All eyes are still on retired Hong Kong tycoon Li Ka-shing
Even after announcing his retirement in 2018, Hong Kong business magnate Li Ka-shing is still making headlines. From the introduction of his granddaughter to the family businesses to the recent divestments of his companies from the UK and Europe, recent developments have led analysts and the public to speculate on mainland China's economic conditions and whether Li could make a comeback. Lianhe Zaobao's China Desk delves into the recent developments surrounding Hong Kong's "Superman".
The Li Ka-shing family is the most influential of the four prominent families in Hong Kong, and its every move and action often lands in the limelight. Recently, the emergence of its third-generation members has seen plenty of media coverage in Greater China.
On 24 June, the pro-Beijing Hong Kong Commercial Daily published an article titled "CK Asset's HK$4.8 billion Acquisition of UK REIT Paves Way for Li Ka-shing Eldest Granddaughter, Michelle Li". The article stated that despite her low-profile introduction, the younger Li has made market watchers sit up and take notice.
Li Ka-shing's granddaughter in the spotlight
According to the article, 27-year-old Michelle Li is the eldest daughter of Victor Li, the chair of CK Hutchison Holdings and Li Ka-shing's elder son. She is currently a business development manager at CK Asset Holdings. Both CK Hutchison and CK Asset belong to the Li Ka-shing family.
In May this year, CK Asset acquired the Civitas Social Housing real estate investment trust (REIT), which is publicly listed in the UK, for 485 million British pounds (US$612.9 million) through its subsidiary.
In a press release on the acquisition by CK Asset, Michelle Li was designated as its contact person in her capacity as business development manager. This was widely interpreted as a formal introduction of the third generation of the Li family into the public eye.
Based on public information, Li Ka-shing has two sons and seven grandchildren. His elder son, Victor Li, has three daughters and a son who are all fully grown. Meanwhile, his younger son, Richard Li, has three sons. A commentary noted that Michelle Li is the first third-generation Li family member to make a public appearance.
The Hong Kong Commercial Daily article also included some personal details about Michelle Li, such as her original (Li Yan-ning) and present (Li Si-dek) Chinese names, her interest in windsurfing, and that she graduated from King's College London faculty of law in 2017.
The article also mentioned that Michelle Li keeps a low profile and usually dons a cap, sunglasses and mask in public. In October 2017, Li Ka-shing made public a photograph of him with Michelle Li. In the following year, Michelle Li took on a number of appointments, such as board director of Tai Po's Tsz Shan Monastery, which Li Ka-shing donated money to construct. In 2020, Michelle Li became a board member of the Li Ka Shing Foundation. She has also worked in companies such as Chesterfield Realty, which is privately held by Li Ka-shing.
Is this an allegation that Li is profiting from the troubles of mainland China developers? Neither Li nor his companies have responded to this.
As the granddaughter of a prominent businessman, Michelle Li quickly garnered media interest, and mainland Chinese and Hong Kong media outlets in particular have covered her extensively.
Aside from reporting on Michelle Li, these articles also touched on the recent activities and topics related to Li Ka-shing. Some media outlets even used headlines that say Li Ka-shing remains actively involved in the family businesses despite his retirement.
Even though the magnate, who started out in Hong Kong and subsequently expanded his business empire to many countries, made a high-profile announcement of his retirement in 2018, he is still of great interest to the media.
A series of recent moves
On 27 June, financial news platform wallstreetcn.com reported that Li Ka-shing was in Guangzhou on 19 June and that CK Asset was in discussions with mainland China property developers Logan Group and KWG Property over a potential deal.
The report stated: "KWG is headquartered in Guangzhou, while Logan's base is in Shenzhen, which is about 100 kilometres away. Li's sudden appearance in Guangzhou coincides with CK Asset's prowl of a luxury residential project that KWG and Logan jointly developed in Hong Kong."
According to Bloomberg's report on 26 June, the above-mentioned project is The Corniche, and CK Asset is looking to take over its HK$10.2 billion (US$1.4 billion) loan that Logan and KWG are facing difficulties in servicing, with both having defaulted on offshore debts previously.
According to news outlet Yicai (第一财经), Bai Wenxi, vice-chair of the China Enterprise Capital Union and chief economist at IPG China, said that taking over the loan means owning the rights to the principal, interest income, mortgage, and derived rights for participation in the project, debt restructuring, debt-to-equity conversion, and more.
Bai also added that the party taking over a loan will usually negotiate for the transfer of project ownership instead of using coercive measures to deal with the assets. While there is no legal issue with doing so, it calls into question whether this counts as an act of exploitation from a business ethics perspective.
Is this an allegation that Li is profiting from the troubles of mainland China developers? Neither Li nor his companies have responded to this.
According to Southern Metropolis Daily, The Corniche is a rare, large-scale residential development located in an urban area on Hong Kong Island. With a backdrop of hills and views of the sea, the project is conveniently served by the South Island Line of the Hong Kong MTR. Commuters can reach the Admiralty MTR station directly from the South Horizons MTR station nearby, while the Aberdeen Tunnel makes it a convenient drive to Causeway Bay.
Based on publicly available information, the development only launched 295 units for sale. The usable floor space for the units ranges from 1,340 to 9,663 square feet (around 124 to 898 square metres). Based on the total sales area for the project of 673,000 square feet and a per-square-foot price of HK$50,000, its valuation comes up to around 30 billion RMB (US$4.15 billion).
Aside from news of major business acquisitions, a number of netizens have also shared sightings of Li in Hangzhou on 14 June through Chinese social media platforms. Online photos show Li arriving in a private jet, dressed in a black suit with white shirt and tie and looked rather sprightly.
When The Time Weekly asked someone from CK Hutchison whether Li was in Hangzhou for private or official business, the person was "unable to comment" on Li's itinerary for it is his "personal matter". Notably, Hangzhou is the headquarters for a number of well-known Chinese private enterprises, such as internet giant Alibaba and beverage giant Nongfu Spring.
According to Ejam Finance (易简财经), industry insiders have interpreted this as a signal that the mainland China property market is an upcoming focus for Li.
Another netizen said, "This reminds me of the Li family's sale of a number of their mainland and Hong Kong assets in the last decade. Does it mean that Li Ka-shing is making a comeback?"
Disposing of UK and Europe assets
In fact, one of Li's companies, Hutchison Whampoa, participated in a land auction in Guangzhou in May 2022. Even though it was unsuccessful, this marked the company's return to land auctions in mainland China after sitting out for nearly a decade.
At the time, the move sparked speculations of Li's return to the mainland China market mainly because his companies were also actively disposing of their assets in Europe and the UK. These assets included the 5 Broadgate, a grade A commercial building in London, for 1.21 billion British pounds, and its wireless transmission towers business in Europe for 10 billion euros (US$10.95 billion).
In the Weibo thread titled "Li Ka-shing to sell UK assets worth 100 billion RMB", a netizen commented, "Europe's economy is not doing well. Coupled with the Ukraine war, the Li family is probably forced to sell at this time, but they would still have made a handsome profit."
Another netizen said, "This reminds me of the Li family's sale of a number of their mainland and Hong Kong assets in the last decade. Does it mean that Li Ka-shing is making a comeback?"
In response, a securities analyst who was interviewed by financial news outlet Cailianshe (财联社) said this is probably a fresh round of asset allocation for optimisation based on the global situation. According to Yicai, analysts they spoke to shared that Li might have been prompted to sell those assets due to factors such as the devaluation of the British pound after Brexit, the impact of the Covid-19 pandemic, the flagging UK economy, the tightening of monetary policies, calls by politicians to nationalise public utilities, and a gloomy outlook for Europe's economy due to the Ukraine war.
Against the backdrop of a global economic slowdown, there is no direct link between location and how Li, a business veteran nicknamed "Superman", invests his funds. Instead, his key considerations are the rate of return and stability.
At the 2022 annual performance conference in March this year, CK Asset chair, Victor Li, was asked whether CK Asset will continue selling its assets in the UK. He replied that the overriding consideration is the quality, stability and rate of return of the investment, rather than the country or region. The idea is to have different asset allocation in different phases of the economic cycle. Victor Li emphasised that as a multinational company, CK Hutchison chooses its investments based on the project and not location, and "the most important thing to shareholders is to make money".
In March, Bloomberg reported that CK Hutchison's profits grew by around 10% in 2022, far exceeding analyst expectations. Its globally diversified investments and major transactions helped the company buffer the impact of the Covid-19 pandemic in mainland China, the downturn in Europe's economy, and currency fluctuations. More than half of the company's earnings come from Europe, with mainland China accounting for 20%.
Divesting in stages
Li Ka-shing started out in 1950 as a manufacturer of plastic flowers. Bolstered by the subsequent boom in mainland China's economy, he established a business empire that spans several countries. The flagship of his empire is CK Hutchison, which has businesses in property, infrastructure, retail, ports, telecommunications and more.
In 2013, Li's companies started selling their assets in mainland China and Hong Kong as uncertainty in the property markets increased.
According to the BBC, between 2013 and 2017, the Li family sold more than HK$170 billion worth of their assets in mainland China and Hong Kong. Most of the resulting proceeds were used to acquire companies in countries such as the UK, Portugal and Germany.
At the time, the public opinion in mainland China was that Li was leaving the local market because he was not confident in the Chinese economy.
In 2015, the Liaowang Institute, a think tank affiliated to the Xinhua News Agency, published an article titled "Don't Let Li Ka-shing Get Away". The article argued that Li was able to make his fortune from real estate primarily because he was "intimate with the powers that be" and not totally due to his expertise in the workings of a market economy, so "it will not do for him to go as he pleases".
The article also mentioned that mainland China's real economy requires large inflows of capital, and Hong Kong tycoons should contribute towards revitalising China's economy instead of "withdrawing the moment profits grow slim".
In a three-page-long written response published by Li Ka-shing at the time, he said that he would not withdraw from China. Li even quoted a verse from Tang poet Bai Juyi to rebut doubts of his patriotism: "I do not have a fixed abode, home is where I am at ease (我身本无乡，心安是归处)."
In fact, Li did not leave Hong Kong or mainland China. The borders of nations mean nothing to capitalists who are only interested in preserving their capitals while chasing profits. Against the backdrop of a global economic slowdown, there is no direct link between location and how Li, a business veteran nicknamed "Superman", invests his funds. Instead, his key considerations are the rate of return and stability.
This article was first published in Lianhe Zaobao as "李嘉诚动作频频 长孙女登场".
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