25 October 2016
Li Ka-shing (center) probably knew the storm was coming. Photo: HKEJ
Li Ka-shing (center) probably knew the storm was coming. Photo: HKEJ

If only we listened to them before the market crashed

Who could have predicted the spring blossom and the summer crash? What happens in autumn? What lies beyond?

It’s a shame that tycoon Li Ka-shing won’t come out and meet the press today during the first set of results of the merged CK Hutchison Holdings (00001.HK).

The man with the Midas touch should be able to make some sense of the market madness because he’s the one who always seems to know what lies six months ahead.

When Li announced the mega restructuring of his two flagships in January, he made it a point to have the deal completed in June.

Without selling an asset to outside parties, he saw his fortune rise 50 percent in five months.

In hindsight, we can safely conclude that he knew the storm was about to come. And that is why he lost much less, percentage wise, than his peers in this China-triggered crisis.

To his credit, he consummated two European telecom deals that largely decreased his exposure to Hong Kong and China.

It’s just uncanny that everytime the investment guru makes a big corporate move, the bull run ends like night that follows day.

It happened in 1987 right after his companies raised HK$10 billion from a rights issue, and again in 1997 when he had a group restructuring that involved Cheung Kong Infrastructure (01038.HK) and Hongkong Electric, which is a subsidiary of Power Assets Holdings Ltd. (00006.HK). It happened again in 2007 when he cashed out all his much-hyped China shares. 

Another individual who has an equally good track record in investments is former PCCW (00008.HK) deputy chairman and HKEx (00388.HK) chief executive Francis Yuen Tin-fan.

The recent record-breaking HK$1.5 billion sale of his Barker’s Road house to Jack Ma sent a strong signal to the market that the top financier does not feel very comfortable at the top of Hong Kong.

Of course, Yuen, along with his wife, Hang Seng Bank (00011.HK) chief executive Rose Lee Wai-mun, was smart to move into one of Hong Kong’s most luxurious apartments instead of living in a super large mansion (imagine how much the couple would have to spend on security and gardening alone) while pocketing a net one billion dollars in the grand summer sale when everything is 20 percent cheaper.

Don’t forget Yuen, who sold out his PCCW share options in exchange for his apartment in 1999 at the peak of the internet bubble, also manifested excellent timing in cashing out of these shares, which still dropped over 90 percent from the peak.

Since most of us are not Li or Yuen, it may be wise to listen to the advice of James Tien Puk-chun, who has respectable views on everything from politics to society to economy.

Yesterday Tien said in a radio program that it is not the right time for long-term investors to go bottom fishing in view of the volatile markets.

But he said the market situation is just right for smart investors to day-trade.

Of course, he’s talking to smart investors, not to ordinary ones like me.

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EJ Insight writer

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