Billionaire Li Ka-shing Says Hong Kong Property Prices Remain `Reasonable'
Li Ka-shing, chairman of Chueng Kong (Holdings) Ltd., attends the company's 2008 annual results news conference in Hong Kong. Photographer: Daniel J. Groshong/Bloomberg
Li Ka-shing, Hong Kong’s richest man, said he may buy shares in Agricultural Bank of China’s initial public offering and more land in the city, betting China will withstand the impact of Europe’s debt crisis.
China’s economy is “looking good” and the Hong Kong property market is a safe long-term bet for homebuyers, the 81- year-old billionaire told reporters yesterday after the annual general meeting of Cheung Kong (Holdings) Ltd.
Li, known as “Superman” in the Hong Kong media for his investment acumen, correctly forecast in 2007 that China’s stock-market bubble would burst and last year predicted the rally in Hong Kong home prices. Hong Kong-based Li said he may purchase more land in the city for new home construction and that he took part in Prudential Plc’s $21 billion rights offer.
“His prediction on properties and the stock markets have always been quite accurate and this time it looks like he may be right again,” said Francis Lun, general manager of Hong Kong- based brokerage Fulbright Securities Ltd. “From what we see, many of our clients are sensing prices have reached the bottom and are ready to move in anytime.”
Hong Kong’s benchmark Hang Seng Index has declined 13 percent since Li said on Jan. 7 that global stock gains in 2009 outstripped growth in economic fundamentals and investors should be cautious. Home prices in Hong Kong have risen 33 percent since March last year, when Li told investors to buy real estate.
Not a Skeptic
Concerns that Europe’s debt crisis may spread, and a report that North Korea’s military had been ordered to prepare for combat dragged Asian stocks to a 10-month low on May 25. The MSCI Asia Pacific Index dropped 13 percent from an April 15 peak.
Still, “the U.S. economy is improving and China’s growth this year should be at least 8 percent so I won’t be too skeptical about the global economy,” said Li.
Li’s comments echoed those of U.S. investor Barton Biggs, who runs New York-based hedge fund Traxis Partners LP and who said yesterday that U.S. stock markets are oversold and may rally strongly in the next few days.
Agricultural Bank of China Ltd., the nation’s biggest lender by customers, is preparing for what may be the world’s largest IPO. The Beijing-based lender may sell as much as 18 percent of itself in Hong Kong and Shanghai, two people with knowledge the matter said May 4.
Li said Cheung Kong and his foundation each invested about $100 million in Prudential’s rights offer as underwriters. London-based Prudential is raising money to fund the $35.5 billion takeover of American International Group Inc.’s main Asian unit.
The billionaire also said he is considering listing the Asian units of Husky Energy Inc., the Canadian oil producer he controls, and Hong Kong could be used as a base.
Land Auctions
Cheung Kong is interested in the next two land auctions by the Hong Kong government, Li said. The government sold a plot of land in the Fanling area of the New Territories for HK$1.33 billion ($171 million), less than surveyors’ estimates, on May 24. The first auction of this fiscal year, for a site on Lantau Island, fetched HK$3.42 billion, a third less than estimated, on May 11.
Prices at the land auctions were “reasonable,” Li said.
“Sometimes surveyors’ estimates are too high,” he said.
Cheung Kong is one of three developers which bid to build a residential and commercial project on top of a station run by MTR Corp., the city’s government-owned subway operator, Cheung Kong said on May 25.
Rags-to-Riches
Hong Kong’s government is trying to avert a real estate bubble and ease concerns that property has become unaffordable for many of the city’s residents after prices rose 39 percent since January 2009, driven by a supply shortage, buying from rich Chinese, and two-decade-low interest rates.
Li said investors with excess cash should consider putting their money in the property market.
“If you look at postwar Hong Kong, over the last 70 years if you buy property at a specified time” its value will always go up in the long run, said Li.
Forbes magazine listed Li as the world’s 14th-richest person in March, compared with 16th a year earlier, after his wealth increased 30 percent to $21 billion.
Born in Chaozhou in the southern Chinese province of Guangdong, Li turned the plastics company he opened in Hong Kong in 1950 into investments in retailing, real estate, ports and energy in 54 countries.
“He’s a rags-to-riches story and he’s very property focused, so what he says tends to holds some weight,” said Andrew Sullivan, a sales trader at MainFirst Securities Hong Kong Ltd. “Developers often come out and make statements and at the end of the day they’re talking their own book up.”
To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net
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