China tightens the noose
THE worst fears of Hong Kong’s richest person Li Ka-shing, proprietor of trading behemoth Hutchison, are being realised.
When the Union Flag was hauled down in 1997, Li recognised the potential danger to Hong Kong’s democracy and free markets if sovereignty were handed over to Beijing. He has spent the last several decades diversifying the family’s wealth.
Li viewed Britain as a safe haven and has poured more than £40bn of investments into the country. These include Britain’s premier container port at Felixstowe, water companies up and down the land and mobile network Three.
Last year he splashed out nearly £5bn on the Greene King brewery and pub network. That is just as well given the existential threat to less well-endowed landlords caused by Covid-19.
China showed restraint last year during Hong Kong’s street and parliamentary protests. No tanks lumbered onto the streets and only a handful of lives were lost. Now we know that President Xi Jinping and his nodding dog assembly was biding its time and has passed a tough security law which tightens its control over the territory.
The clampdown must also be regarded as a threat to the City, which has long regarded Hong Kong as its main outpost in the Pacific. Britain’s largest bank, HSBC, makes most of its money in Hong Kong and Asia and currently is engaged in a retrenchment in Europe and the US which will leave it even more heavily exposed to Beijing’s sphere of influence.
Our biggest insurer Prudential, may still be based in London, but operations are focused on Hong Kong and China. The London Metal Exchange is owned by the Hong Kong Stock Exchange. Only last year the Hong Kong exchange made a failed £32bn bid for its valuable London counterpart.
Beijing’s super-rich are estimated to have parked more than £800bn in Hong Kong. Bankers report that money is on the move again. A Chinese client of a Hong Kong bank bought five apartments in Singapore and moved his family investment office there this week in expectation that the People’s Republic will squeeze the lifeblood out of the region. The Americans will almost certainly respond to Beijing’s move by imposing sanctions on companies and individuals close to President Xi and his circle.
If Beijing planned to sneak in its gradual political power grab in Hong Kong, under the radar of a pandemic, the UK must disabuse it without delay. It is in defiance of solemn undertakings made to Britain and a blow to our economic interests.
AT A time when the prospects of much of UK clothing retail are so dismal the success of online fast fashion pioneers Boohoo and Asos is something to savour. In spite of a quote on the less regulated AIM market, Boohoo has attained a valuation of £4.7bn, which is more than twice that of Marks & Spencer’s worth, currently less than £2bn.
The rise and rise of Boohoo does not mean that it is excused from normal governance rules. The decision to buy out the minority interest in its brasher sister Pretty Little Thing needs careful scrutiny.
The potential £324m deal is a family affair. Pretty Little Thing is run by a son of Boohoo founder and executive chairman Mahmud Kamani and is the target of criticism from short-seller Shadowfall. It alleges the profits of Pretty Little Thing are exaggerated.
Valuations for fashion enterprises are notoriously unreliable, as we learned at Ted Baker. The accounts of Jigsaw’s parent company were qualified because the auditors were not able to confirm the valuation of stock.
Boohoo has ambitions to build a brand presence, alongside its cheap and cheerful approach, and acquired the Coast and Karen Millen brands. It would be a pity if its advance were interrupted by questions over inter-company dealings. Sitting Pretty Vaccine race
ASTRAzENECA has cornered recent favourable headlines with its backing for the Oxford Covid-19 vaccine trials and a new heady stock market valuation. So it is good to know its UK compatriot and rival GSK is hard on its heels.
GSK has laid out plans to produce 1bn doses of vaccine-efficiency boosters, or adjuvants, as it races to come up with a riposte to coronavirus in partnership with France’s Sanofi.
Even better it is pledging to make the adjuvant available to poor nations by donations through global institutions.
That’s the spirit.