21 October 2018
New World boss Henry Cheng (R) quoted a line from German writer Johann Wolfgang von Goethe (L) to make a point about economic changes. Photos: Wikimedia, HKEJ
New World boss Henry Cheng (R) quoted a line from German writer Johann Wolfgang von Goethe (L) to make a point about economic changes. Photos: Wikimedia, HKEJ

Henry Cheng annual report: First the good news, then what?

In one sense, most Hong Kong tycoons are like Warren Buffett who likes to talk about his business philosophy.

That is why Hong Kong’s richest man, Li Ka-shing, regularly hosts two-hour press conferences, Lee Shau-kee loves to offer stock tips and Ronnie Chan habitually churns out 40-page chairman’s statements.

Enter Henry Cheng, who will turn 70 this year, playing catch-up with his peers.

Although probably not as articulate as his father, Cheng Yu-tung, the younger man has nonetheless made quite an impression.

Last year, when his flagship New World Development released its annual report, Henry Cheng took a leaf out of the Charles Dickens classic A Tale Of Two Cities to highlight the “acute contradictions” in the economic landscape.

More to the point, Dickens’ famous opening line (“It was the best of times, it was the worst of times”) summed up the Hang Seng Index which fell 10,000 points in 10 months from its peak of 28,000.

Yesterday, Cheng quoted the 18th century German philosopher Johann Wolfgang von Goethe, who witnessed the impact of the French Revolution sweep through continental Europe.

“Life belongs to the living, and he who lives must be prepared for changes,” Cheng began his interim chairman’s report.

Then he launched into his own discourse: “The course of history is a cyclical loop. In the present day of the 21st century, the world is also facing challenges posed by economic changes and impacts caused by contradicting forces.

“The contradictions arising from the complicated economic landscape around the globe further intensified in 2015.”

Cheng noted that the United States, which stood out from the crowd by virtue of its economic performance, raised interest rates for the first time since the 2008 global financial crisis.

He said the move hurt fragile economies in the eurozone, some of which had turned to negative interest rates to fight deflation.

Hong Kong had mixed fortunes.

As a small and open economy, Hong Kong faced multiple challenges, including a slowing Chinese economy, higher US interest rates which affect the peg to the greenback and a host of internal factors.

Still, Hong Kong produced moderate growth in the third quarter (2.3 percent) compared with 2.8 percent in the second quarter.

The labor market remained stable, with the unemployment rate at 3.3 percent, a 17-year low, while private spending showed robust growth.

That’s the better half of the economic picture Cheng tried to show.

The other half included a 43.6 percent drop in interim net profit for New World Development, a declining tourism sector and a weakening property market.

All of these hurt the sprawling conglomerate which is engaged in hotels, exhibition centers, bus franchises, infrastructure and property development and investment.

That is where Goethe’s wisdom came in handy, specially the one about bracing for changes.

But if Cheng’s tone is anything to go by, his brave new world is not gloomy after all.

It’s a good thing he talked economics, not politics.

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EJ Insight writer

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