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The Morning Risk Report: Western Companies in Hong Kong Activate Contingency Plans as Turmoil Spreads
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The Four Seasons Hotel in Hong Kong’s business district. PHOTO: JAYNE RUSSELL/ZUMA PRESS
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Good morning. Western companies with large operations in Hong Kong are activating plans for employees to work remotely, and considering how to respond to a variety of possible scenarios, as protests and police actions in the city become more widespread and unpredictable.
On Tuesday, as protesters disrupted Hong Kong’s airport for a second day after earlier causing scores of flights to be canceled, bankers and company executives said rising social unrest in the city—now in its 10th week—has led to postponements of business meetings, deal discussions and other events.
[Continued below…]
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Three Hong Kong-based bankers said investment roadshows planned for this month—including one for a Chinese property developer planning its inaugural sale of U.S. dollar bonds—have been put off until September. Some bankers have been forced to cancel trips to meet clients, while executives at some Chinese debt issuers have also delayed trips.
BlackRock Inc., the world’s largest asset manager, has rescheduled a two-day conference at the Four Seasons Hotel in Hong Kong that was supposed to take place in early September. The event, which usually draws top BlackRock executives and more than 100 of the firm’s clients to Hong Kong, is now planned for February
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Casinos Filing Fewer Suspicious Activity Reports, FinCEN Says
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The gaming sector is filing fewer reports to the federal government on suspicious transactions, according to the U.S. Treasury Department’s anti-money laundering unit.
Casinos and card clubs in 2018 filed 9% fewer suspicious activity reports than in the previous year, Kenneth Blanco, director of the Financial Crimes Enforcement Network, said in a speech Tuesday. Those kinds of businesses in Oklahoma, Washington and Ohio reported notable declines of about 50% each, he said.
Companies including banks, money transmitters and casinos are required to file reports, called SARs, to FinCEN about activity that could be a sign of money laundering or other illegal behavior.
The most common types of suspicious activity reported by casinos so far in 2019 include large transactions from customers who have done minimal gaming, as well as “chip walking,” in which customers leave a casino with chips they have not redeemed, Mr. Blanco said.
The FinCEN director emphasized the usefulness of SARs to federal law enforcement agencies. The Federal Bureau of Investigation, for instance, uses the information provided in the reports in 21% of its investigations, Mr. Blanco said.
—Kristin Broughton
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The move by the Federal Housing Finance Agency is seen as a win for VantageScore, a credit-score system by VantageScore Solutions LLC. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
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One firm’s dominance over the credit scores used to vet many U.S. mortgages is getting a shake-up. Fannie Mae and Freddie Mac, two mortgage-finance firms that back nearly half of U.S. mortgages, will have to consider credit-score alternatives to Fair Isaac Corp.’s FICO score when determining a mortgage applicant’s creditworthiness, under a new rule issued by the mortgage-finance giants’ federal overseer.
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More than 20 states are suing the Trump administration over its rollback of climate-change regulations for power plants in what could be a landmark case deciding what the federal government’s responsibility is for fighting global warming. The Obama-era plan had been blocked by legal challenges that cited concerns including the costs of compliance. Mr. Trump’s EPA responded by replacing it rules that aim to give more authority to states and allow even coal-fired plants to remain in operation if they adopt newer technology.
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The U.S. Preventive Services Task Force—an independent panel of medical experts whose recommendations can be pivotal for insurance plans under existing federal law—released a draft recommendation that doctors ask their patients about illicit drug use, including opioid painkillers, so they can be directed to treatment. The panel also wants doctors to inquire about drug use on patient questionnaires in doctors’ offices.
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Iran and the U.K. are making progress toward the release of an Iranian tanker impounded in Gibraltar, according to people familiar with the talks, a move that could prompt Tehran to free a British-flagged vessel it subsequently seized and defuse tensions between the two countries. Iran has lifted several stumbling blocks by reflagging the vessel and setting a new destination after Gibraltar sought assurance that the ship wouldn’t sail to Syria, according to people familiar with the matter.
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Singapore property prices fell 0.6% in the quarter. A view of the Singapore Central Business District skyline. PHOTO: SUHAIMI ABDULLAH/GETTY IMAGES
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Commercial-property prices in major cities around the world tumbled in the second quarter, amid signs of slower global growth and heightened trade tension between China and the U.S. Average property prices fell in the second quarter from the first quarter in Hong Kong and Seoul to London and Washington, D.C., according to data from Real Capital Analytics.
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U.S. mortgage debt reached a record in the second quarter, exceeding its 2008 peak as the financial crisis unfolded. Mortgage balances rose by $162 billion in the second quarter to $9.406 trillion, surpassing the high of $9.294 trillion in the third quarter of 2008, the Federal Reserve Bank of New York said.
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Argentine financial markets steadied after their historic rout a day earlier, but some economists said the country is heading for prolonged financial instability amid the growing likelihood that the left-wing Peronist movement will return to power in October elections. The peso weakened a further 4.7% against the U.S. dollar by late Tuesday afternoon, following losses of about 15% on Monday.
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China reported a raft of weak economic data, adding to evidence that the world’s second-largest economy is slowing further as it remains locked in a trade war with the U.S. Meanwhile, Germany’s economy shrank slightly in the second quarter, rekindling fears of a recession and underscoring how Europe’s industrial core is suffering from the uncertainty caused by the U.S.-China trade dispute.
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Boeing recorded a fifth straight month without any orders for the 737 MAX aircraft. PHOTO: GARY HE/EPA/SHUTTERSTOCK
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Boeing Co. delivered fewer planes in July than in any month for the past decade, furthering the financial blow to the aerospace giant brought by the grounding of its 737 MAX jetliner.
Boeing’s deliveries for the year through July totaled 258 planes, down from 417 planes in the same period a year earlier and the smallest number for that time frame since 2007. The 19 planes the Chicago-based company delivered in July was the lowest monthly count since the four deliveries it made in November 2008 during the financial crisis.
Airbus SE shipped 458 planes in the first seven months of this year, putting the European company on track to surpass U.S. rival Boeing as the world’s biggest aircraft manufacturer on the year.
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Travelers have to face a new reality—their faces are rapidly becoming their IDs and boarding passes at airports. Facial recognition is rolling out at boarding gates for international flights at big airports in Europe, Asia and the U.S., even as privacy concerns about the technology grow.
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Coach apologized to Chinese consumers for appearing to label Hong Kong and Macau as countries on its products. Here, a Coach store in Beijing. PHOTO: WU HONG/EPA/SHUTTERSTOCK
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Foreign companies that have been labeling Hong Kong as a separate entity from China were quick to apologize this week to angry Chinese buyers, fearful of losing favor in the world’s second-biggest consumer market.
Versace, Coach, Asics and Givenchy are among the foreign brands that posted apologies on Chinese social media after consumers took issue with their merchandise or store locators that listed Hong Kong separately from China. Calls for boycotts spread to major U.S. brands, as Chinese consumers attacked Apple Inc. for listing Hong Kong, Taiwan and Macau in the clock system of its new mobile operating system without specifying they are Chinese territories.
The latest outcry against Western brands comes as tensions increase between Chinese authorities and Hong Kong, a special administrative region of China, and as Beijing remains locked in a trade war with the U.S.
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A scene from Showtime’s ‘Escape at Dannemora’. Showtime is owned by CBS. PHOTO: CHRISTOPHER SAUNDERS/SHOWTIME/ASSOCIATED PRESS
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The ink is barely dry on the merger deal between CBS Corp. and Viacom Inc., and already Wall Street is anticipating which moves the combined company will make to bulk up further in an entertainment industry dominated by a few giants.
Executives at the companies have contemplated the idea of mergers with cable programmers including Discovery Inc. and premium network Starz or its owner, Lions Gate Entertainment Corp., people familiar with the situation say. Sony Corp.’s movie and TV unit, Hollywood studio MGM and AMC Networks Inc. are among other possible targets, industry executives and Wall Street analysts say.
The planned merger of CBS and Viacom brings together Viacom’s several major cable channels including MTV and Nickelodeon—and its movie studio Paramount Pictures—with CBS’s flagship broadcast network and premium cable channel Showtime, among other assets.
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The plan to buy a Dallas house for NRA chief Wayne LaPierre started early last year after the February 2018 high-school shooting in Parkland, Fla. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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A top National Rifle Association executive signed a document agreeing that the gun-rights organization would be 99% owner of a company formed to buy a $6 million Dallas mansion for NRA CEO Wayne LaPierre, according to a copy of the document reviewed by The Wall Street Journal.
The document also shows the NRA agreed to contribute $6.5 million to the company formed to buy the property, raising yet more questions about the NRA’s previous statements that none of the gun-rights group’s money was to be used to purchase the house for Mr. LaPierre.
The house-purchase deal never happened, but conflicting explanations from the NRA and its former ad agency for the aborted transaction have renewed the focus on Mr. LaPierre’s financial dealings with the agency, Ackerman McQueen Inc.
In a statement, NRA spokesman Andrew Arulanandam said: “As we have said repeatedly, neither Mr. LaPierre nor the Board ever formally considered, much less approved, an investment in the house in question or the other properties shown by Ackerman McQueen’s real estate agent.”
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U.S. businesses across a range of sectors increasingly are turning to outsiders to fill finance chief vacancies, with the percentage of businesses seeking CFOs from beyond their ranks reaching a decade high.
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