Hong Kong’s ‘superman’ billionaire and the battle over the Panama Canal – Tech Journal

If anybody can take the lengthy view on Donald Trump, it’s Li Ka-shing, the 96-year-old Hong Kong billionaire who fled the Sino-Japanese warfare as a toddler and constructed a world empire from scratch.

The US president has mentioned “China is working the Panama Canal”, pointing to CK Hutchison’s operation of two ports there, a declare that echoes issues first voiced when the group secured the contracts in 1997.

Panamanian attorneys have launched a lawsuit in an try to cancel the concessions, whereas the federal government of Panama is auditing the group.

Hong Kong’s richest man, nicknamed “Superman”, has constructed his group spanning ports, retail, infrastructure and telecoms on strategic investments within the west. Whereas he has weathered criticism over hyperlinks to China earlier than, together with in Australia and the UK, the newest onslaught comes at a difficult time.

The corporate is underneath stress to spice up its shares — which have fallen greater than 40 per cent over the previous 5 years and underperform Hong Kong’s Hold Seng benchmark — and to dip into its greater than HK$130bn (US$16.7bn) warfare chest to safe greater acquisitions such because the UK’s Thames Water.

Its infrastructure arm, CK Infrastructure, this month made a preliminary £7bn bid for a majority stake in Thames Water, rivalling a £4bn bid from US non-public fairness agency KKR. Analysts anticipate pushback over its ties to China.

“We don’t rule out geopolitics constraining the CK group’s growth plans,” mentioned Lorraine Tan, director of Asian equities analysis at Morningstar.

Liwho fled to British-run Hong Kong on the age of 12, had his begin in plastics manufacturing earlier than increasing into property and telecoms. The corporate in 2023 reported revenue of $3bn and is one in every of Hong Kong’s largest conglomerates.

Like many Hong Kong tycoons of his era, Li ran his firm in a different way to these in mainland China, the place companies are topic to tighter authorities management.

However because the territory’s handover to China in 1997, Hong Kong companies have been more and more perceived as Chinese language, significantly after pro-democracy protests in 2019 and the introduction of a sweeping nationwide safety regulation the next 12 months.

In 2020, the Trump administration revoked Hong Kong’s particular commerce privileges and mentioned the US now not thought of the town as autonomous from China.

“Hong Kong used to profit from one of the best of each worlds,” mentioned an individual in shut contact with Hong Kong’s conglomerates, together with CK Hutchison. “Now [companies] are caught up within the tug of warfare between the 2 sides [China and the west].”

Whereas some Hong Kong tycoons — particularly these with vital investments in China — have grow to be nearer to prime Beijing officers because the handover, Li and CK Hutchison have had a trickier relationship.

Li supported the appointment of Beijing-backed hardliner John Lee as Hong Kong’s chief in 2022 and the introduction of the nationwide safety regulation. He has additionally affirmed his assist for Xi Jinping as China’s chief and met Xi a number of occasions. However his sale of a number of of actual property holdings in China prompted criticism from state-affiliated media, together with an article headlined “don’t let Li Ka-shing run away” in 2015.

His son Victor, who handles day-to-day operations, in 2023 was faraway from the standing committee of China’s prime political consultative physique. “They [Li and his family] must play it good with Beijing and seem as patriotic people or firms,” mentioned Jean-Pierre Cabestan, a senior analysis fellow on the Paris-based Asia Centre think-tank.

“Many governments, significantly the US authorities, have concluded that any Hong Kong firm is an agent of the Chinese language Communist social gathering, which is clearly unfaithful, significantly CK Hutchison,” mentioned Cabestan.

Li’s investments within the west stay pivotal to the group.

CK Hutchison generated greater than half of its 2023 income from the UK, Europe and Canada, whereas lower than a fifth stems from mainland China and Hong Kong.

Within the UK, Li’s household controls UK Energy Networks, Northumbrian Water and Phoenix Vitality. Final 12 months, the infrastructure arm purchased 32 UK wind farms and launched a second itemizing on the London Inventory Change.

Li’s conglomerate and subsidiaries additionally runs Eversholt Rail, the telecoms community Three UK, in addition to well being retailer Superdrug and the port of Felixstowe, one in every of Britain’s largest container ports. CK Asset, its property arm, owns the pub group Greene King, one of many greatest within the nation.

Some observers and politicians anticipate its potential acquisition of Thames Water to face pushback.

The Labour authorities ought to ask themselves whether it is “proper [for] an organization from a overseas state, the place their nationwide safety regulation requires these firms to do as they’re informed . . . [to operate strategically important utilities] and resolve whether or not or not this will proceed”, mentioned former Tory chief Sir Iain Duncan Smith. “My view is it shouldn’t.”

For CK Hutchison, its focus is utilizing its “pretty sizeable warfare chest” to make new investments, mentioned Tan at Morningstar. “They want to return to being profitable in making extra significant acquisitions going ahead.”

At 96, Li Ka-shing is in good well being and frequently returns to the Seventieth-floor workplace of his conglomerate. The group didn’t reply to a request for remark.

A senior individual near Li beforehand informed the Monetary Occasions there was “nothing” the corporate may do about the truth that it was more and more perceived as Chinese language. However that notion “shouldn’t restrict what we do”, the individual mentioned.

“We will’t change who we’re,” the individual mentioned.

Information visualisation by Haohsiang Ko