’s management of strategic resources.

    Under the transition timeline laid out by Indonesian officials, private companies will be required to transfer all export and import transactions to the new state entity between June and August, with full state control in place by September. Coordinating Economic Minister Airlangga Hartarto noted that the government will provide detailed guidance to all foreign and domestic investors before June 1, emphasizing that the initial phase of the policy will focus primarily on improving trade reporting transparency. Still, many trade analysts have expressed skepticism that the government can pull off such a massive industry takeover in less than four months, warning of potential disruptions to established trade networks.

    As the world’s top exporter of thermal coal for power generation and palm oil — a ubiquitous ingredient used in everything from cosmetics to transportation biofuels — and holder of the planet’s largest proven nickel reserves, a critical mineral for electric vehicle batteries and stainless steel production, Indonesia’s policy shift will be felt across every major global economy. Nickel’s central role in the global clean energy transition makes this move particularly consequential for industries racing to expand renewable energy capacity and electric vehicle manufacturing.

    China, Indonesia’s largest trading partner and a dominant investor in the country’s critical mineral sectors, will face the most immediate impact from the policy change, experts agree. Li Shuo, a senior fellow with the Asia Society Policy Institute’s China Climate Hub, noted that Indonesia’s resources form the foundation of China’s global leading position in electric vehicles, batteries, and advanced industrial manufacturing. “Indonesia has become vital to China,” Li said, adding that “the relationship is evolving.” Lie Xie, a researcher with UK-based think tank Third Generation Environmentalism, said China is closely monitoring the nationalization move and assessing its potential impact on future bilateral cooperation, noting that “the future path that Indonesia is taking is highly important for China.”

    The swift implementation timeline threatens to disrupt supply for China’s fast-growing clean technology sector, which relies heavily on Indonesian raw materials to meet booming global demand for renewable energy hardware. Even before the official announcement, the China Chamber of Commerce in Indonesia submitted a five-page protest letter to the Indonesian government, highlighting widespread investor concerns over an increasingly unpredictable business climate. The letter accused Indonesian regulators of “excessively stringent regulation, over-enforcement, and even corruption and extortion” that have “severely disrupted normal business operations” and eroded long-term investment confidence. Bhima Yudhistira, an economist with the Jakarta-based Center of Economic and Law Studies (CELIOS), said Prabowo moved forward with the takeover despite Chinese pushback, calling the sudden move “very, very shocking.”

    Analysts say the policy shift is part of a deliberate strategy by the Prabowo administration to diversify foreign investment in Indonesia’s resource sectors by reducing China’s outsize influence, a move that could open new doors for American and other Western investors looking to secure alternative supply chains for critical minerals. “Such a move is a clear signal that U.S. investment is being attracted to come to Indonesia even more,” Yudhistira said, though he warned the takeover will likely force a renegotiation of nearly all existing contracts held by Chinese firms in the affected sectors, and will intensify the global race for critical resources between the United States and China. Yudhistira characterized the policy as an outright “hostile takeover” of core industries.

    Whether the reform ultimately succeeds in attracting new foreign investment will depend heavily on how transparent the government is during implementation, according to Syahdiva Moezbar of the Centre for Research on Energy and Clean Air. Right now, many domestic and international private stakeholders remain unclear on how the new system will work, particularly for small-volume traders, specialized product exporters, and downstream processing industries. Eddy Martono, chairman of the Indonesian Palm Oil Association, said the full impact of Danantara’s takeover on the sector is still undefined, noting that “exporters usually already have their own established markets; we must ensure we do not lose these markets if they are not managed properly.”

    Beyond China, other major importers of Indonesian coal, palm oil, nickel, and iron alloys including the United States, European Union, India, Japan, South Korea, and Southeast Asian neighbors Malaysia, Vietnam, and the Philippines will also face potential supply chain disruptions from the policy change. The reform is the latest in a series of moves by the Prabowo administration to expand state control over strategically important natural resources, including crackdowns on unlicensed mining, government takeovers of unauthorized plantations, and incentives to build out a domestic critical mineral refining industry.

  • Turkey liquidates nearly all US Treasuries as Iran war bites economy: Report

    Turkey liquidates nearly all US Treasuries as Iran war bites economy: Report

    In a dramatic move that underscores the severe economic pressures piling up on Ankara, Turkey offloaded nearly all of its U.S. Treasury securities in March, according to estimates from Bloomberg that draw on U.S. government data. The country liquidated roughly $14 billion in U.S. sovereign debt, slashing its total holdings to just $1.6 billion – a far cry from the $80 billion peak it hit a decade ago.

    This steep sell-off is rooted in a cascade of economic shocks triggered by the ongoing US-Israeli war on Iran, which has hit Turkey’s already fragile economy on multiple interconnected fronts. As a nation that imports nearly all of its energy needs, Turkey has been squeezed first by soaring global energy prices driven by regional conflict. Before the war began, roughly 14% of Turkey’s natural gas imports came from Iran; those deliveries have halted entirely following an attack on Iran’s key South Pars gas field, creating additional supply strains and cost pressures.

    The conflict has also spurred broader global inflation concerns that have pushed U.S. Treasury yields sharply higher. For Turkey, this shift translates directly to increased borrowing costs on international markets, and has made the country’s already high-risk debt far less appealing to foreign investors.

    Selling U.S. Treasuries is a standard step for emerging economies like Turkey looking to shore up their domestic currency. Nations typically draw on their holdings of U.S. debt to raise dollars, which they can then sell on foreign exchange markets to prop up the value of their own currency. Turkey’s lira has been caught in a years-long downward spiral, paired with persistent sky-high inflation that has eroded purchasing power across the country. Since the outbreak of the war on Iran, the lira has already depreciated roughly 5% against the U.S. dollar, making dollar-denominated energy imports even more costly.

    Turkish policymakers have openly acknowledged the deep uncertainty hanging over the country’s economic trajectory. In May, the Turkish Central Bank raised its 2026 inflation target from 16% to 24%, citing persistent elevated volatility. Leading global financial institutions JPMorgan and Deutsche Bank project that Turkish inflation will climb to 30% by the end of 2024.

    Separate reporting from Reuters added another context to the $8 billion portion of the sell-off: the country tapped those reserves to stabilize the lira after a Turkish court annulled the opposition party congress that elected Özgür Özel as head of the nation’s largest opposition party, removing him from his post and sparking short-term political volatility.

    While Turkey is a relatively small holder of U.S. debt compared to other major regional players – Saudi Arabia holds roughly $150 billion in U.S. Treasuries, while the United Arab Emirates holds around $114 billion – the trend of broad liquidation carries broader global implications. If a growing number of countries follow Turkey’s lead and offload U.S. sovereign debt, yields will continue to rise, pushing up borrowing costs for both the U.S. federal government and American consumers across the board.