Thursday, 17 March 2016

Li Ka-shing's Global Observations

Li Ka-shing talked to the media about his outlook on the global economy
Even Hong Kong's Superman, tycoon Li Ka-shing is feeling the pinch.

In today's press briefing following CK Hutchison's announcement of profit earnings, Li said the city is experiencing some of its harshest economic conditions in two decades amid global weakness, adding that the downturn in property and retail sales was worse than during the SARS epidemic.

"The global economy in 2015 experienced mounting deflationary pressures resulting in a collapse in commodity prices and slow global trade," he said in a filing to Hong Kong's stock exchange.

Hong Kong only makes up 6 percent of his investments
"In addition, volatility in global equity, debt, commodity and currency markets may increase against a background of continued monetary easing in Europe, increased global political uncertainty, economic and refugee issues in Europe, as well as increased geopolitical risk in the Middle East and African regions.

"I am confident that Britain will stay in the European Union. If it leaves the EU, we will be more cautious and reduce our [future] investment in Britain," he told reporters."

In Hong Kong, he said the economy is experiencing some of its toughest moments in two decades, with "property sales and retail sales [at times] worse than during the SARS epidemic [in 2003]."

But despite these challenges, CK Hutchison, the revamped conglomerate that includes Li's non-property assets, posted a better than expected net profit at HK$31.2 billion, slightly higher than the HK$31 billion estimate in a Thompson Reuters poll of 14 analysts.

Li believes Britain will not leave the EU. Is he right?
Only 6 percent of its earnings (before interest, taxes, depreciation and amortization) came from Hong Kong, compared to 34 percent in Britain, 19 percent from Continental Europe, 13 percent from China, 8 percent from Canada, and 18 percent from Australia and the rest of the world.

About 35 percent of CK Hutchison's investments were in infrastructure, 24 percent in telecommunications, 16 percent from retail, 13 percent from port and related services, 10 percent from energy, and 2 percent from finance and investment.

Interesting Li should comment about the challenging economic climate when his company is doing so well.

But alas we're not in the same league as the tycoon. Interesting to note he does not think Britain will leave the EU. We'll have to see if he's right or not.

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