Li Ka-shing's apparent move to reduce his investments in Hong Kong could damage the city's economic competitiveness, says a study by a central government think tank.
Hong Kong still ranked as the most competitive Chinese city last year, according to the annual "blue paper" by the Chinese Academy of Social Sciences (CASS).
But it said soaring property prices and the lack of innovation could hamper the city's growth and it could be overtaken by other Chinese cities.
"[There are also] rumours about Li Ka-shing and his group's plan to withdraw from Hong Kong. If [the group] frequently sells assets in the latter half of this year, it could affect Hong Kong's overall business competitiveness," the report said.
Coincidentally, Cheung Kong and Hutchison Whampoa - the two flagship firms controlled by Li - reduced their shares in Hong Kong-listed Hui Xian Real Estate Investment Trust yesterday.
Rumours about Li's intentions have been swirling since the planned sale was announced last year of his ParknShop supermarkets, later abandoned.
In November, he rejected suggestions he was pulling out of the city as a "big joke". But in January, Hongkong Electric Investments - part of his energy flagship, Power Assets - raked in HK$52 billion in an initial public offering. And in March, Li sold a 60 per cent stake in the container port's Terminal 8 West for HK$2.47 billion.
In February he gave a downbeat assessment of Hong Kong, pointing to Occupy Central, the harassment of mainland tourists and declining competitiveness vis-à-vis neighbouring markets.
In response to the CASS report, Cheung Kong said Li, its chairman, had emphasised on several occasions that the group had no plans to withdraw from the city. "Hong Kong and the mainland will continue to be the group's important investment area," a company statement said.
Liao Qun, chief economist of Citic Bank International, said: "It is hard to say whether rumours of [Li] cashing in will affect the city's competitiveness.
"Li has sold assets in Hong Kong and in some mainland cities. But I see it as an asset allocation. I do not think he will sell his assets in Hong Kong and mainland on a large scale."
Dr Chan Kin-man, co-organiser of the Occupy Central movement, said the protest could create "short-term disturbances", but that Hong Kong would become more competitive if it had real democracy.
The CASS report said Hong Kong could leverage the support of Beijing to develop as an offshore yuan and international asset management centre.
It added that a transparent government coupled with an efficient transport system could also help to sharpen its edge over other mainland cities.
But Hong Kong faced a challenge because of its high level of dependence on the financial and real estate sectors and its rapidly ageing population.
"The development of small-to-medium-sized enterprises has been affected by high rentals," the report added.
Political commentator Johnny Lau Yui-siu said: "It is academic research. It does not mean that it represents the central government's stance."
Additional reporting by Benjamin Robertson and Tony Cheung