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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Goldman Sachs’ chief executive has warned that global investors are still “predominantly on the sidelines” over deploying capital in China because of weak consumer confidence and difficulties getting money out of the country.

David Solomon said investors “continue to be concerned” about cashing out of investments in the world’s second-largest economy.

“It’s been very difficult over the course of the last five years to get capital out,” he told an event on Tuesday organised by the Hong Kong Monetary Authority, the territory’s de facto central bank.

“I think you’ve got a combination of issues that have global investors predominantly on the sidelines with respect to capital deployment,” Solomon said.

He added that investors would like to see “an improvement in consumption” in China and “continued progress in the opening up of the capital markets”. 

Speaking on the same panel, Morgan Stanley chief executive Ted Pick said he agreed with Solomon. “Transparency is important and battling deflation takes time,” he said.

Deflationary pressures have increased in China, where the country’s leadership is trying to stabilise a property sector crisis and boost domestic consumption in order to meet its economic growth target of 5 per cent for the year.

Chinese stocks rallied in September after Beijing launched a stimulus package, including measures to boost the stock market. But the rally has cooled as authorities held off from making significant new fiscal spending announcements.

The CSI 300, China’s blue-chip index, on Tuesday closed down 11 per cent from a post-stimulus peak on October 8.

“The fiscal piece will take time, the real estate dynamic is going to take a number of quarters,” said Pick. “Clearly the name of the game here is to reignite consumer confidence and that’s something that takes a while to take hold, but we’re seeing some green shoots.”

The conference is a sign of HKMA’s sway over global financial institutions even as US-China relations fray. The annual event is attended by the biggest names on Wall Street, in part because the HKMA oversees hundreds of billions of dollars and is a valuable client and limited partner of many of the institutions.

Attendees included Apollo Global Management’s chief executive Marc Rowan, Blackstone president Jon Gray, and leading figures from buyout groups KKR, TPG, CVC and Carlyle.

Solomon and Pick were responding to a question from deputy HKMA chief Howard Lee about whether China’s stimulus package and “positive remarks” from Beijing officials, who stressed the importance of China opening up to the world, would make investors “feel more assured” about the country.

Earlier in the morning, China’s vice-premier He Lifeng delivered a speech in which he said mainland officials wanted to preserve Hong Kong’s status as an international financial centre while encouraging greater mutual market access between the city and the rest of mainland China.

The bank bosses spoke briefly about Donald Trump’s US election victory. Citi chief executive Jane Fraser said it had prompted a “big unlock” in demand for initial public offerings and mergers and acquisitions that had been “very gummed up” in recent years.

The prospect of reduced regulation “puts many CEOs in a good mood”, she said.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

A Hong Kong court has sentenced 45 leading pro-democracy activists to up to 10 years in prison in a landmark security case as authorities stamp out dissent in the Chinese territory.

Legal scholar Benny Tai received 10 years in prison, the heaviest sentence. The court, in its ruling on Tuesday, said that Tai was a “principal offender” in organising an unofficial primary election in 2020.

The other defendants received sentences of between four and eight years. Joshua Wong, a former leading student protest organiser, was sentenced to more than four years in prison, while Gordon Ng, an Australian national, received more than seven years.

“One day in prison is too many,” said Chan Po-ying, wife of former lawmaker Leung Kwok-hung, 68, who was sentenced to 81 months.

The trial of the Hong Kong 47, as the case was known, was the largest national security trial in Hong Kong, which has been struggling to restore its reputation as an international financial centre in the wake of Beijing’s political crackdown and coronavirus pandemic restrictions.

“This case is unprecedented in Hong Kong’s history of democratic movement,” said Eric Lai, a research fellow at Georgetown University’s Center for Asian Law. “Hong Kong’s pro-democracy movement will suffer for many years due to the vacuum of leaders and outstanding activists.”

The defendants — who were arrested in sweeping dawn raids in January 2021 — represented some of the city’s most prominent pro-democracy politicians, activists, union officials, journalists, academics and student leaders.

Thirty-one, including Tai and Wong, had pleaded guilty in hopes of receiving reduced sentences, while 14 were convicted in May. Two were previously acquitted, though prosecutors have filed an appeal against one of the acquittals.

Most of the defendants have been in detention for more than three years after being denied bail. The charges carried a maximum penalty of life imprisonment.

This is a developing story

An attorney for Pete Hegseth, the Fox News host and President-elect Donald Trump’s nominee for defense secretary, confirmed to NPR that Hegseth had paid a woman who accused him of sexual assault in order to prevent her from filing a lawsuit that could damage his career.

Hegseth, 44, has denied the woman’s allegations. The incident took place in 2017.

The Washington Post reported Saturday that Hegseth’s lawyer, Timothy Parlatore, had said in a statement, Hegseth reached a settlement with his accuser, including paying her an unknown amount of money in exchange for her signing a nondisclosure agreement. This arrangement was intended to stop her from filing a lawsuit and to protect Hegseth’s position at Fox News, the Post reported.

Hegseth’s lawyer, Timothy Parlatore, told NPR on Monday that the information attributed to him was accurate, which first reported news of the settlement. According to the Post article, a friend of the woman had shared information about the incident in a memo sent to the Trump transition team last week. NPR has not independently confirmed the contents of the memo.

No charges were filed, Trump team says

“President Trump is nominating high-caliber and extremely qualified candidates to serve in his Administration,” Trump Communications Director Steven Cheung said in a statement to NPR.

Hegseth’s nomination will go forward, Cheung said.

“Mr. Hegseth has vigorously denied any and all accusations, and no charges were filed,” he said. “We look forward to his confirmation as United States Secretary of Defense so he can get started on Day One to Make America Safe and Great Again.”

Trump has himself been convicted of falsifying business records connected to hush money payments, to adult-film star Stormy Daniels, a case he claims is politically motivated.

What is Hegseth accused of?

In 2017, Hegseth was named in an investigation by the Monterey Police Department concerning a reported sexual assault at a golf resort in California. According to a statement from city officials, Hegseth acknowledges having sexual intercourse with the woman but insists it was consensual.

The incident occurred in the early hours of Oct. 8 at 1 Old Golf Course Road, which is the address of Hyatt Regency Monterey Hotel and Spa. Police say the woman reported an injury to her right thigh. Their news release does not disclose the alleged victim’s name or age; however, she was 30 at the time and worked for the California Federation of Republican Women, assisting with logistics while Hegseth spoke at their conference.

She was staying at the hotel with her husband.

Hegseth’s relationship status at the time was complicated: in 2017, his second wife filed for a divorce “around the same time” he and his current wife had a baby, according to The Washington Examiner.

In his statement to the Post, Parlatore says that Hegseth had been drinking at the hotel bar and was intoxicated when he went to his hotel room with the woman. According to the Post, the memo from the woman’s friend said that the woman took Hegseth to the room after being informed that he was being a nuisance to other women. A few days later, she contacted the police to report a sexual assault.

After the woman hired an attorney a couple of years later to consider a lawsuit, both parties reached an agreement. Parlatore noted in his statement to the Post that the MeToo movement was gaining momentum at the time, and he told CBS News that Hegseth would have faced “an immediate horror storm” had he been publicly accused of sexual assault, a quote that Parlatore confirmed to NPR.

The incident in Monterey occurred about a year after Fox News settled with former Fox & Friends co-host Gretchen Carlson for $20 million over her sexual harassment claims against the network’s former chairman, Roger Ailes. Between early 2017 and 2020, the network experienced several high-profile departures linked to misconduct, including hosts Bill O’Reilly and Eric Bolling, Washington correspondent James Rosen and news host Ed Henry.

Hegseth is known for his TV work, and loyalty to Trump

When Hegseth was nominated last week, his selection seemingly surprised several Republican lawmakers; as NPR reported, his name was not on the known shortlist of potential nominees. But it continued a pattern of Trump’s placing loyalists and Fox News personalities in prominent positions.

Trump’s selection has put Hegseth, who lives in Tennessee with his wife and seven children, under intense scrutiny.

Prominent Democrats and military experts have raised questions that range from the meaning of his tattoos and political ethos to whether Hegseth is qualified to oversee the country’s largest employer. The Defense Department has “more than 2.1 million Military Service members and over 770 thousand civilian employees,” according to a 2020 fiscal report.

Hegseth is a Minnesota native who served as an officer in the Army National Guard, leaving service as a major in 2021 after deployments to Iraq and Afghanistan, according to his official biography. He earned a master’s degree in public policy from Harvard University in 2013.

Those questioning Hegseth’s qualifications include Rep. Betty McCollum, D-Minn., the ranking member of the House Appropriations Subcommittee on Defense.

“I have great respect for anyone who has served our nation in the U.S. Armed Forces. However, not everyone who has worn the uniform is qualified to lead the Department of Defense,” McCollum said in a statement, adding that she is concerned that Hegseth “is ill-prepared to serve as Secretary of Defense.”

Military has its own sexual assault issues

If confirmed, Hegseth would lead a U.S. military that has been trying to reduce the alarming rates of sexual assaults from military academies to overseas deployments.

In a notable shift, the Defense Department implemented a change earlier this year that grants independent military lawyers the authority to handle sexual assault cases,
removing these matters from the chains of command of either the accused or the victim.

This change to the military justice system was backed by the current defense secretary Lloyd Austin.