Back in late January we featured a cover image of Li Ka-shing standing at a crossroads, peering towards Europe, while other investors looked towards China and its new Silk Road initiatives (see WiC268). Our article went on to describe how the Hong Kong tycoon had been methodically shifting his asset mix to the UK and continental Europe and away from mainland China – as well as his homebase Hong Kong.
We noted that in the early 1990s around 90% of his conglomerate Hutchison Whampoa’s assets were located in Hong Kong and mainland China. By mid-June of 2014 that figure had declined substantially (to 9.5% in mainland China and just 14% in Hong Kong). We estimated European assets at closer to 60% of the total (including bonds) and these look set to rise with Li’s ongoing purchases on that continent.
Of course, all this had been going for many years and it was hardly clandestine – nor, in fact, was Li’s well-known dissatisfaction with Hong Kong’s political leadership. However, seven months after our cover image appeared, a couple of further transactions seem to have triggered a full-blown Chinese media storm. Perhaps to his surprise, Li is being labelled as ungrateful and unpatriotic.
The first raw nerve seems to have been hit in August when the tycoon put up for sale a Rmb20 billion ($3.1 billion) commercial real estate complex in Shanghai. At a time of jittery sentiment in the Chinese markets this transaction – further thinning Li’s property holdings in the mainland – sent out a fresh signal to market bears that this canniest of investors had lost confidence in China.
Then he announced a merger of his two utility powerhouses, CK infrastructure and Power Assets. The upshot: the domicile of Power Assets (formerly Hongkong Electric, the electricity monopoly on Hong Kong island) will shift from the territory to the Caymans. Lost on no one, the great Li Ka-shing, Beijing Youth Daily reported, now has the domicile of all 10 of his major listed firms outside Hong Kong. Did this signal a loss of confidence in his home city too?
The initial backlash? From a think tank that is part of state news agency Xinhua. Titled “Don’t let Li Ka-shing run away”, it ran an angry commentary that warned Li against deserting China, saying he had enjoyed a great run in past decades through special favours from Beijing and that he still had “missions” to fulfill in the country.
This week People’s Daily, the official mouthpiece of the Party, followed up with a blistering article.
“Li Ka-shing’s choices do appear particularly brazen,” it commented, before warning him how it all looked “in the eyes of ordinary people”. After all, it said, Li shared comfort and prosperity in the good times “but when the hard times come he abandons us – this has really left some people speechless.”
“Businessmen have their own motherland,” the People’s Daily continued, lacing its rhetoric of betrayal with a prophecy that the 87 year-old would end up the loser by shunning China and its growth story. But it stopped short of endorsing the idea that the government block Li’s planned sales: “Even if it is morally legitimate to stop him from moving his capital out now because of the special privileges he received in the past, it is not logical and it is not in accordance with the law.”
Between love and hate, sometimes indifference hurts the most. Securities Times, another state newspaper, suggested: “Let Li Ka-shing run away if he wishes. The sky won’t collapse.”
In contrast to the outcry against Li in the official media, some bloggers were more sympathetic. “Are we switching back to the Fight the Landlords mode?” one liberal netizen commented on weibo, referring to a nationwide campaign by the Party in the 1950s to seize land and assets from landlords. “Li Ka-shing must definitely want to run away now after seeing articles like this,” another concurred.
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