A couple of items on the CKH drama

Mark Simon on the CK Hutchison ports drama…

If they come for Li, they will come for anyone.  It is impossible to state that Hong Kong is a safe investor environment, when even Li is defenseless. If the largest, most successful businessman in its history is under threat for actions that are completely legal, everyone will be.

…No news organization anywhere in the world has covered Li Ka Shing in greater depth or more extensively than Next Magazine and Apple Daily; the publications of now jailed news media owner, Jimmy Lai.  

Without being too snarky, there’s a lot of people out there, giving their opinion on this deal. I’m sorry, but nobody knows Li better than the former journalists of our organization.  

We are 100% certain that Li would never do this port deal if he did not think he had approval from Beijing.  It would defy every action of his entire career that he would proceed to sell an asset when he understands the strategic implications for China without having a green light..

So what happened? Why now the attacks on Li’s port sale?

Donald Trump was able to claim victory in kicking out a Chinese linked company from Panama.  Trump’s victory was Xi Jinping’s loss. Xi doesn’t take losses.  

So just as they always have, the CCP with the assistance of the Hong Kong government is doing a little historical rewriting.  Li will be the bad guy.  Hong Kong chief executive John Lee will be the incompetent dupe. Hong Kong’s financial system will be the victim.

First they came for Jimmy Lai, now they come from Li Ka Shing. The irony is, the one company that would’ve said something, would have stood for the Hong Kong financial system, and Li, was Jimmy Lai‘s Apple Daily.

And from the (paywalled) Economist…

Mr Xi’s reported displeasure is understandable, given his image as a muscular leader capable of challenging America and defending China’s global interests. Chinese officials thus worry about appearing weak or unresponsive, says Zongyuan Zoe Liu of the Council on Foreign Relations, a think-tank in New York. Mr Xi also wants private Chinese companies to be more “patriotic” without government intervention.

Still, his current priority is to avert a full-scale trade war with America, since its impact on China could be more damaging for him. He may hope to reach an accommodation over Taiwan, too. Seeing Mr Trump’s preoccupation with Panama, there could also be leeway to carve out some ports from the deal during the 145-day window for exclusive negotiations. Conceding will be painful for Mr Xi. But resistance, in this case, could be more so.

Both these pieces suggest performative outrage to cover embarrassment rather than a vociferous determination to force CK Hutchison to abandon the deal.

Meanwhile, the company has offered shareholders HK$25 a share to approve the deal – 65% of its Friday closing price of HK$43.25.

Perhaps there’s a case for owning shares in legacy Hong Kong stocks like Cheung Kong, HSBC, Swire, Cathay, utilities, etc: potential dismemberment/sequestration break-up value when geopolitical tensions/Beijing pressure make it pointless to carry on. 

Further to Jimmy Lai – the Guardian explains the Court of Final Appeal’s recent rejection of his appeal against the barring of his British lawyer…

This week, an obscure legal development has, in the eyes of some legal experts, inflicted another cut on the city’s once revered legal system.

…The details of the saga date back to 2022, when [Tim Owen KC] was first approved to represent Lai. The Hong Kong government objected to Owen’s admission, but lost multiple appeals to have him blocked. So John Lee, the chief executive, turned to Beijing. In December 2022, the Chinese government issued an interpretation of the national security law, which had been imposed on the city in June 2020 to quell months of pro-democracy protests. The interpretation stated that the courts needed approval from the chief executive to admit foreign lawyers in national security cases.

Although Owen had been admitted to represent Lai before the interpretation was issued, Hong Kong’s national security committee nonetheless instructed the immigration department to deny him a work permit.

“It’s pretty well unheard of for somebody who is entitled to represent a client not to receive a work permit,” says Jonathan Sumption, a former supreme court judge who quit the CFA last year, warning that the rule of law was “profoundly compromised” in Hong Kong. “I think it tells us quite a lot about the view of the rule of law taken by the executive”. Sumption said that blocking Owen via a visa refusal was “a subterfuge” on the part of the government.

But the issue at the heart of Lai’s appeal was not the visa – but the fact decisions made by the national security committee cannot be legally challenged, a principle that has caused alarm in some legal circles.

Paul Harris SC, a former chairperson of the Hong Kong Bar Association, who fled the city in 2022 after being warned by the national security police that they were considering charging him with sedition, said that the principle “effectively gives the committee the powers of a police state”.

In case you haven’t seen it. Includes gloriously bad-taste reference to RFK Jnr at end…