Un­rest starts to weigh on HK

Can­celed IPOS point to dented in­vestor con­fi­dence

Global Times US Edition - - BIZUPDATE -

Af­ter weeks of vi­o­lent un­rest in Hong Kong, warn­ing signs of a po­ten­tially dev­as­tat­ing eco­nomic im­pact on the global fi­nan­cial hub have started to pile up, as sev­eral re­cent ma­jor deals un­der­scored un­ease among busi­nesses in the city and be­yond.

On Mon­day, Hong Kong-based real es­tate de­vel­oper CK As­set Hold­ings, which is con­trolled by the fam­ily of the city’s richest man Li Kash­ing, an­nounced that it had agreed to ac­quire Greene King, a pub chain and brewer in the UK, for 4.6 bil­lion pounds ($5.6 bil­lion). CK As­set will also take over Greene King’s debts.

Though the com­pany stressed that the deal was based on con­sid­er­a­tions for the UK com­pany’s at­trac­tive land as­sets and abil­ity to gen­er­ate cash, the move im­me­di­ately re­vived lin­ger­ing spec­u­la­tion about the Li fam­ily shift­ing its busi­nesses from the Chi­nese main­land and Hong Kong to over­seas.

Liang Haim­ing, an econ­o­mist at Hainan Univer­sity, said that CK As­set made the deal most likely due to the cheaper price of the tar­get as the pound de­pre­ci­ated sharply due to its Brexit chaos. Since the Brexit ref­er­en­dum in 2016, the UK cur­rency has de­pre­ci­ated about 18 per­cent against the Hong Kong dol­lar.

“Li has in­deed with­drawn a large amount of money from the main­land and Hong Kong to in­vest in Europe and the US, par­tic­u­larly the UK,” Liang said. Ac­cord­ing to some es­ti­mates, Li has un­loaded as­sets in the main­land and Hong Kong worth nearly 200 bil­lion yuan ($28.33 bil­lion) over the past few years, while in­vest­ing more than HK$400 bil­lion ($51 bil­lion) in the UK alone.

Li has de­nied ru­mors of with­drawal from the main­land and Hong Kong and said in 2018 that he loves China and he loves Hong Kong. Last week, Li broke his si­lence since the protests started in June and bought news­pa­per ads that called for an end to vi­o­lence in Hong Kong. CK As­set also joined other de­vel­op­ers in the city to voice their op­po­si­tion to vi­o­lence.

“Per­sis­tent chaos is no doubt hurt­ing Hong Kong’s econ­omy and rep­u­ta­tion,” Liang said, “but the main­land has a huge mar­ket, China’s eco­nomic de­vel­op­ment will not be stopped by any in­di­vid­ual leav­ing or com­ing, as long as the pub­lic still have con­fi­dence in the main­land econ­omy.”

Adding to the signs of un­ease was a re­ported de­ci­sion by Chi­nese e-com­merce gi­ant Alibaba Group to post­pone its list­ing in the Hong Kong Stock Ex­change, which had been planned for August.

Alibaba’s de­lay of its up to $15 bil­lion IPO was due to the “lack of fi­nan­cial and po­lit­i­cal sta­bil­ity in Hong Kong,” Reuters re­ported on Wed­nes­day, cit­ing peo­ple fa­mil­iar with the sit­u­a­tion.

In a blog post on Sun­day, Hong Kong Fi­nan­cial Sec­re­tary Paul Chan Mo-po warned that the Hong Kong econ­omy might face a re­ces­sion in the third quar­ter and an “eco­nomic typhoon” is im­mi­nent, call­ing on all par­ties to drop their dif­fer­ences and work to­gether to min­i­mize the im­pact.

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