Billion-dollar business deals came thick and fast during 1997, as mainland companies increased their foothold in Hong Kong and local corporates took advantage of the hectic financial markets to raise funds. The pace is expected to slow this year, as lacklustre markets and weak sentiment underline the economic slowdown. Last year's deals kept analysts, lawyers and advisers frantically busy as the corporate landscape of the SAR turned a deeper shade of red. Two of the hallmark deals saw the mainland's Ministry of Posts and Telecommunications (MPT) and Citic Pacific buy up slices of Hongkong Telecom and China Light & Power respectively. Li Ka-shing was also in a wheeling and dealing mood, launching a reshuffle of his corporate empire and overseeing his conglomerate Hutchison Whampoa execute a US$2 billion bond deal. The big deals in the first half of 1997 focused on strategic industries, as the approaching handover fuelled a round of ownership changes. Telecommunications giant Hongkong Telecom was at the centre of several of the deals, helping its shares to post the biggest gains of any Hang Seng Index stock over the year. Speculation that a mainland company would take a stake in the carrier was rife as the year began, with analysts arguing the mainland would be unhappy to see Telecom remain under British influence after the handover. When a Telecom deal was finally announced, it was not the one people had expected. Citic Pacific said in May it had agreed to sell its 7.7 per cent stake in Telecom to another mainland company, state-controlled China Everbright Holdings, for $11.3 billion. Citic said there was no political motive behind the transaction - it was merely trying to reduce its gearing. The deal the market was waiting for finally came in June, when China Telecom, the operating arm of the MPT, agreed to pay Hongkong Telecom's top shareholder, Britain's Cable & Wireless, $9.17 billion for an initial 5.5 per cent Telecom stake. Hongkong Telecom chief executive Linus Cheung said the deal was 'win, win, win, win' for all parties, but many saw the benefits flowing mainly to China Telecom and Cable & Wireless, which was offered increased mainland access as part of the transaction. Another strategic industry had already come under the mainland's orbit, when Citic snared a $16.25 billion stake in Hong Kong's largest electricity supplier, China Light & Power (CLP). In a deal few saw coming, Citic agreed in January to buy 20 per cent of CLP's enlarged share capital for $32.66 a share. CLP's major shareholders, the Kadoorie family, saw their stake slip from 33 per cent to 26 per cent, while CLP piled up a massive $18 billion war chest. Analysts were in two camps over the deal: some saw it as the mainland muscling in on another key Hong Kong industry, while others saw it as a dream deal for the Kadoories in entering a partnership with the mainland's most powerful business group. Asset reshuffling of another sort also went on in January, as Hong Kong's largest business empire, Li Ka-shing's Cheung Kong Group, announced a wave of shareholding changes. The rejigging of the ownership of Cheung Kong, Hutchison Whampoa, Cheung Kong Infrastructure and Hongkong Electric saw Mr Li take a stranglehold over his flagship companies ahead of the handover. Shares in the companies surged following the deal, and Mr Li reportedly made himself US$350 million richer. Hutchison made headlines again in July, when it raised $2 billion in one of Asia's biggest global bond issues. The original $1 billion issue was increased first to $1.5 billion and then to $2 billion, as roadshows in Hong Kong and New York were met with an 'ecstatic response'. Other big deals of 1997 included the stock exchange's biggest new listing to date, China Telecom (HK), which raised HK$35 billion. The issue got away safely, even though it had the misfortune to start trading on October 23, one of the darkest days of the region's financial crisis. The listing in May of red chip Beijing Enterprises Holdings drew a record 1,276 times oversubscription.