Law­maker takes loan at 18pc in­ter­est to buy Hong Kong prop­erty

Irish Independent - Business Week - - TECHNOLOGY - Fox Hu, Shawna Kwan and Ben­jamin Robert­son

Just how at­trac­tive is Hong Kong prop­erty? A re­cent stock ex­change fil­ing shows that some peo­ple will con­tinue to pay up for the chance to buy in. Hong Kong busi­ness­man and law­maker Peter Wong Man Kong will pay an 18pc in­ter­est rate on one of three loans to buy a prop­erty in Deep Wa­ter Bay, an area known for lux­ury homes.

The de­tails were re­ported to the ex­change be­cause Wong is an in­de­pen­dent di­rec­tor of fi­nance com­pany Sun Hung Kai & Co.

A unit is ex­tend­ing the HK$155m ($19.8m) of loans, mak­ing the deal a “con­nected trans­ac­tion” re­quir­ing pub­lic dis­clo­sure.

Wong’s deal comes as Hong Kong’s prop­erty mar­ket, on a bull run for most of the past 15 years, is show­ing signs of cool­ing. While much of the money he’s bor­row­ing is at 7.6pc, one loan is at 18pc and an in­stal­ment of an­other loan is at 19.6pc. While stock ex­change rules al­low the ar­range­ment, ac­tivist in­vestor David Webb doesn’t like it. “It’s hard to be in­de­pen­dent of some­one who has a mort­gage on your prop­erty,” Webb said by email.

“In­vestors should not con­sider him to be in­de­pen­dent, even if the stock ex­change does.”

A non-ex­ec­u­tive di­rec­tor’s in­de­pen­dence is more likely to be ques­tioned if the di­rec­tor is fi­nan­cially de­pen­dent on the listed is­suer or its units, ac­cord­ing to HKEX’s list­ing rules. “I’d say some­one who finds it nec­es­sary to bor­row from a non-bank lender at high in­ter­est rates is ‘fi­nan­cially de­pen­dent’ on that lender,” Webb said.

For its part, the com­pany re­it­er­ated to Bloomberg what it told the stock ex­change: that the terms of the loan agree­ment were af­ter arm’s length ne­go­ti­a­tions be­tween Sun Hung Kai Credit and Wong, and in line with the unit’s or­di­nary busi­ness prac­tices.

No com­ment was im­me­di­ately avail­able from Wong, who’s a life honorary chair­man of Hong Kong’s Chi­nese Gen­eral Cham­ber of Com­merce and a del­e­gate to the Chi­nese leg­is­la­ture, ac­cord­ing to the cham­ber’s web­site.

He serves as in­de­pen­dent non-ex­ec­u­tive di­rec­tor for listed com­pa­nies in­clud­ing MGM

China Hold­ings Ltd. and Far East Con­sor­tium In­ter­na­tional Ltd.

Sun Hung Kai & Co. is sep­a­rate from prop­erty gi­ant Sun Hung Kai Prop­er­ties Ltd.

(Bloomberg)

Lux­ury homes: While Hong Kong’s prop­erty mar­ket has been on a bull run for most of the past 15 years, it is now show­ing signs of cool­ing

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