Panama Canal deal a boost for CK Hutchison but 'worrying' for Hong Kong

Firm says sale is not linked to politics, but it is said to have faced pressure from US, EU

- Magdalene Fung

HONG KONG - The planned sale of a port stake in the Panama Canal by a conglomerate owned by Hong Kong's richest man Li Ka Shing shields the city from a brewing geopolitical storm, but could have "unintended consequences" for its role as a super-connector between China and the rest of the world.

CK Hutchison on March 4 said it is selling a majority stake in its lucrative port business — including assets on both ends of the vital waterway for global trade — to a consortium led by US investment giant BlackRock for US$22.8 billion (S$30.5 billion).

It is keeping all its ports in mainland China and Hong Kong, while giving up control of 43 ports in 23 countries to the investor group that includes US infrastructure investment fund Global Infrastructure Partners and Swiss container terminal group Terminal Investment.

The deal — which will hand command of key docks in the Panama Canal to the US — signals a deliberate decision by CK Hutchison to withdraw from the global port business outside of Greater China.

This comes after US President Donald Trump vowed to wrest control of the canal and hinted at the use of force to do so. More than three-quarters of all vessels that pass through the 82km waterway are heading to or from the US.

Shares of Hong Kong-listed CK Hutchison closed up 22 per cent on March 5 — its biggest one-day jump since 1998 — amid a 2.8 per cent rise in the broader Hang Seng Index.

While market investors are taking the news positively, political analysts say the firm's divestment of its overseas port assets is a "worrying sign" for Hong Kong's role as a global gateway and a reminder for small states about the risks of being caught in the tussle between the US and China.