ANALYSIS-HK frets over growing Li family influence
finet.com.hk
20:55 01-MAR-2000
By David Lawder HONG KONG, March 1 (Reuters) - Asia's biggest corporate takeover had made it more difficult than ever to buy goods and services in Hong Kong without enriching the Li Ka-shing family -- and the territory is beginning to fret aloud about it. Tuesday's US$35.9 billion takeover of Cable & Wireless HKT <0008.HK> by Richard Li's Pacific Century Cyber Works Ltd <1186.HK> means that most Hong Kong households will be writing a monthly phone check to yet another Li family enterprise.
"There is significant public outcry at the moment that Hong Kong is turning into Li Land and this could be a potential threat to the deal," said SG Securities analyst Jonathan Iu. "It's probably a 100-1 shot, but the possibility is still there." Iu borrowed the "Li Land" line from a South China Morning Post editorial on Tuesday, which called for a re-examination of local antitrust laws. As news of the takeover sank in on Wednesday, shares of Li Ka-shing's own Internet venture, tom.com Ltd, marked its stock market debut with a 335 percent gain. This created HK$22.1 billion (US$2.84 billion) in shareholder value, nearly half of it held by Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd <0013.HK>, both controlled by the senior Li. The listing sparked some criticism that Li received special treatment from Hong Kong's stock exchange, which approved the offering even though tom.com had not been in business for the two years required under Growth Enterpise Market rules. Both the exchange and Hutchison have denied any preferential waivers.
CONCERNS ABOUT MONOPOLY Richard Li came under even greater criticism last year when the Hong Kong government awarded him a deal to develop the HK$13 billion Cyber-Port, a waterfront high-tech business park designed to attract Internet and multimedia firms. The project was not put out to tender, bringing howls of protest from other developers.
"It is unavoidable that (Richard) Li Tzar-kai's success may deepen public worries about the Li family's influence on Hong Kong's economy," the Chinese-language Ming Pao newspaper said in an editorial.
"Li Ka-shing's enormous business empire raises concerns of monopoly." While Richard Li will control Hong Kong's biggest telecoms group, his father controls the second biggest, Hutchison Telecom, whose Orange brand mobile phone service recently ousted C&W HKT as the local mobile market leader.
Hutchison is also Hong Kong's biggest container port operator, a major hotelier and its biggest retailer.
It even produces the territory's best selling orange juice, Mr Juicy. "I'm not sure if their omnipresence is really good for Hong Kong," said Emily Lau, a legislator and member of the pro-democracy Frontier Party. "I have nothing against people accumulating wealth and this is an international business centre," Lau said. "But they need to be sympathetic to the public mood and should not throw their weight around." INVESTORS APPLAUD INSTINCTS If investment in listed Li family companies is any indication, most Hong Kongers heartily endorse their business instincts.
PCCW is consistently the most heavily traded stock in Hong Kong by value, with Hutchison and Cheung Kong just behind.
Together the Li family owns a quarter of the combined market capitalisation of the Stock Exchange of Hong Kong and the Growth Enterprise Market, Ming Pao said. Last week, hundreds of thousands of investors queued for hours at banks with share applications in hopes of acquiring 2,000 tom.com shares at the HK$1.78 IPO price. Li Ka-shing this month hit back at critics of his family's dominance, denying he had received favours from the government.
"I have no ambition but only a loving heart for Hong Kong," he said. Newspapers on Wednesday urged the government of Hong Kong Chief Executive Tung Chee-hwa, a good friend of Li Ka-shing, to ensure fair play in the territory.
"There is no denying that PCCW's rapid rise is partly due to the government's support of its cyberport project," the Hong Kong Standard said. "This has reinforced the perception that the government is tilting towards the Li family." ((Hong Kong Newsroom +852 2843-6345, Fax +852 2845-0636 hongkong.newsroom@reuters.com)) ($1=7.782 Hong Kong Dollar) . |
