Li, Ka-Shing, the richest man in China and in Asia, announces to sell two of his companies’ stakes ($5.5 billion) in Guangzhou and Shanghai earlier this month. Just a while ago, he also decided to spin of his Hong Kong electricity business at $4 billion. His act is being seeing as a warning that he has lost faith in both Hong Kong and Mainland China’s economies.
Li Ka-shing has always had a record of being able to predict the market just like Warren Buffett; Wang Shi, chairman of Vanke, a leading realty developer in China, warned that “sales of properties in China by Li Ka-shing, noted for his business acumen, is a sign which investors cannot neglect.”
In fact, China has always had a large housing bubble, it has not popped yet because the central government is controlling and supporting the real estate so hard. Li might have already seen the crisis and decided to back up before it’s too late. However, I think this is not just about the fragility of China’s current real estate, but also related to the politics since many Hong Kong business people are dissatisfied with the government of CY Leung, a Chinese communist party supported Chief Executive and President of the Hong Kong Special Administrative Region. There’s a very complicated and difficult guanxi among too many stakeholders.