China’s Belt and Road Initiative could be in trouble as debt crises loom in emerging markets: The ambitious overseas lending scheme that sees China pouring investments into countries across Africa, Asia, and the Middle East, to further trade and foreign policy is struggling under a mountain of non-performing debt and claims of corruption and mismanagement, the Financial Times reports. The value of projects related to the initiative reached USD 838 bn by the end of 2021, according to data collected by Washington-based think-tank the American Enterprise Institute. However, a record USD 52 bn in loans that finance these projects had to be renegotiated over the past two years, more than triple the USD 16 bn that had turned bad in the previous two years.

The problem: Countries that are already indebted are struggling to meet loan repayments as many of the initiative’s high-profile projects have failed to yield commercial returns, the FT writes. China has now resolved to issue tens of bns of USD in “rescue” loans — short-term liquidity injections that allow debtors to service their loans and avoid default — in an attempt to put out the fire it has helped spark emerging markets.

China doesn’t have much exposure to Egypt: Egypt has borrowed the equivalent of 2.1% of GDP in sovereign and hidden debt, according to data (pdf) compiled by AidData. Egypt is one of 21 emerging markets currently at risk of default, with the number of sovereign bonds falling into distressed territory climbing higher to reach record levels over the past months.

IN OTHER NEWS-

• Hyundai reports highest net income in eight years in 2Q 2022: Hyundai Motors’s bottom line jumped 56% in the second quarter of the year, recording USD 2.8 tn. (Statement)
• Abu Dhabi Wealth Fund gets stake in TMF: Abu Dhabi Investment Authority has bought a significant minority stake in CVC Capital Partners’ business service provider TMF Group. (Bloomberg)
• China’s Evergrande CEO, CFO forced to resign: The CEO and CFO of crisis-hit Chinese developer Evergrande have been forced to step down after an internal probe found they allowed a creditor to take USD 2 bn as the company was trying to restructure its USD 300 bn debt pile. (FT | Bloomberg)
• China slaps ride-hailing group Didi with a fine of USD 1 bn over data law breach: Chinese regulators said Didi had committed a violation of China’s data collection laws and “seriously impacted national security” with data processing activities. (Financial Times)

THE CLOSING BELL-

The EGX30 rose 1.9% at Thursday’s close on turnover of EGP 975 mn (15.1% above the 90-day average). Local investors were net buyers. The index is down 22.3% YTD.

In the green: Ibn Sina Pharma (+10.9%), Qalaa Holdings (+9.8%) and EFG Hermes (+6.8%).

In the red: Eastern Company (-0.6%).