Foreign direct investment in Bulgaria in the first half of 2019 stood at EUR 457.1 mln, the equivalent of 0.8 per cent of the gross domestic product (GDP), statistics from the Bulgarian National Bank (BNB) showed. In the same period of 2018, FDI was EUR 152.6 mln, but the original amount reported by BNB last year was EUR 246.2 mln, which was revised downward later. Investment in equity, including in the real estate sector, showed a net outflow of EUR 687.6 mln (compared to a net outflow of EUR 192.6 mln in the first six months of 2018) and re-invested earnings showed a net inflow of EUR 48.5 mln (versus an inflow of EUR 76.7 mln a year earlier), according to preliminary data. Receipts from real estate investments by foreign companies totalled a net EUR 3.3 mln, compared to EUR 10.9 mln during the same period of 2018.

The current account surplus rose by 157.5% y/y to EUR 880.3 mln in June, the Bulgarian National Bank (BNB) reported. The cumulative surplus in Jan-Jun reached EUR 1.76 bln compared to EUR 266.3 mln surplus for the same period in the previous year. On a twelve-month rolling basis, the CA surplus accounted for 6.8% of GDP, which we view positively in regards to the growth model sustainability. The strong CA balance improvement in June alone reflected mostly a surplus on the external merchandise trade, the first one since Sep 2017, as well as strong y/y increase of the secondary income surplus. The merchandise surplus amounted to EUR 29.6 mln in June compared to a deficit of EUR 202.2 mln in June 2018. The surplus was driven by a solid 11.2% y/y drop in imports, while exports also fell, although at slower speed of 2.5% y/y. The secondary income surplus rose by 191.2% y/y to EUR 364.9 mln in June, entirely on the back of higher absorption of EU funds. The net services also contributed positively to the CA surplus, as their surplus went up by 2.7% y/y to EUR 499.7 mln during the month.

The Competition Protection Commission (CPC) refused to launch an investigation on the signal from four nationally represented employers' organizations that electricity producers and traders affiliated with businessman Hristo Kovachki are manipulating the electricity price for the companies and are benefiting from it. The watchdog refuses to investigate, arguing that the companies mentioned in the signal are not officially affiliated to Kovachki and are registered to other parties. In addition, CPC pointed out that the Energy and Water Regulatory Commission (EWRC) is the competent authority to investigate manipulations of the electricity market. However, the KRIB, BIA, BICA and BCCI signal has been added to the investigation already started by the antitrust authority following signals at the end of last and the beginning of this year for speculative prices on the electricity exchange. Although it will not investigate, the CPC, for its part, asked employers to answer 11 questions asking them specific questions about the specifics of the electricity market. According to the employers' organizations, however, it is unacceptable to be compelled to answer a questionnaires and to be expected to do the job of the Energy Committee at the National Assembly, EWRC, the Prosecutor's Office of Bulgaria, the CPC, the FSC and SANS within 20 days.

Bulgarian IoT products developer Allterco has lent a total of EUR 1.8 million to its units Allterco Properties and Allterco Trading. The company lent EUR 900,000 to Allterco Properties to finance the renovation of the group's office building, and EUR 900,000 to Allterco Trading to help the company finance the costs of the reorganisation of its production and distribution activities. The one-year loans have a fixed annual interest rate of 1%. Last month, Allterco wrapped up the sale of five of its telecommunications subsidiaries to Norway's LINK Mobility Group for EUR 7.9 million. Allterco sold its units in Bulgaria - Teravoice, Tera Communications and Allterpay, as well as its Romania-based subsidiary Teracomm RO and Macedonia-based Tera Communications DOOEL. Allterco received 60% of the price in cash and a further 20% is shares in Victory Partners VIII Norway Holding - the sole owner of LINK Mobility Group. The remaining 20% will be paid on a deferred basis within two years.

"The Bulgarian metallurgical industry continues to be a fairly solid part of the country's industrial production, despite the heavy blows it has suffered as a result of the US-China trade war," commented the Executive Director of the Bulgarian Association of Metallurgical Industry - Politimi Paunova. "The trade war has been responsible for four consecutive quarters of declines in metallurgy, though we hardly export directly to the United States. Currently, there are between 12-13 thousand people involved in the industry, which is about 80,000 less than it was over 20 years ago," said Paunova. The reason is that the industry is developing dynamically with solid investments for modernization and introduction of people mainly into command rooms for machine control in the workshops. "Metallurgy has radically changed its appearance over the last 20 years. There is no workforce in the workshops. Everything is exported to the computer control rooms. They are continuous technological processes. Manual labor is minimized."

Bulgaria's Commission for Protection of Competition has granted approval to local diversified group Rodna Zemya Holding to acquire 100% of Sofia-based fast-moving consumer goods retail chain HIT Hypermarket. Rodna Zemya Holding and HIT Hypermarket are not active on the same market segments so the acquisition will not lead to the establishment of a dominant market position. Earlier this month, Rodna Zemya Holding raised some BGN 36 million via a capital increase. HIT entered the Bulgarian market in 2004. It operates two stores in Sofia, offering a range of food and non-food products.

Bulgaria's First Investment Bank (Fibank) said that its consolidated net profit rose to BGN 98.3 million in the first half of 2019 from BGN 49.7 million a year earlier, backed by investment property revaluations and lower depreciation costs. Fibank booked net revenue of BGN 72.9 million from investment property revaluations in the January-June period of this year, up from BGN 13.7 million in the comparable period of 2018. The bank also nearly halved its depreciation costs to BGN 25.3 million in the period under review, from BGN 44.5 million in the like period of 2018. The lender's revenue from banking operations edged down to BGN 187.4 million in the first six months of the year, from BGN 189.7 million the year before. Net interest income decreased to BGN 123.5 million from BGN 129.1 million, while net fee and commission income rose to BGN 49.6 million from BGN 48.0 million. Administrative expenses grew to BGN 111.8 million in the first half of 2019 from BGN 100.6 million in the same period of last year. The lender's assets totalled BGN 9.97 billion at the end of June, up from BGN 9.59 billion a year earlier. Loans to clients other than banks and financial institutions increased to BGN 6.08 billion at the end of the first half of 2019 from BGN 5.72 billion a year earlier, while deposits from clients other than banks rose to BGN 8.66 billion from BGN 8.34 billion. Fibank was Bulgaria's fourth largest lender by assets at the end of June.

Germany’s central bank warned that Europe’s largest economy could be about to tip into recession, adding to the pressure on policy makers to ramp up support. The Bundesbank said in its monthly report that German output will remain “lackluster” in the third quarter and “could continue to fall slightly”. That would be a second straight quarter of contraction -- the typical definition of a recession -- after a 0.1% decline in the April-June period. The prognosis follows weeks of worse-than-expected German data and meager corporate earnings reports. That has dragged down the rest of the euro area and prompted the European Central Bank to consider extra monetary stimulus. The government has also signaled that it might be willing to step up spending should the crisis worsen. The Bundesbank cited persistently weak momentum in industry as a reason for the continued weakness, and said it’s unclear whether domestic demand might take a hit as well. Up until a week ago, economists surveyed by Bloomberg foresaw growth of 0.2% in the current quarter, but since then big-name institutions including Deutsche Bank have lowered their projections.

The cost of insuring against Argentina's sovereign default rose on Monday after opposition candidate, Alberto Fernandez, said the country would struggle under present conditions to repay a loan to the International Monetary Fund. Argentine 5-year credit default swaps (CDS) were quoted by IHS Markit at 2,669 basis points (bps), up 319 bps from Friday's closing level of 2,350 bps. Markit calculations, based on Friday's closing prices, estimate a 77% probability of a sovereign default within the next five years. Fernandez, the favorite to win the October election, said he would seek to renegotiate the repayment terms. Argentina signs a mid-2018 agreement with the IMF for $ 57 billion. That deal was overseen by President Mauricio Macri, who was beaten by Fernandez in the August 11 primary election.

Japan’s exports fell for the eighth straight month in July as worries continued about President Donald Trump’s trade policies denting Asian economic growth. Ministry of Finance data released Monday showed exports and imports fell in July, compared to the same month a year ago. Exports fell 1.6%, while imports slid 1.2%, resulting in a trade deficit of 249.6 billion yen ($2.35 billion). Global markets have been in turmoil because of Trump’s trade war with China. A slowdown in China is certain to hurt other regional economies, including Japan’s. Japan’s exports to China in July fell 9.3% while its imports from China gained 2.8%. Japan’s exports to the U.S. in July grew 8.4% while imports from the U.S. rose 3.5%. Trump says he plans to impose 10% duties on an additional $300 billion of Chinese imports to the U.S., extending penalties to almost everything the United States buys from China. Japan is also entangled in a trade dispute with neighboring South Korea. Japan’s exports to South Korea in July dipped 6.9% while imports slid 8.6%.