Weak Chinese economy steers Li’s business to shift to Europe
Print Edition
FAMED for his sharp business acumen and knack for perfectly timed investments, Hong Kong billionaire Li Ka-shing is shifting away from a slowing Chinese economy and bargain hunting in Europe.
The move is seen as a quest for stability for Li’s vast empire and a sign of diminishing confidence in the region.
The tycoon’s holdings are embodied in a striking 63-story glass skyscraper in the heart of Hong Kong and his business decisions have the potential to affect property and utility prices for the city’s 7 million residents.
But his focus is now switching to European and other foreign markets.
The announcement just over a week ago that he plans to buy UK phone giant O2 for up to US$15.4 billion follows prolonged asset offloading in China’s mainland and Hong Kong — and a major reshuffle of his business empire announced last month.
The 86-year-old, dubbed “Superman,” dismissed talk of a withdrawal from the region as “a big joke” last year.
But analysts say that his moves are a reaction to the China slowdown.
“The concern about economic growth seems to be the major reason for them (Li’s companies) to make such dramatic moves during recent months,” financial analyst Castor Pang said.
Pastures new
Li has offloaded major property investments on the mainland — where growth slowed to a 24-year low last year — after investing heavily there in the 1990s.
Shortly before the O2 move, Li’s firm Cheung Kong said it would buy Britain’s Eversholt Rail Group, which owns 28 percent of the nation’s passenger trains, for US$3.8 billion.
Li is playing the market with Europe a bargain hunter’s playground, says Pang, head of research at Core Pacific-Yamaichi International.
“He is quite good at timing for acquiring business and assets at the lowest price, this could also be why he chooses the European market at this moment.”
Independent financial analyst Francis Lun adds that the O2 move is a clear sign Li is steering away from Hong Kong and the region.
The major restructuring of his businesses in January also saw assets from multiple sectors combined under two new listed companies to be incorporated in the Cayman Islands.
“He is transferring registration to Cayman Islands, shaving off a lot of his Hong Kong and Chinese mainland assets and investing in what you call politically safe areas,” Lun said.
The revamp of his empire is also largely seen as paving the way for Li to hand over the reins after he retires.
Shares in Cheung Kong and Li’s Hutchison Whampoa — two of Hong Kong’s largest companies — jumped over 10 percent after the reshuffle announcement and have remained stable following the O2 move.
Asia’s richest man — worth US$31.4 billion according to the Bloomberg Billionaires Index — Li was born in 1928 in the Chinese city of Chaozhou.
He and his family fled to neighboring Hong Kong during the War of Resistance against Japan’s Aggression — Li recalled bombs being dropped on his hometown when he was in primary school, according to an interview with Forbes Magazine in 2012.
Li first started his own business in 1950 manufacturing plastic flowers. He called the company Cheung Kong after China’s Yangtze River and set it up with just US$8,700, said Forbes.
But after diversifying into property he saw large profits in the 1960s and in the next decades his businesses reached into many sectors of Hong Kong, including utilities, retail and telecommunications.
Li has had a long-standing interest in overseas markets, making investments in the Canadian property and energy sectors in the 1980s.
In recent years, he has sold off local and regional assets while other Hong Kong tycoons, such as the Kwok family who owns Sun Hung Kai Properties, remain heavily invested.
This move sets him apart, says Lun.
“He is a maverick — maybe he is a precursor for things to come.”
But for Li, the moves indicate a quest for stability and security for the next generation.
After the revamp, when asked if he was preparing to pass the baton to his son Victor, Li said: “The tracks have been laid down, everyone has a goal, it’s a good thing for the company’s foundation.”
However, Li shows little sign of slowing down and has given no timescale for his retirement.
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