Political pressure on plans by Hong Kong's conglomerates has sold the Port of Panama to American investor BlackRock, raising questions about the future of the $19 billion deal.
Hong Kong leader John Lee added his voice on Tuesday to expand the warning from China, saying the deal deserves “serious warning.”
The deal between CK Hutchison, one of Hong Kong's most successful conglomerates, and BlackRock, the world's largest asset manager, was seen by investors as a geopolitical hot potato solution that began with President Trump claiming that CK Hutchison had been “nationally safe” on the edge of Panama Canal, resulting in ownership of two major ports. Trump praised the BlackRock deal after it was announced.
Now, the solution is beginning to look more problematic. Stakes in CK Hutchison, managed by Li Ka-Shing, one of Hong Kong's wealthiest people, fell nearly 3% on Tuesday after Lee's comments. The company has cancelled its coverage and investor briefing scheduled this week to release its latest financial report. Hutchison did not respond to requests for comment.
China criticized the planned port contract. As a result, CK Hutchison sells most of its holdings at Hutchison Port, including Panama Port and more than 40 other global ports. A series of commentary published in Ta Kung Pao, a Hong Kong newspaper owned by the Hong Kong government and the Communist Party, argued that the Hutchison-BlackRock arrangement allows the United States to “use it for political purposes and promote its own political agenda.”
On Tuesday, Hong Kong's Lee said “transactions must comply with legal and regulatory requirements.” Speaking at weekly press conferences, he said the government will “handle it according to laws and regulations.”
He did not elaborate, but legal experts said historically, any mergers or acquisitions made by Hong Kong companies did not have to seek regulatory approval as Lee has potentially mentioned.
It is not clear what Hong Kong authorities can do to stop the transaction. In contrast, Chinese companies often need to secure permission to sell assets from the Ministry of Commerce, the state government of foreign exchange, and other regulatory authorities, or move money from mainland China.
However, the warning raised concerns among some in the financial community about the politicization of business in Hong Kong. Hong Kong was a former British colony that returned to Beijing in 1997 under the promise of working with “highly autonomy.” The pledge changed in 2020 when Beijing imposed national security laws on the city to counteract democratic protests.
Lee's government has repeatedly emphasized that Hong Kong is an open place for businesses and a global financial hub with laws separate from the rest of China, but some critics point out that the government is under pressure from Beijing.
But amid growing hostility between the US and China and the global uncertainty sparked by President Trump's trade policy, transactions involving Hong Kong companies are becoming more politicized.
Wang Xiangwei, an associate professor of journalism at Baptist University of Hong Kong, said the deal between CK Hutchison and BlackRock “is not considered purely commercial in nature.”
“Inverting, BlackRock said it announced that it would sell the port to Chiang Kong in Hong Kong,” Wang said of CK Hutchison's previous name. “You'd imagine Trump writing an angry tweet about the truth that denies the deal,” he added. “We are confident that legislators will also begin an investigation into the deal and will begin an investigation into the legislative body.”
On Tuesday, Lee also added criticism from Beijing of the Trump administration's tariff threat, saying that the Hong Kong government urged other countries to provide businesses with a level playing field. He used a similar language to the Chinese government in his own statement on the subject, adding that he “opposes the abusive use of coercion or bullying tactics in international economic and trade relations.”
