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FirstFT: Biden to warn US companies over risks of operating in Hong Kong


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Joe Biden’s administration is poised to warn US companies of the rising risks of operating in Hong Kong as China asserts more control over the financial hub.

According to three people familiar with the plan, the state department will this week flag concerns about a range of threats, including China’s ability to obtain data that foreign companies store in Hong Kong.

It will also point to the risk of a new law allowing Beijing to impose sanctions against anyone enabling foreign penalties to be implemented against Chinese groups and officials.

The move, which the sources said would probably come on Friday, is the first time the US has issued a business advisory in relation to Hong Kong.

Five more stories in the news

1. Pace of US inflation picks up again in test for Fed The pace of US consumer price increases accelerated unexpectedly in June — up 5.4 per cent from the previous year — challenging the view within the Federal Reserve and White House that high inflation during the US recovery will be temporary. What is driving US inflation higher? FT’s Colby Smith explains.

Line chart of Year-over-year change (%) showing US consumer price index soars

2. Goldman and JPMorgan pivot to M&A The two Wall Street banks are benefiting from a boom in dealmaking activity just as trading revenues plunge from the record levels during the early stages of the Covid-19 pandemic. Both reported a surge in fees from advising on corporate acquisitions and initial public offerings during the second quarter, helping to offset declining returns from bond and stock trading.

3. Rivals see opportunity in crackdown on Didi Chuxing China’s rival apps are rushing to lure drivers and users as they seek to take advantage of a cyber security crackdown on the Chinese ride-hailing market leader following its blockbuster New York listing. The country’s estimated 230 ride-hailing apps are accelerating expansion plans, offering discounts and boosting incentives for drivers, analysts said.

  • Related read: Singapore’s Temasek, one of the world’s largest investors, reported its strongest returns in more than a decade and expressed confidence in its Chinese assets despite a regulatory crackdown on its portfolio company Didi Chuxing.

4. Foreign Olympic workers arrested for alleged cocaine use Four foreigners working at the Tokyo Olympics have been arrested on suspicion of drug offences after what local media reported was an evening out in the nightclub district of Roppongi. The incident will revive opposition to the games and pressure on the Japanese government to crack down on mask use.

Do you think the Tokyo Olympics should proceed as planned given the Covid-19 situation? Tell us what you think in our poll.

5. Biden seeks public support for voting-rights push US president Joe Biden will aim to drum up public support against an “onslaught of voter suppression laws” in Republican states, with Democratic efforts to enact new voter protection laws facing long odds in Congress. Vice-president Kamala Harris will meet this week with Democratic Texas lawmakers who left the state to halt Republican efforts to pass new voting laws. (FT, Reuters)

Coronavirus digest

  • Japan’s Daiichi Sankyo plans to begin phase 3 clinical trials for its coronavirus vaccine this autumn with the aim of bringing the country’s first homegrown Covid-19 jab to the public in 2022.

  • The fragmented US healthcare system is hampering the country’s efforts to rapidly sequence Covid-19 cases so it can track the Delta variant and potential future mutations, scientists and laboratory companies have warned.

  • France will make vaccination against Covid-19 compulsory for all healthcare workers and will restrict access to cafés, restaurants and other venues to those customers with “health passports”

Follow the latest with our coronavirus live blog and sign up for our Coronavirus Business Update newsletter for more Covid-19 news.

The day ahead

Japan industrial production figures Data released today will be among the week’s key figures for the Japanese yen. Last month factory activity fell 5.9 per cent amid the continued chip shortage caused by the pandemic. (FT, Japan Times)

Bastille Day If you are a French citizen, you can add to your liberté a side order of égalité and fraternité as Bastille Day is celebrated on Wednesday. In Paris, President Emmanuel Macron will watch a military parade, thanking French health workers for their work in the fight against Covid-19.

US bank earnings continue Bank of America Corp, Wells Fargo & Co and Citigroup Inc will report earnings today. Elsewhere in US financial world, Jay Powell will appear in a virtual hearing in front of House Financial Services Committee Wednesday.

What else we’re reading

Sovereign debt profits vs human rights Divestment campaigns are not new in emerging markets investing. But they have been given impetus by the phenomenon of ESG investing sweeping the industry, as activists demand that asset managers stop supporting regimes that abuse their own citizens.

  • As US investment groups rush into mergers, European rivals face mounting pressure to respond. Will they defy the mantra that big is better?

Bar chart of Bond yields (%) showing Countries with poor human rights records can offer higher yields

Hong Kong ‘doxing’ crackdown stirs fears for business During the Hong Kong protests in 2019, doxing — the malicious sharing of personal information online — was rife. As the territory’s administration takes action with new data privacy laws, it has raised concerns that the measures will cut access to information and hamper social media groups.

Time for AI to pull up a chair to the negotiating table Science fiction has sparked decades of debate about whether future wars will be made more deadly by weaponised artificial intelligence. Yet, in the real world, AI is already being harnessed to broker peace, writes Helen Warrell.

The quest for the investment Holy Grail Indexing is a booming business, slicing markets up into geographies or categories such as equities or bonds and then subdividing by size or industry. But combining everything from commodities to venture capital in one gauge — an “ultimate index” — has proven elusive, writes Robin Wigglesworth.

What business leaders can do about biodiversity The World Economic Forum estimates that half of global GDP or $44tn depends on nature. The FT’s Gillian Tett looks at what business executives can do to protect environmental assets. Get the latest on socially responsible business with our Moral Money newsletter. Sign up here.

Video: What business leaders can do about biodiversity


Growing psychoactive plants You could say that all gardens are psychoactive, in that they are designed to change how we feel. But some take that idea more literally than others. Michael Pollan takes us on a tour of his opium poppies, cannabis and mescaline-producing cacti.

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