Keeping Cool Amid Red Chip Fever

Swire waits while investors burn for closer ties to China

When he started out at Swire Pacific Ltd. as a "ship jumper" in Hong Kong's Victoria Harbor over 30 years ago, Peter D.A. Sutch would ride sampans out to arriving freighters to hobnob with the captains and pay the crews. These days, as chairman of the U.S. $5 billion hong, or trading company, it is shareholders Sutch must talk to, and they're not happy with what he's saying. Unimpressed by Swire's traditional 10% annual earnings growth, investors have let the stock drift along at $7 or so--even as they've driven up rival Hong Kong stocks and mainland-based "red chips" to record prices. Some critics have even urged that Swire be dumped from the Hang Seng Index.

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