`Brexit' Specter Prompts Caveat From Hong Kong's Richest Man

  • CK Hutchison would cut U.K. investments, chairman says
  • Billionaire Li among executives voicing Brexit concerns

Billionaire Li Ka-shing.

Photographer: Billy H.C. Kwok/Bloomberg

As the U.K.’s future in the European Union hangs on the outcome of a referendum looming in June, one of the country’s biggest foreign investors is calling out for voters to say no.

QuickTake Will Britain Leave the EU?

Hong Kong billionaire Li Ka-shing, the tycoon who’s seeking to buy O2 and create the biggest mobile-phone carrier in the U.K., said on Thursday that he’d "surely" scale back investments in the country in the event that Britain exits from the EU. Li, who spoke at an annual earnings press briefing, also said he doesn’t expect the split to happen.

Hong Kong’s richest man joins the likes of Nissan Motor Co. and Goldman Sachs Group Inc. in voicing concerns about a potential exit, underscoring how the debate is rippling through beyond the U.K. and Europe. With the "Brexit" risk roiling the pound and the euro, Li’s flagship CK Hutchison Holdings Ltd. on Thursday singled out currency fluctuations for undermining earnings at the company’s ports and retail businesses.

"Brexit is a risk concern for long-term investors who put their money on European projects such as CK Hutchison," said Dickie Wong, executive director of Kingston Securities Ltd. "Its investments in Europe will be more cautious this year."

Within the U.K., bosses from about a third of the country’s biggest companies recently signed a letter urging continued membership of the bloc and those from HSBC Holdings Plc have warned they would move 1,000 jobs to Paris in the event of an exit.

Telecom Merger

Last year, the U.K. accounted for 37 percent of the ports to retail conglomerate’s $8 billion in earnings excluding taxes and interest, the single largest contributor by country. Companies controlled by Li last year acquired the U.K.’s Eversholt Rail Group.

As to Li, 87, Brexit isn’t his only headache in the country. CK Hutchison, which owns the Three UK mobile-phone service, is being scrutinized by European antitrust regulators on concerns the proposed purchase of O2 for as much as 10.25 billion pounds ($14.7 billion) may harm consumers. CK Hutchison has countered by pledging not to raise prices for five years and invest billions of pounds to strengthen the wireless network if the deal goes through.

Canning Fok, Li’s top lieutenant, said on Thursday that Three may have to raise prices if the merger collapses. CK Hutchison also said the company is considering selling up to a 20 percent stake in Three UK to a new investor by next quarter.

CK Hutchison, which on Thursday reported earnings that edged above analysts’ estimates, was little changed in early Hong Kong trading on Friday.

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