Analysis-As Trump hails taking back of Panama Canal, Hong Kong Inc walks tightrope

4 months ago 63

By Clare Jim, James Pomfret and Anne Marie Roantree

HONG KONG (Reuters) - Hong Kong's borderline arsenic a fiscal hub volition erode further arsenic the metropolis becomes embroiled successful China-U.S. tensions, with the flash merchantability of a Hong Kong-owned planetary ports concern highlighting geopolitical volatility, executives and analysts said.

The erstwhile British colony is caught successful the oculus of a tempest betwixt Beijing and Washington, underlined by the determination by conglomerate CK Hutchison, controlled by Hong Kong billionaire Li Ka-shing, to merchantability its ports network, including assets on the Panama Canal, to a U.S. consortium led by BlackRock.

U.S. President Donald Trump, who claimed successful January that the Panama Canal was being operated by a Chinese company, has hailed the deal.

"The Trump medication is going to spot that this worked...and you person to presume they're going to travel the aforesaid play book...(they) spot this arsenic a victory," Steven Okun, a elder advisor to fiscal and hazard advisory Kroll, told Reuters.

As the U.S. strives to incorporate its main planetary rival China connected fronts including trade, shipping, exertion and superior raising, a twelve concern people, investors, lawyers, shipping executives and hazard analysts who spoke to Reuters accidental this is bringing greater uncertainty and volatility to Hong Kong.

Hong Kong firms person traditionally been seen arsenic internationally-focused and autarkic of the Chinese state, reflecting the relation of the erstwhile British colony arsenic a freewheeling fiscal hub.

"We person been perpetually reviewing our concern program and discussing astir our strategy due to the fact that of the governmental tension," said an enforcement of a listed Hong Kong institution who declined to beryllium named fixed the sensitivity of the topic.

"For example, bash we inactive privation to database our units successful Hong Kong and is Hong Kong inactive charismatic arsenic a listing venue, due to the fact that investors could gully a China connection," helium told Reuters.

Hong Kong has a abstracted regularisation of instrumentality from China and its ain fiscal policy-making autonomy, but immoderate lawyers, diplomats and concern executives accidental that aft China's imposition of a nationalist information instrumentality successful 2020, the metropolis was fundamentally being viewed by the West arsenic afloat nether the power of Beijing.

This has wounded it economically and formed uncertainty connected whether it is simply a jurisdiction abstracted from mainland China with planetary champion practices, they said.

Earlier this year, Hong Kong's Far East Consortium and Chow Tai Fook Enterprise, which owns a improvement with Star Entertainment, the embattled casino radical successful Brisbane, tried to bargain Star out.

If successful, the bid volition beryllium different trial of regulators who presumption Hong Kong companies arsenic Chinese. In 2018, Australia blocked a A$13 cardinal ($8.2 billion) takeover of the country's biggest state pipeline company, APA Group, by CK Infrastructure, a portion of CK Hutchison, citing it would beryllium against the nationalist interest.

'LUMPED IN'

"Hong Kong is being progressively lumped successful with China ... that's a fact," said a committee subordinate of a starring Hong Kong concern household with interests locally and overseas, including retail and property.

"To a degree, this has raised the complexity and outgo successful our concern dealings. We person to unrecorded with this."

According to a idiosyncratic with cognition of the matter, CK Hutchison had initially tried to combat to support its 2 main larboard businesses successful Panama aft Trump alleged the Panama Canal was nether Chinese control.

But later, Hutchison opted to currency retired and mitigate longer word reputational risks.

"People successful the Hutch empire are moving for cover," said the idiosyncratic with cognition of the ports negotiations, who declined to beryllium identified owed to the sensitivity of the issue. "This is simply a nightmare concern and we've ne'er dealt with thing similar this before."

This root added that CK Hutchison executives were successful interaction with officials successful Beijing portion the concern unfolded.

CK Hutchison did not instantly respond to a petition for comment.

Co-managing manager Frank Sixt said successful a connection this week the ports transaction was "unrelated to caller governmental quality reports."

The Hong Kong authorities has said it has ne'er interfered with the commercialized operations of Hong Kong companies, and criticised U.S. officials for making what it said were unreasonable and distorted accusations regarding the cognition of the Panama Canal.

CAUGHT IN CROSSHAIRS

"It's been politicised and weaponised," a elder Chinese authorities authoritative said of the Trump administration's framing of Hutchison arsenic a Chinese entity - thing the steadfast has denied.

"It's unfortunate and regrettable," the authoritative told Reuters, declining to beryllium identified.

Others, including concern executives and lawyers, agreed that Hong Kong is progressively being viewed arsenic akin to different Chinese cities, adjacent though officials similar the territory's fiscal secretary, Paul Chan, accidental the metropolis remains a planetary hub for the escaped travel of capital, goods and people.

"The marketplace is based connected expectations," said Vera Yuen, an economics lecturer with the University of Hong Kong concern school. "The valuation (of Hong Kong) is based connected what they (the world) think, not what you claim."

Even up of the caller Trump medication unit connected Hutchison's Panama ports, immoderate section firms with planetary scope had been drafting up contingency plans to woody with increasing U.S.-China strategical rivalry – and a increasing consciousness Hong Kong would beryllium successful the crosshairs successful a conflict.

In 2023, Hong Kong-based conglomerate Swire Pacific sold its Swire Coca-Cola USA portion to its controlling shareholder, John Swire & Sons Ltd headquartered successful the U.K., to support the concern truthful that it would nary longer beryllium seen arsenic being held by a "Chinese company", 2 sources with cognition of the substance said.

A Hong Kong shipping steadfast enforcement described however his cognition was already presenting its planetary posture successful meetings with overseas investors.

"The cardinal is being arsenic planetary arsenic we tin – our offices, domiciles and ships," the enforcement said.

"We privation to beryllium capable to amusement we are not truly based anywhere."

($1 = 1.5780 Australian dollars)

(Additional reporting by Greg Torode and Jessie Pang successful Hong Kong; Scott Murdoch successful Sydney and Beijing Newsroom; Writing by James Pomfret; Editing by Raju Gopalakrishnan)

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