PwC China expects 6-month enterprise ban over Evergrande audit | Invesloan.com

Good morning. We have the latest from the Democratic National Convention and the search for those still missing from the sinking of a yacht off the Sicilian coast.

But first, we start with an exclusive report on PwC. The Big Four firm’s China business has told clients it expects Chinese authorities to hit it with a six-month business ban that will start as early as next month, as part of punishment over its audit of collapsed property developer Evergrande.

The action against PwC comes after China’s securities regulator in March said Evergrande had inflated its mainland revenues by almost $80bn in the two years before the developer defaulted on its debts in 2021, despite PwC China giving the accounts a clean bill of health.

The business ban, which could come with a large fine, would be the toughest-ever action by Chinese regulators against a Big Four firm as Beijing steps up scrutiny over the role of auditors in financial scandals.

While it may not threaten the survival of PwC Zhong Tian, the entity commonly known as PwC China, here’s how the ban would disrupt operations at the firm.

And here’s what else I’m keeping tabs on today, including plenty for monetary policy watchers:

• Economic data: The Eurozone, France, Germany, the UK and the US have flash purchasing managers’ indices.

• Jackson Hole: Top central bankers gather in Wyoming for their annual symposium, with all eyes on Federal Reserve chair Jay Powell’s speech tomorrow.

• Central banks: The European Central Bank releases minutes from its last monetary policy discussion, after records of the Fed’s July meeting showed most rate-setters were ready to cut interest rates in September.

• US politics: Kamala Harris is set to close the final night of the Democratic National Convention in Chicago with a speech accepting her party’s presidential nomination. We have more on last night’s speeches below.

Thanks for reading FirstFT. Have lingering questions about today’s scoop on PwC China or this newsletter? Email us at [email protected] or hit “reply” and remember to include your name and where you’re writing from. We’ll answer as many as possible in a special weekend edition of the newsletter.

Five more top stories

1. Tim Walz attacked Donald Trump as bizarre and extreme as he called on Americans to “turn the page” on the Republican candidate. Kamala Harris’s running mate portrayed the vice-president as a defender of freedoms at the third night of their party’s convention, which also saw appearances from Bill Clinton and Oprah Winfrey. Here’s more from the Democratic National Convention in Chicago.

• Fundraising race: Harris raised four times as much money as Trump last month, according to a Financial Times analysis, bringing in $204mn.

• Foreign policy: How would a Harris presidency deal with America’s changing place in the world order? Much could depend on a low-profile pragmatist who has the vice-president’s ear.

2. Five bodies have been found by divers searching the wreckage of Mike Lynch’s superyacht Bayesian, which sank off the coast of Sicily. Authorities have yet to identify them. Four bodies were pulled from the sunken yacht yesterday, while a fifth body was found but not yet removed. A sixth person remains missing. More details here.

3. Big Tech is looking to convert old power stations into data centres as finding suitable locations with sufficient power for the energy-hungry facilities becomes increasingly challenging. Although decommissioned coal power stations and other industrial sites are “more complicated”, here’s why they are attracting the largest cloud computing service providers.

4. Top US law firms are offering their junior lawyers as much as $50,000 to refer acquaintances for jobs amid a renewed war for talent. The size of such payouts increased in 2021 and 2022, and a frenzied market for mergers and acquisitions is driving high demand for lawyers again after a lull last year. Here are the firms making a renewed hiring push.

5. Unions are expected to press the UK government for “pay restoration” to make up for a decade of public sector real-terms salary cuts. The move from the Trades Union Congress will clash with the Labour administration’s attempts to keep a grip on the country’s strained public finances. Here’s how much union demands could cost British taxpayers.

The Big Read

The agricultural lobby is a sprawling, complex machine with vast financial resources, deep political connections and a sophisticated network of legal and public relations experts, winning it significant subsidies and exemptions in the EU and US. While the sector argues they are protecting farmers’ livelihoods, critics fear the industry’s power has given it a free pass on issues such as pollution.

We’re also reading and listening to . . . 

• 🎧 Deepfakes: How worried should we be about AI-generated images, videos and audio? Find out in the latest episode of our Tech Tonic podcast.

• Climate and tourism: From refurbishing damage caused by wildfires to heatwaves affecting travel habits, climate change is shaking up the industry.

• German politics: Sahra Wagenknecht, the country’s most prominent far-left politician has taken credit for the government’s decision to limit military aid to Ukraine.

• Population decline: An ageing, shrinking population will add to pressure on wages and pensions, but there are opportunities for investors, writes Simon Edelsten.

Chart of the day

Western investors have piled back into gold as they position for US interest rate cuts this year, helping to drive prices to record highs on top of this week. Prices reached $2,531 a troy ounce in trading on Tuesday, taking the precious metal’s gains for the year to more than a fifth, boosted by purchases by institutional investors and bullish hedge fund bets.

Take a break from the news

Who doesn’t love mushrooms in a fry-up? But beyond a delicious meal with high nutritional value, fungi can also make for beautifully sculptural and surreal pot plants, writes Alice Lascelles.

Additional contributions from Emily Goldberg and Melody Abike Adebisi