Li Ka-shing's two-pronged attack on Jardines is a major vote of confidence in the future of Hong Kong. Those who believed it would be business as normal after the handover have been proved right by his choice of this moment to go on the offensive against a company that goes to the heart of the territory's history as an Asian business hub. Despite both parties attempting to play down the issue yesterday, the general view is that Cheung Kong's purchase of three per cent of Jardine Matheson and Hongkong Land marks the opening shot in a war to cherry-pick prime properties, perhaps even an entire company, from the last British hong still free of Chinese influence.
If that is so, then the odds must be that Mr Li will eventually prevail. The sums involved are massive, with Hongkong Land's portfolio worth $9.6 billion, and including much of the most valuable property in Central. But Cheung Kong should have no difficulty in finding local partners willing to join any raid. Either Mr Li will succeed in forcing Jardines' management to the negotiating table, and perhaps acquire key sites such as Prince's Building and Alexandra House, or he can use his new stake in Jardine Matheson to move against other affiliated companies.
An attack on Jardines has been on the cards ever since the British hong fought off Mr Li's last move against Hongkong Land in 1988, in alliance with Henderson Land's Lee Shau-kee and New World's Cheng Yu-tung. The trio promised not to launch any further hostile bids against Jardine companies for seven years. But that guarantee expired in 1995. Although Jardines has taken several defensive measures, including a complex system of inter-related shareholdings, and their controversial move to Bermuda, where they can take advantage of a custom-written takeover code, this can only slow rather than stop any hostile move.
Over the years, the other hongs have gradually slipped out of British hands. Hutchison Whampoa, Wharf and Wheelock Marden were taken over by local Chinese entrepreneurs. Even Swire has adapted to the new business climate by ceding much of its control over Cathay Pacific to mainland partners, and bringing them on to its board. The attack on Jardines is a natural sequel to these developments and reflects the new business and political environment that exists in modern Hong Kong.
That Mr Li has launched this manoeuvre only a month after Beijing's resumption of sovereignty is highly symbolic, although almost certainly coincidental. As shown by the surge in the share price of Jardine Matheson and Hongkong Land, following yesterday's news, the market certainly does not believe that a change in ownership would be bad for business. Jardines has recently been under-performing the rest of the market because of its poor relations with Beijing. That could now change. And if Mr Li is able to cherry-pick key properties, and combine them with Cheung Kong's massive portfolio, then he will strengthen his already-dominant position in the territory, while boosting his patriotic credentials, by becoming known as the man who forced the last untouched British hong into Chinese hands.