Li Ka-shing’s withdrawal from China related to new leadership

Li Ka-shing’s withdrawal from China related to new leadership

Staff Reporter

2014-05-10

Recently, a lot of new property projects in China have offered discounts, with some in Beijing having cut prices dramatically in order to find buyers.

One may wonder how Li Ka-shing could have foreseen the current slump in the real-estate market and successfully hedged risks again as Li’s family sold a prime piece of real estate–a mixed used complex in Beijing–in April.

The 85-year-old tycoon has been named the richest Chinese person for 16 consecutive years, with his total assets said to be worth US$29.4 billion.

It is well known that China’s political milieu has decided on its unique economic development mode, and economic development to a large degree hinges on the political direction of the government.

Li of course understands the intricate relation between economic development and politics. One may be surprised to find that Victor Li Tzer-kuoi, the eldest son of the tycoon, has served in China People’s Political Consultative Conference, a political advisory body in China, for 16 consecutive years.

This shows that Li has excelled not only in business, but also in his political savvy and connections to those in power.

Li started making inroads into China’s market in 1989, and began developing relationships with the top brass there.

We can see that whether in mainland China or in Hong Kong, Li’s investments have been built on the basis of a favorable political and economic environment.

What Li has repeatedly called a “safe” investment milieu is in fact a “monopoly,” as it ensures maximum safety for his investments, and his monopoly to a large extent is dependent on his connections with top leaders. To develop these connections, he has to gain an understanding of the direction of economic and political development of those in power.

China’s new leadership has focused on breaking the monopoly to invigorate the dynamism of small and medium-sized enterprises, which is in contradiction with the Li family’s economic development mode.

We can say that Li’s stepping up of his “withdrawal” is not because he no longer sees positive development in China or Hong Kong, but more importantly, because the investment environment in both places no longer conforms to Li’s investment aims and he simply wants to find a more “comfortable” investment environment.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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