Tag Archives: Li Ka-shing

The Rich Are Losers, Too

We are not sure whether we should feel smug or disappointed that the richest people in the world don’t appear to be any better at figuring out  the global economic slowdown than the rest of us. Forbes’s annual list of billionaires around the world shows their fortunes are down on average about as much as the equities markets overall over the past year. That still adds up to a loss of $2  trillion of wealth for that group, which is a serious chunk of change however rich you are.

The tumultuous year culled the ranks of the wealthy, reducing the 1,125 billionaires a year ago to 743. Li Ka-shing remains East Asia’s richest man, ranked at #16 with a net worth of $16.2 billion, though that is down from $26.5 billion a year ago, then good enough to rank him 11th. (The two Asian’s above Li, Mukesh Ambani and Lakshmi Mittal fell from 5th to 7th and 4th to 8th respectively, while Anil Ambani and K.P. Singh, 6th and 8th last year, have fallen out of the top 20 altogether.)

The cooling of the rapid growth that took China from having no billionaires in 2003 to 42 last year has had the commensurate effect in opposite direction. Nineteen of those 42 are no longer billionaires, and China ranks among the the top five countries in terms of number of drop-offs from the Forbes list.

Yang Huiyan, the Country Gardens real estate heiress is no longer China’s richest person; that is now Liu Yongxing who founded animal feed producer East Hope Group, and is worth $3 billion. Yang ‘s fortune fell from $7.4 billion to $2.3 billion, but still enough to keep her on the list (and China’s richest woman). Not so electrical appliance retailer Wong Kwong Yu, founder of Gome Electrical, whose fortune, Forbes estimates. fell from $3.5 billion to 900 million, though it concedes that figure is “murky right now”. Given Wong’s legal troubles his financial fall from grace may be the least of his worries.

To be rich isn’t always glorious.

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Bank Of America Sells Some Of Its China Construction Bank Shares

It is scant surprise that Bank of America has, finally, sold an eighth of its stake in China Construction Bank. The sale raises $2.8 billion  — $1.1 billion of it profit on paper — and BofA needs the cash to recapitalize its balance sheet and help pay for the merger with Merrill Lynch. China Construction says it understands (statement in Chinese).

BofA will be careful to cast the sale in just such a light, and still holds a 16.6% stake in China’s second-largest commercial lender by assets.  As we’ve noted before, Beijing isn’t too thrilled to have what were meant to be foreign-owned strategic stakes in three of its largest banks being flogged off.

UBS has sold off its holding in Bank of China, and Royal Bank of Scotland and the Singapore sovereign fund, Temasek may follow suit. IPO lockups lapsed at the end of last month. Lock ups in Industrial and Commercial Bank of China, in which Goldman Sachs and American Express hold stakes, lapse in April and October. All the foreign banks need to raise capital from wherever they can.

And they are being joined by Li Ka-shing, who, Bloomberg reports, wants to sell $500 million worth of shares in Bank of China.

Back with China Construction, we assume that BofA has got round the provisions of China’s securities law that have previously held back the sale. Those ban investors holding more than 5% of a locally incorporated, publicly traded company from selling shares within six months of buying the stock. BofA’s first stake was taken in 2005 but the most recent shares were acquired only last November.

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Li Ka-shing, Facebook and QQ

East Asia’s richest man, Li Ka-shing, has pumped another $60 million into the social networking site Facebook run by Mark Zuckerberg, a fellow billionaire if one less than a third Li’s age.

Li said during a Hutchison Whampoa earnings conference call on Thursday that he was upping his previous $60 million investment, made last November and which gave him 0.4% of the company. But he didn’t say by how much, and clearly no one thought to ask him. Reuters has now run down a number.

What does Li hope to get for his $120 million? One clue comes from what he said on Thursday, that he saw some synergy between Facebook and the 3G services of Hutch’s mobile phone business. That makes some sense given that China has 465 million mobile phone users but only 172 million Web ones.

And while Facebook is having a hard time figuring out how to make money out of all the users of its Web site, you don’t need to be a rocket scientist to make money off IM and SMS mobile phone services. Just look at Tencent/QQ. In 2007, at $523 million, it had four times Facebook’s revenue, with a fifth of that coming from mobile services. Tencent also reported a $224 million operating profit last year. Facebook lost $50 million.

Li has a head that is both old and wise. If he can crack the China market for Facebook that $15 billion valuation on Zuckerberg’s site won’t look quite so mind-boggling.

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