Will Swire Pacific be privatized?

November 18, 2020 10:14
Photo: Reuters

It must be a relief for the Swire family that its flagship is soon to be kicked out from the Hang Seng Index after 55 years.

The day came last Friday when it’s announced that Swire Pacific is to be removed from the blue-chip index next month. In the latest reshuffle, Meituan, Anta Sports and Budweiser Brewing will become new constituents. The three all claim a strong market share in their expert areas, respectively in delivery, sport shoes and beer in China.

Swire Pacific is a good company, no doubt. It is also a socially responsible company, but it is also way under-appreciated by investors.

Like its British fellow HSBC, Swire was battered. Swire lost nearly 40 per cent year-to-date because all its core businesses faced challenges it has never seen before.

Cathay Pacific and Pacific Place represent how Covid-19 destroyed its crown jewels as people are barred from travelling and even going to work.

A Financial Times columnist once joked that if one thought of the five worst hit sectors in Hong Kong and added together they will get a word – Swire.

Following a successive decline of its market capitalization, the company’s ranking is now down to 160th among Hong Kong-listed firms.

Unfortunately no one has the crystal ball to see whether covid-19 will inflict permanent damage on the group.

Still Swire has done all the good things for Hong Kong. It sponsored generously for Hong Kong Philharmonic and led the way with its green initiatives – mostly recently by taking a stake in food company Green.

As the blue-chip status is about to go, It makes one wonder what Swire family will do.

Rival Wheelock ended its 57-year presence on the local bourse in June following a privatization move. Will Swire go down the same path?

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EJ Insight writer