Hong Kong tycoon Victor Li says city must do whatever it takes to maintain financial hub status

Hong Kong tycoon Victor Li says city must do whatever it takes to maintain financial hub status

Hong Kong tycoon Victor Li says city must do whatever it takes to maintain financial hub status

Hong Kong must maintain its hard-fought status as an international financial centre as the city faces headwinds from a global economic turmoil, said Victor Li Tzar-kuoi, chairman of CK Hutchison and CK Asset Holdings, which announced full-year results on Thursday.

The two flagship companies of Hong Kong’s richest man, Li Ka-shing, reported lower profits, reflecting the impact of a slowing global economy and a high interest rate environment.

“In recent years, Hong Kong’s economy has experienced multiple stress tests, the 2019 demonstrations, then Covid, and now a slowing economy,” Victor Li said at a post-earnings press conference.

“How to respond depends on the Hong Kong government. There are only a few [international financial centres], and Hong Kong has been one of them for many years. It is hard-won. We must not lose this place.”

Victor Li is the chairman of CK Hutchison Holdings and CK Asset Holdings. Photo: Facebook @ John KC Lee

CK Hutchison, with businesses spanning ports and infrastructure to telecommunications and supermarkets, announced an underlying profit of HK$23.5 billion (US$3 billion), a decline of 9 per cent from the HK$25.74 billion in 2022.

Including one-off items in 2022, the decrease was 33 per cent. These included gains from the disposal of UK tower assets and from the merger of its Indonesian telecoms business. That partly offset the non-cash impairments of the group’s telecoms businesses in Italy and Sri Lanka, and non-cash impairment charges of Cenovus Energy in Canada.

‘Always the first’: CK Asset’s history of foretelling property slumps

CK Asset, the property developer, reported a net profit of HK$17.34 billion, a drop of 11.6 per cent from the HK$19.63 billion from continuing operations in 2022.

CK Asset’s revenue from property sales, including its share in joint ventures, fell 49 per cent to HK$13.15 billion, against HK$25.76 billion in 2022. The company attributed the decrease to the worsening economic conditions and weak property market sentiment in Hong Kong and on the mainland.

“The world’s economic landscape remains challenging [this year] and will continue to be affected by geopolitical tensions, elevated interest rates, inflationary pressure, tight monetary policy, and trade conflicts,” said Victor Li, Li Ka-shing’s elder son, in a filing from CK Asset to the Hong Kong stock exchange.

“Housing policies and interest rate movements will continue to be determining factors for the property market.” he said.

But the group is well-poised to navigate the current high interest rate environment with its low gearing ratio, ample liquidity and solid financial position, he added.

Regarding CK Hutchison’s prospects, Victor Li said “the group will maintain a prudent approach to managing our businesses this year, with a strong focus on cash flow and tight management of capital expenditures and new investments”.

The results came hours after the Hong Kong Monetary Authority left its base rate at 5.75 per cent, following the US Federal Reserve’s unanimous decision to maintain its watchful stance. Analysts have pushed back bets on a US rate cut to June, while Hong Kong lenders could start cutting their prime rates later this year.

Hong Kong home prices won’t rebound despite property curbs withdrawal: analysts

S&P Global on Monday said it expected home prices in the city to decline by as much as 10 per cent this year as elevated interest rates keep demand in check. The ratings agency believes that the pent-up home buying demand will only be released when economic growth stabilises and interest rates start easing.

Late last month, Financial Secretary Paul Chan Mo-po scrapped all cooling measures restricting property transactions as he unveiled a budget aimed at restoring the city’s flagging fiscal health.

The removal of all property sector cooling curbs in Hong Kong sparked an immediate interest among mainland Chinese buyers, with overall home sales transaction volumes jumping. Some analysts, however, have raised concerns whether such demand is sustainable amid the city’s weak stock market and slow economy.

CK Asset declared a final dividend of HK$1.62 per share. Together with the interim dividend of HK$0.43 per share, the total payout for the year stood at HK$2.05, against HK$2.28 in 2022.

CK Hutchison declared a final dividend of HK$1.775 per share. Together with the interim dividend of HK$0.756 per share, the full year dividend totalled HK$2.531, against HK$2.926 in 2022.

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