Li Ka Shing 李嘉誠爵士 into UK Utilities, Selling Everything in China

So what is HK Billionaire Li Ka Shing (b. 1928, net worth more than US$30bn) doing in UK and China?

Come, let's make money together.

 Getting out of China & Hong Kong
While Li has publicly said that he was not abandoning China and Hong Kong, the actions of his companies seem to suggest otherwise.  It has been reported that since 2010, the Li family has sold assets worth HK$186.8 billion (US$24.1 billion) located in China and Hong Kong, with 96.8% of the capital from the sale re-invested in Europe, especially in UK.  He has not bought anything in China.

Li's maneuvers are considered by many as a leading indicator. According to some insiders, Li will always sell his assets 2-3 years before a crisis.  According to Simon Black, he speculates that the impending Chinese credit crunch is the main reason why Li is evacuating China so quickly.

China's Shadow Banking - Of Global Concern
The shadow banking system alone is now worth 84% of GDP according to an estimate by JP Morgan. The IMF pegs total private credit at 230% of GDP, jumping by 100% in the last few years.

Credit crunch coming?  Li thinks so....

Historically, growth rates of these proportions have nearly always been followed by severe financial crises. And Chinese leaders are doing their best to engineer a ‘soft landing’.

If they’re successful, the world will only see major drops in global growth, stocks, property, and commodity prices. If they fail, the spillover could become pandemic.

 Investments In The United Kingdom
Among Li's investments in Europe, he places more focus on the United Kingdom, reportedly because of UK's good investment environment and good legal system.

Some commentators have suggested that Li's preference for the UK can be attributed to his close relationship with HSBC bank.  It is very obvious that Li's close business links with Michael Sandberg (ex Chairman of HSBC) go back many decades.  Back in 1975, HSBC (led by Sandberg) had even saved one of Li's business from going under.

I'm happy to be in the UK!

Utilities, Why Utilities?
Li's investments in the UK have largely been in British Utilities.  See this graphic from 2011.  It does look like Li had amassed a huge Utility Kingdom in the UK.

In the short run, savvy investors would observe that Utilities are pretty much recession proof industries.  If indeed Li believes that China's impending credit crunch could hit the world hard, then parking his money in Utilities across UK (and Europe) makes a lot of financial sense.  So his investment moves are coherent, pretty much protecting himself against any severe downside.

Over time, if UK grows and prospers, the Utilities will just have to become more valuable.  Nothing too exciting, but solid bread & butter growth.

More recently, in mid 2012, Li paid 645 million pounds ($1 billion) cash for Wales & West Utilities Ltd. to almost double the size of the gas transmission businesses his companies control in the U.K.

“The price tag looks reasonable given the target company’s large-scale operations,” said Evan Li, a Hong Kong-based utility analyst at Standard Chartered Plc.

Buying Wales & West will give Li control of pipelines covering a quarter of the U.K.’s population as he steps up acquisitions in Europe following declines in valuations on concern the global economy will slow further. He led groups that acquired Northumbrian Water Group Plc for $7.5 billion including debt last year and Electricite de France SA’s U.K. power networks for 5.8 billion pounds in 2010.

Investments In Real Estate Development
Li's company, Hutchinson Whampoa, is also involved in the Convoys Wharf Project that I have blogged about previously, see this post.  The Convoys Wharf project was very controversial.  Boris Johnson (Mayor of London) had to step in to grant the Planning Permission, after the local council exceeded the statutory time limit.

China's  Richest Man -王健林
China's richest man Wang Jian Lin has also gone into UK, buying up the One Nine Elms project.  However, I don't think Wang has sold his property investments in Mainland China.  Read more about 王健林 in my earlier blog post.

Hong Kong Knight Dragon
Knight Dragon, (controlled by Henry Cheng Kar Shun) has bought out the entire Greenwich redevelopment project, read my other blog post. 

 Li's Personal Advice for Individuals 
Earlier this year, "Li Ka Shing teaches you how to buy a car and house in 5 years", advice went viral.  It is a very good read, so please go read it if you haven't read it.

Thank you for the reminder, Mr Li.

I would just focus on this graphic - "Always make yourself useful."  I find this short advice extremely powerful, and more importantly, extremely and succinctly positive.

Happy Investing!

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Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk

Convoys Wharf - Deptford, Upcoming Development by Hutchinson Whampoa

This is an exciting upcoming Thames river-facing project, by Hutchinson Whampoa (和記黃埔有限公司) (Hong Kong). In my previous blog post, I updated that the planning process had taken too long and the site had been left derelict for 14 years. The Mayor of London has intervened to push the project ahead.

Location - Where is this place?
London borough of Lewisham, just south-west of the Isle of Dogs.  Let's take a look at the maps.

The big red square in the middle of this map is Canary Wharf, which is growing and doing very well.  The small green square across the River Thames marked with 'CW' is the 40 acre site for Convoys Wharf.  The distance from Convoys Wharf to Canary Wharf is about 2 km, as the bird flies.

A closer look at the Convoys Wharf site.  A very historical site.  All this history may have contributed to the very strong opposition against developing high-rise luxury towers in this area.  The high rise towers would have wonderful views of Canary Wharf.

Transport Links 
Not great at the moment.

Deptford railway station should be within walking distance of the development.  However, this is the suburban rail, and not the Tube.

My guess is that there will be river buses or river boats that operate right from the Convoy Docks, to bring residents directly into Canary Wharf.  Such services already exist, they just need to create a new stop at the Convoys Wharf area.  This pdf shows existing river bus operations.

Not much more to write about at this moment.  It will still take a while before the project is launched. Right now, we don't know what the pricing will be like.

Happy Investing!

Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk