Li Ka-shing

Stake sale adds to concerns over Li Ka-shing shift

Sell-down in mainland company taken by some as further signs of lack of confidence locally

PUBLISHED : Saturday, 09 November, 2013, 1:54am
UPDATED : Saturday, 09 November, 2013, 1:54am

Li Ka-shing has sold down his stake in a small company in his latest divestment from the mainland, adding to concerns about investor confidence.

The sale of a combined 5 per cent stake in Changyuan Group, a mainland manufacturer of power grid facilities - for 367.9 million yuan (HK$468.1 million) on October 31 and November 1 - cut Li's stake to 20.8 per cent. This is down from a peak of more than 35 per cent.

Concord Investment, the vehicle Li used to invest in the mainland firm in 1995, had not ruled out further sales over the next year, Changyuan said in a statement on Tuesday.

The latest sale has added fuel to a heated debate about whether Asia's richest man is losing confidence in the mainland and Hong Kong property markets and the broader economy.

Li's companies had earlier announced plans to sell off Hongkong Electric and explore the sale of shares in retail unit AS Watson.

"The sell-off by Li Ka-shing will have an impact on the mainland's and Hong Kong's economy," Guo Shiliang, a mainland columnist and critic, blogged yesterday.

Another critic, Luo Zhiyuan, said on his Weibo microblog: "In whatever ways we interpret Li Ka-shing's sell-off, it implies the coming of a crisis."

Mainland home prices have soared to record highs despite intensified government efforts to cool the market and worries about a housing bubble, amid an economic slowdown.

Li has been selling down his stake in Changyuan since the start of this year, reaping about 917 million yuan. He has also sold an office tower in Shanghai, the Oriental Financial Centre, and a shopping centre in Guangzhou this year.

Wang Shi, the chairman of China Vanke, the mainland's biggest home builder, wrote on his Weibo microblog in September that "the smart Mr Li" selling out of mainland real estate was "a signal - watch out!"

Li has said the assets in Hong Kong and on the mainland were sold so that he could seek better opportunities in Europe. The interim report of Hutchison Whampoa, Li's flagship conglomerate, showed it generated 43 per cent of its profits from Europe in the first half of this year, compared with 15 per cent from Hong Kong and 11 per cent from the mainland.

"It makes sense that [Li] sold his investments on the mainland and is buying assets in Europe that are now available at bargain prices," said Li Daxiao, a research director at Shenzhen-based Yingda Securities. "I don't think Li's stake sale will have any impact on the sentiment of the share markets as he just sold the shares in a small company."