Hong Kong’s Chief Says Hutchison’s Port Sale Requires “Serious Attention"

 

The Chinese government continues to apply pressure after the news of CK Hutchison’s planned sale of its international port operations, including in Panama to a partnership between U.S. investment group BlackRock and MSC Mediterranean Shipping Company’s TiL ports group. The deal has become mired in the politics between Donald Trump and China.

While Beijing has officially remained silent on the deal, it has used proxies to increase the pressure against Hutchison and Li Ka-shing, the tycoon behind the company. He has long been seen at odds with the Communist Party but when CK Hutchison announced plans to sell its foreign port operations early in March it called the deal “purely commercial,” and said it was “unrelated to recent political news reports,” in a veiled reference to Trump’s assertions regarding the Panama Canal. 

The company, headquartered in Hong Kong, has largely gone silent in the face of the campaign being waged in the media. Yesterday, the company said it would not hold its normal briefings with investors and the media when it releases its financial results.

In a regularly scheduled press conference, Hong Kong’s Chief Executive John Lee spoke out against the proposed sale echoing last week’s pressure from a newspaper closely linked to the Community Party. Analysts highlight that historically Hong Kong has not asserted legal rights to review transactions selling assets to foreign companies, unlike the mainland government that closely controls foreign asset sales.

Lee speaking to reporters cited the “extensive discussions” related to Hutchison’s proposed sale saying it reflects “society’s concern” over the sale which last week the newspaper called unpatriotic and against national interests. Today, Lee said, “These concerns deserve serious attention.”

He said that any transaction “must comply with the legal and regulatory requirements. Hong Kong will handle it in accordance with the law and regulation.”

Hutchison highlighted when announcing its plan that the deal, which involves a total of 43 ports in 23 countries, does not involve its Chinese port operations. Further, the sale of the two terminals in Panama is in a parallel transaction subject to the review of the Panama government and separate from the other international ports.

China has said it views the deal as coercion by the United States and efforts to extend the U.S.’s dominance over China and others.

“The Hong Kong Special Administrative Region Government urges foreign governments to provide a fair and just environment for enterprises, including enterprises from Hong Kong,” Lee told reporters today. “We oppose the abusive use of coercion or bullying tactics in international, economic, and trade relations.”

At the same time, it was reported that China sent a delegation to Panama over the weekend. Under pressure from Trump, Panama has sought to back away from its close relationship with China including serving notice that it would not renew its participation in the Belt and Road initiative. The Panama Government continues to assert that the canal belongs to Panama but said it would review the proposed transaction between Panama Ports controlled by Hutchison and the BlackRock-MSC partnership. Earlier, Panama said it was reviewing the contract awarded to Hutchison to run the two terminals.

Hutchison and BlackRock agreed in March to enter into exclusive negotiations to finalize the terms of the transaction. The companies set a target of on or before April 2 to sign definitive documentation for the Panama Ports Corporation portion of the deal. It said that the acquisition of the HPH Ports Sale Perimeter would proceed on “an expedited basis” subject to the BlackRock-TiL Consortium conducting normal and usual confirmatory due diligence, settlement of definitive documentation, and receipt of any necessary regulatory approvals, amongst others.