Economy
AI-driven cyber risk seen as top concern for global financial system
The impact of AI on cyber risk is the most immediate concern for the global financial system, a global watchdog said Monday, cautioning that the technology could change the speed, scale and economics of an attack.
Many countries do not have systems in place to manage the deployment of advanced artificial intelligence models, said Andrew Bailey, the chair of the Financial Stability Board, which seeks to identify and manage risks in financial systems.
The warning by Bailey, who also serves as the Bank of England governor, came in a letter to G-20 finance ministers and central bank governors ahead of meetings this week.
The financial sector’s dependence on a handful of powerful tech providers could undermine system-wide market confidence, Bailey said.
The comments highlighted concerns among regulators that advanced AI could accelerate the discovery of cyber vulnerabilities, forcing faster patching and creating potential operational and resilience challenges if testing and recovery processes are unable to adapt safely.
His comments follow the U.S. administration’s tightly controlled rollout of Anthropic’s powerful Mythos model, restricting it at one point to only U.S. nationals.
“Recent developments highlight the importance of ensuring that advances in capability are matched by resilience and preparedness,” he said.
Supporting safe and responsible model release “on a global basis” should be a priority, he said.
In July, an OpenAI agent escaped a controlled testing environment and hacked AI company Hugging Face, raising concerns about the potential for AI systems to circumvent safeguards.
Bailey reiterated prior warnings about the risk of potential market corrections, citing stretched AI valuations and frailties in government debt markets, while flagging as an emerging concern the increase in the use of leverage in equity markets.
The U.S. Treasury earlier this month intervened to cap yields on long-term bonds that had reached multi-decade highs.
Eurozone inflation rose to 3.3% August, the highest level seen in three years, as the war in the Middle East kept pressure on energy costs, official data showed Tuesday.
Well above the 2% target set by the European Central Bank (ECB), the figure from the EU’s statistical office was up sharply from 2.9% in July and in line with forecasts by analysts for Bloomberg.
“Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in August,” Eurostat said, noting that energy prices were up 14.3% in August after rising 10.3% in July.
The U.S. war against Iran and the near-total closure of the Strait of Hormuz, a key energy trade route, have sent global energy costs soaring.
“Inflation should remain well above target into next year, as higher gas and food prices put additional upward pressure on the index,” said Leo Barincou of Oxford Economics.
The ECB is expected to again raise interest rates at its meeting on Sept. 10 to tame the surge in prices, after a first hike in June.
The bank’s chief, Christine Lagarde, warned in July that the energy shock from the conflict “could intensify further.”
ECB hike expected
“The ECB will hike again next week,” said Kamil Kovar at Moody’s Analytics, adding that the jury was out on whether the decision would be followed by another increase in December.
“The broad-based increase in energy prices – not just transport fuel, but also gas and now even electricity – is playing in hawks’ favor,” he said.
Core inflation, which strips out volatile energy and food prices, has remained largely stable in recent months.
In August, it slowed back to 2.4% after accelerating slightly to 2.5% in July.
Food and drinks inflation in August remained at 1.2%, the same level recorded last month.
Eurozone inflation was last above 3.3% in September 2023, when it stood at 4.3%.
At the time, consumer price rises were slowing after reaching a peak of 10.6% in October 2022, driven by surging energy prices caused by Russia’s invasion of Ukraine.
Shares in online fast-fashion retailer Shein dropped 4% in their first day of trading in Hong Kong on Tuesday after slumping as much as 10%, with investors worried about the impact of setbacks of its long-delayed listing potentially undermining its competitive advantages.
Known globally for selling $5 tops and $10 dresses, Shein has been humbled by tariff and duty changes in the U.S. and Europe that have contributed to a dramatic decline in valuation for the company.
Founded in China in 2012 and headquartered in Singapore since late 2021, Shein spent years touting its credentials as a global company before re-embracing its roots to list in Hong Kong.
That capped a four-year quest to go public after failing to list in New York and London. Intense scrutiny of its business practices also hampered its attempts, which were ultimately blocked by Chinese authorities.
Its shares traded at HK$46.62 ($5.95) by mid-session, down from its HK$48.56 ($6.19) IPO price tag, but recovering somewhat from an earlier slide of as much as 10%.
That values the company at about $25.3 billion, compared to its peak of nearly $100 billion in 2022.
“As a new company listed in Hong Kong, we will continue to innovate, optimize and cooperate with our supply chain partners for mutual benefit and win-win results,” Shein Chief Financial Officer Leigh Gui said at the opening gong ceremony.
Founder and CEO Sky Xu, known for disliking the limelight, did not speak at the event, although he later took pictures with Shein employees on stage. He declined to respond to Reuters’ questions.
Valuation still seen as expensive
Investors and analysts have worried about Shein’s slower growth, higher trade costs and tighter regulatory scrutiny.
“I think the weak debut shows that even after the huge valuation reset, investors still don’t see Shein as obviously cheap,” said Charu Chanana, chief investment strategist at Saxo.
She said Shein was valued at 15 times forward earnings, more than double the multiple for PDD, the owner of rival Temu, which meant “investors were being asked to pay a premium despite weaker growth visibility and significant regulatory and trade risks.”
Demand for Shein’s stock during the IPO was tepid compared to high-profile offerings from the AI and robotics sectors.
The retail tranche was subscribed 5.63 times, while the international portion was subscribed 2.59 times. Some deals have been hundreds of times oversubscribed, especially from Hong Kong’s army of retail investors who track IPOs very closely.
Despite Shein’s growth worries, existing investors who participated in the IPO included billionaire Michael Bloomberg’s family office Willett Advisors, French billionaire entrepreneur and investor Xavier Niel and Microsoft, a filing showed on Monday.
Indian billionaire Mukesh Ambani’s Reliance also bought more shares in Shein, according to the filing, as did Bolivian American billionaire Marcelo Claure’s Claure Group and the SoftBank Vision Fund.
The amount sold in the IPO represents about 6.6% of Shein’s enlarged share capital. Cornerstone investors took about one-fifth of the IPO and are locked up for six months, leaving roughly 5% freely tradable.
Q1 loss, new strategies
Last year, the U.S. ended the de minimis duty exemption for e-commerce shipments under $800 that had powered Shein’s direct-shipping model. The European Union recently followed suit, imposing fees on low-value packages.
Shein’s net income slid 39% last year, and it swung to a loss in the first quarter.
Shein has said it expects first-half operating profit margin to be slightly lower than in the first quarter, hurt by higher customs duties, tariffs, fees and logistics costs in Europe and the Middle East.
“Daily active users in Europe have fallen around 45% since the EU scrapped its duty exemption on small parcels, and Temu has seen a similar drop,” said Josh Gilbert, lead analyst for Asia-Pacific at eToro.
“This is less a Shein problem, but more so the end of an era for cheap cross-border shipping. The brand’s reach is unquestionable, but a large share of that loyalty has always belonged to the price tag.”
Shein has been trying to widen beyond its own-label ultra-cheap fast fashion, having expanded its third-party marketplace and bought U.S. apparel brand Everlane in May.
Regulatory risks remain a concern.
Shein has disclosed an ongoing U.S. Federal Trade Commission (FTC) consumer protection investigation that could result in significant penalties.
The European Commission is also examining the company’s handling of illegal products, the potentially addictive design of its platform and the transparency of its recommendation systems.
The IPO has helped Shein compensate early investors who invested at much higher valuations. The company has agreed to make cash payments totaling about $3.5 billion and share adjustments to some preferred shareholders.
“This IPO is not just a fundraising event; it is also, and probably more of, a capital-structure event,” said Jianggan Li, CEO of consultancy Momentum Works.
The European Union said Monday the bloc would stop imports of Brazilian meat and other animal products as of Thursday pending assurances from Brazil that it is complying with its animal health rules.
The European Commission said Brazil has failed to provide sufficient guarantees that its exports meet EU standards aimed at preventing the misuse of antibiotics in livestock farming.
“Brazil will no longer be authorized to export to the Union food-producing animals and products of animal origin intended for human consumption,” a Commission spokesperson told Agence France-Presse (AFP) on Monday.
This will affect commodities like poultry, meat, eggs, honey and casing. Brussels declined to provide a timeline for when imports might resume.
In May, Brazil was put on an EU list of countries that do not keep to rules on the use of antibiotics in animals.
An audit of Brazil’s poultry and honey sectors is due to conclude on Friday.
If the findings are positive and EU member states give approval, Brazilian poultry exports to the bloc could resume within weeks. Beef imports may take longer.
The commission said the timeline would depend on how quickly Brazil can demonstrate compliance with EU requirements.
“Brazil is an important partner for the EU and we are working closely, constructively and positively with Brazilian authorities to ensure their compliance with these requirements,” the spokesperson said.
“Once compliance is demonstrated, exports to the EU will be able to resume.”
The EU is keen to show its vigilance after facing strong criticism from farmers and from France following its signing in January 2026 of a free trade agreement (FTA) with South America’s Mercosur group of countries – Argentina, Brazil, Uruguay and Paraguay.
Brazil was the EU’s second-largest supplier of beef in 2025, exporting more than 92,000 tons worth over 713 million euros ($825 million).
The bloc bans the use of antimicrobials to promote growth in livestock and restricts the use of antibiotics reserved for human medicine, as part of efforts to curb antimicrobial resistance.
Türkiye’s electric vehicle maker Togg is less than a year away from launching what its board chair says will be a lower-cost model aimed at making car ownership more accessible, with orders expected to open in June 2027.
“We are working on a new, much more affordable model to help our lower-income citizens become car owners,” Fuat Tosyalı said. “We are working with all our strength to offer the most affordable vehicle with the best equipment.”
Initial deliveries of the B-SUV T6X model are planned to begin the same month as orders, Tosyalı said, adding that the company also plans promotional campaigns to support its launch.
The company is currently manufacturing the T10X SUV, introduced two and a half years ago, and the T10F fastback, launched last year, at its factory in the northwestern Bursa province.
The T6X is in the final stages of development, with prototypes currently being prepared ahead of its release next summer.
“We have specifically developed the T6X after the T10X and T10F to make it much more affordable at current prices,” Tosyalı told Anadolu Agency (AA).
Togg was founded eight years ago after President Recep Tayyip Erdoğan called for the production of a fully locally funded passenger car.
Vestel Elektronik, Anadolu Group Holding, Turkcell and BMC Otomotiv each hold 23% stakes in the company. The Union of Chambers and Commodity Exchanges of Türkiye (TOBB) owns the remaining 8%.
Togg sold 39,020 vehicles domestically last year and its sales in the first seven months of this year rose 30% year-over-year to 25,848 units, data from the Automotive Distributors and Mobility Association (ODMD) shows.
Toysalı said the compact T6X is designed to be accessible, with a retail price of around TL 1.3 million Turkish lira ($26,936), while promotional financing campaigns will be available at rollout.
Target of 200,000 vehicles per year
Togg was targeting annual production of 150,000 vehicles initially, but Tosyalı said they plan to exceed 200,000 units a year as the company introduces new models across different segments.
The company has already put around 120,000 vehicles on Turkish roads. It has also built a broad service and charging infrastructure.
Tosyalı said sales of the T10X and T10F were now broadly comparable and that their combined monthly sales had been exceeding the total sales of competitors.
Tosyalı said around 80% of service requirements for Togg vehicles could currently be addressed remotely through software.
The company is continuing to expand its physical service network, particularly to meet the needs of customers who require in-person support, he said.
Tosyalı said the growing number of vehicles on the road was also helping Togg optimize production costs and reduce investment costs per vehicle.
Industry sources say that, despite benefiting from tax breaks and incentives, any carmaker is likely to struggle to achieve profitability until production reaches well into a hundred thousand units per year.
“We made the right investment,” Tosyalı said, adding that the company’s initial priority had been to develop a technologically advanced vehicle that consumers could afford and would be satisfied with.
European ambitions
Togg also plans to expand its presence in European markets.
The company entered Germany last year and has received interest from companies in several countries seeking to sell its vehicles locally, Tosyalı said.
Germany was chosen in part because of the large Turkish community there, he said, adding that the company had received stronger-than-expected interest.
However, differences between Türkiye’s and Europe’s banking and vehicle-financing systems have presented a challenge.
Togg is continuing discussions with banks over financing arrangements in Europe, Tosyalı said.
Investment in charging network
Tosyalı said Togg’s charging network operator Trugo would continue investing to expand charging infrastructure ahead of the growing number of EVs on Türkiye’s roads.
Trugo initially concentrated its investments along routes where Togg vehicles were most frequently used, he said.
Nearly 30 brands have since entered Türkiye’s charging business, significantly easing drivers’ concerns about finding charging stations.
Tosyalı said Trugo would continue to lead the sector while also supporting other companies that invest in charging infrastructure.
He added that the growing network meant EV owners would not face a shortage of charging stations now or in the future.
Tosyalı also welcomed potential new domestic carmakers, saying additional Turkish brands would enrich the market and further expand the country’s automotive transformation ecosystem.
Türkiye’s trade with members of the Organization of Turkic States (OTS) surpassed $10 billion from January through July of this year, the Trade Ministry said Monday.
The trade rose 6.6% year-over-year to $10.1 billion in the first seven months, the ministry said in a statement.
The annual volume has expanded nearly twentyfold since 2002, climbing from $871 million to $16.9 billion at the end of 2025.
Kazakhstan was Türkiye’s largest trading partner among the OTS members last year, with bilateral trade totaling $7.8 billion. It was followed by Azerbaijan with $4.3 billion, Uzbekistan with $3.1 billion and Kyrgyzstan with $1.6 billion.
Türkiye’s trade with OTS observer countries – Turkmenistan, Hungary and the Turkish Republic of Northern Cyprus (TRNC) – increased 6.8% in 2025 to $10 billion. In January-July this year, it grew 5.1% from the same period last year to $6.1 billion.
Türkiye’s annualized trade with OTS member and observer countries consequently reached $27.8 billion as of July, according to the ministry.
The OTS was established in 2009 and adopted its current name at the Istanbul Summit in 2021. Türkiye, Azerbaijan, Kazakhstan, Uzbekistan and Kyrgyzstan are members, while Turkmenistan, Hungary and the Turkish Republic of Northern Cyprus hold observer status.
The ministry said the eastward shift in the center of global production and trade over the past quarter-century had increased the strategic importance of the Turkic region within international trade and logistics networks.
It added that opportunities offered by the Trans-Caspian East-West-Middle Corridor, commonly known as the Middle Corridor, hold significant potential for deeper economic integration across the Turkic world.
“We will continue with determination to strengthen economic and commercial integration within the Organization of Turkic States, make the most effective use of the Middle Corridor’s strategic advantages and further reinforce the Turkic world’s position in global trade,” the ministry said.
The United States will encourage G-20 members to re-examine terms of trade with China to shrink global imbalances and press Beijing to rebalance its economy away from exports and toward domestic consumption, Treasury Secretary Scott Bessent said Sunday.
Bessent said in an interview ahead of a G-20 finance leaders meeting that the current flood of exports from China was unsustainable, even though the U.S. direct trade position with China was “rapidly improving.”
“The world cannot have a China with a $1.2 trillion trade surplus,” Bessent said. “In China, the economy is quite weak, and they are trying to export their way out of it, and they need to rebalance their economy.”
Bessent’s push to mobilize a coordinated trade response to China comes as legal setbacks force the U.S. to rebuild its tariff policy, which had sharply reduced imports from China but led to an influx of Chinese imports elsewhere, especially to Europe and Latin America.
The U.S. has walled off its economy from many Chinese goods with high tariffs and outright bans on some products, including autos. Bessent said he told other industrial economies last year they would face pressures from the China import surge and that “now they are confronted with some very stark choices.”
He said it will be up to other countries to give China an incentive to shift away from exports and strengthen its chronically weak domestic demand.
“The rest of the world is going to have to examine their terms of trade with China,” Bessent said.
The U.S. is pushing for a G-20 joint statement on reducing trade and current account imbalances.
Tariffs imposed since U.S. President Donald Trump returned to office in 2025 have helped cut the U.S. trade deficit with China for the first six months of 2026 by a third from the same period of 2025, to $73.9 billion, according to U.S. Census Bureau data. Some acceleration of Chinese imports occurred in January of the year-earlier period as importers tried to beat anticipated tariffs.
Although some economists and European leaders have called for a coordinated effort to strengthen China’s yuan, Bessent questioned the effectiveness of such a move. The International Monetary Fund (IMF) has assessed the yuan to be undervalued by as much as 21%.
Suggestions that a new “Plaza Accord” – the 1985 agreement to strengthen currencies against the dollar – was the answer to reducing imbalances are misguided, he said, calling this “an easy way to get around dealing with the real trade problem,” which he said was excessive Chinese industrial subsidies and weak domestic demand.
Next U.S.-China summit
Bessent said it was unclear whether he would meet with his Chinese counterpart, Chinese Vice Premier He Lifeng, in person ahead of a White House meeting between President Trump and Chinese President Xi Jinping slated for late September.
Ahead of the summit, U.S. and Chinese officials will press forward with dialogues on potential tariff reductions on non-strategic goods and artificial intelligence guardrails aimed at keeping powerful AI models from falling into the hands of non-state actors, Bessent said.
“I think that there probably are $30 billion of non-strategic, non-critical goods on each side that we could take the tariffs off,” he said.
The September summit comes as the U.S. has been rebuilding Trump’s tariffs after the U.S. Supreme Court struck down broad duties imposed under an emergency law, including 20% on Chinese imports.
Trump’s administration in July imposed a 12.5% tariff on Chinese imports under an anti-forced labor trade investigation. It is poised to add more tariffs related to excess industrial capacity under a separate probe.
The U.S. Treasury chief also said that he planned to hold a bilateral meeting during the Asheville G-20 conference with People’s Bank of China Governor Pan Gongsheng, but declined to discuss details.
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