Li Ka-shing, Hong Kong’s richest man with $34-billion fortune, retires after working ‘too long’

Li Ka-shing, a wartime refugee who used to sweep factory floors in Hong Kong for a living, retired after a career spanning more than half a century amassing one of Asia’s biggest fortunes from building skyscrapers to selling soap bars.

The 89-year-old chairman of CK Hutchison Holdings Ltd. and CK Asset Holdings Ltd. will stay an adviser to the group after stepping down in May. Elder son Victor, 53, will take over a conglomerate that touches the lives of practically everyone in Hong Kong — the family’s Power Assets Holdings Ltd. generates their electricity and ParknShop supermarkets sell their groceries. The group also operates mobile-phone stores and Superdrug and Savers in the U.K., owns ports around the world and a controlling stake in Husky Energy Inc. in Canada.

“Looking back all these years, it’s my honour to have founded Cheung Kong and to have served society,” Li told a packed room of journalists in Hong Kong on Friday. It’s been “my greatest honour,” he said.

The retirement came on a high note as Li’s four biggest companies — CK Hutchison, CK Asset, CK Infrastructure Holdings Ltd. and Power Assets Holdings Ltd. — reported higher 2017 profits. All four stocks rose, though announcement — including two of the earnings — came after the end of trading in Hong Kong.

With a fortune of about US$34 billion, according to the Bloomberg Billionaires Index, Li has been a fixture as the city’s richest man for an entire generation of Hong Kongers and spearheaded an era defined by a handful of swashbuckling Chinese immigrants who built large empires across Asia. For many, he is the face of the changing fortunes of Hong Kong as the former colony’s British elite gave way to Chinese dynasties.

“Li’s retirement symbolizes the end of an era,” said Joseph P.H. Fan, a professor at the Chinese University of Hong Kong, who has researched family-run businesses for two decades. “No one can replace Li Ka-shing as the legendary founder of the largest conglomerate in Hong Kong.”

His retirement announcement illustrates his confidence over business continuity, given that he has prepared his son for several decades, Fan said.


Li personifies some of the conflicts that came from the region’s rise: Dubbed “Superman” by local media for his business acumen, he symbolizes inequality in a city with one of the most lopsided wealth demographics on the planet. He is a property developer who has won admiration for his entrepreneurial skills and a manager with companies so dominant that they often stifle smaller competition.

He also is an uber-capitalist who courted communist leaders. A major figure in China’s emergence as an economic superpower, Li is the most prominent among a generation of Hong Kong tycoons who charged across the border after Deng Xiaoping and his successors promoted economic reforms. His investments in the mainland span across industries ranging from energy to retail and infrastructure.

Starting with some well-timed local property investments that cemented his wealth, Li built a business empire that included retail, energy, ports, telecommunications, media and biotechnology companies worldwide. Overseas, Li-controlled companies are among the biggest foreign investors in the U.K.

For many in Hong Kong, Li is a dealmaker and investment guru on par with the likes of Warren Buffett. Li’s track record includes a US$15-billion profit on the sale of his Orange mobile-phone unit in the U.K. to Germany’s Mannesmann AG in 1999. He is a major investor in technology startups such as Facebook, Spotify and Siri. During public appearances, he’d routinely be asked for prognostications on stocks, the real estate market and the economy.

From Orange to Duet

Even toward the end of his career, he didn’t slow down his dealmaking. In 2015, the mogul restructured his major holdings into two companies, one housing his property assets and the other holding the rest. He followed with the A$7.4 billion (US$5.8 billion) takeover of Australian power provider Duet Group in 2017.

Li was born July 29, 1928 in Chaozhou, a city in southern China’s Guangdong Province. His father was a school principal but the young Li’s formal education stopped at high school as invading Japanese troops reached Guangdong. Fleeing war-torn China for Hong Kong in 1940, Li found factory work while also caring for his ailing father, who soon died from tuberculosis. By the time he was a teenager, Li was working 16 hours a day at a plastics trading company.

After the war, Li made his first fortune as a manufacturer of plastic flowers. His career as property mogul began in the late 1950s when, unable to renew his lease, he bought the site of his factory.

Political Connections

In the years to come, Li invested in local real estate as others sold, most notably in 1967, when riots inspired by Mao Zedong’s Cultural Revolution in China rocked Hong Kong and sent property prices plunging.

His most symbolic coup as a businessman may have come in 1979, when he bought control of trading house Hutchison Whampoa from Hongkong and Shanghai Banking Corp. Li quietly negotiated with the bank, now called HSBC Holdings Plc, to buy Hutchison shares for less than half their book value. HSBC agreed and Li became the first person of Chinese origin to own one of the British-founded companies that had dominated the local economy since the colony’s founding in 1841.

That reputation helped Li make inroads in China, where he mixed extensive political connections with financial interests. Li was a senior adviser to the Chinese government on Britain’s 1997 handover of Hong Kong and served on the committee that drafted the Basic Law, the city’s mini-constitution under Chinese rule.

16-Hour Workday

Close Chinese ties had their downside too, particularly in the U.S., as critics including former President Ronald Reagan’s defense secretary to ex-Republican Senate leader Trent Lott voiced concerns about Li’s relationship with China — allegations denied by Li’s camp. The concerns got real enough for a U.S. national security review to thwart Li’s bid to buy part of Global Crossing Ltd., which operated a fixed-line communications network in North America, in 2003.

Li maintains an intense schedule well into his 80s, saying in a 2016 Bloomberg interview that he works as many as 16 hours daily, seven days a week. Long after he became a billionaire, Li wore a simple Seiko watch rather than a Rolex or other luxury brands preferred by his wealthy peers. In his 80s, he made a small upgrade to a Citizen that cost around US$400, he told Bloomberg in 2016, but even then chose something simple and durable.

Li is no stranger to tragedy. His wife died in 1990 and his son Victor was kidnapped in 1996. The kidnapper was apprehended and executed in China.

Wrestling With Inequality

Then there was Hong Kong’s inequality, which Li wrestled with during his latter years.

“If the government set policies through the emotive lens of populist sentiments, it might make you feel better, but not necessarily fare better,” Li said in a 2014 interview with Chinese media group Caixin. “When a society is mired in discord, it will dent its economic vitality, which is hardly good for anyone.”

In 2014, just days before the start of student-led democracy demonstrations in Hong Kong, he travelled to Beijing and met with President Xi Jinping. After the protests began, Li urged the students and their supporters to go home, saying their message had been heard.

New York power companies can now charge Bitcoin miners more

On Wednesday, the New York State Public Service Commission (PSC) ruled that municipal power companies could charge higher electricity rates to cryptocurrency miners who try to benefit from the state’s abundance of cheap hydroelectric power.

Over the years, Bitcoin’s soaring price has drawn entrepreneurs to mining. Bitcoin mining enterprises have become massive endeavors, consuming megawatts of power on some grids. To minimize the cost of that considerable power draw, mining companies have tried to site their operations in towns with cheap electricity, both in the US and around the world. In the US, regions with the cheapest energy tend to be small towns with hydroelectric power. (Politico recently wrote extensively about the Bitcoin mining boom in Washington state’s mid-Columbia valley, a hotspot for cheap hydro.)

But mining booms in small US towns are not always met with approval. A group of 36 municipal power authorities in northern and western New York petitioned the PSC for permission to raise electricity rates for cryptocurrency miners because their excessive power use has been taxing very small local grids and causing rates to rise for other customers.

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Declaring the internal combustion engine dead? You’re speaking too soon

NATIONAL HARBOR, MD—A Wednesday morning panel at the ARPA-E summit provocatively asked if the auto industry is about to see ”The End of the Road for the Internal Combustion Engine?”

Though all the panel members agreed that gas- and diesel-based systems are on a path to losing market share, none would admit that the internal combustion engine (ICE) would be completely replaced by the electric vehicle (EV). At least before 2050. So what do industry leaders think will happen or should happen to the evolution of drivetrains in the future?

Perhaps the most interesting perspective came from Amitai Bin-Nun, a vice president in charge of autonomous vehicle innovation for the nonprofit Securing America’s Future Energy, or SAFE. Bin-Nun argued that, without a transition to autonomous vehicles, EVs would not see the mass-market adoption that boosters have been hoping for.

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Trump really wants to kill ARPA-E; federal agency says that’s folly

WASHINGTON, DC—Ten years ago, a bipartisan group of lawmakers created ARPA-E, or the Advanced Research Projects Agency for Energy. Today, the agency may be living on borrowed time. Or maybe not.

The Trump administration has, for two years in a row, recommended that ARPA-E be defunded and mothballed. But last year, a Republican-led Congress actually voted to increase the agency’s budget from its 2016 levels.

But until Congress passes a new budget, the fate of ARPA-E is uncertain. In the face of that uncertainty, the agency’s annual summit still convened in Washington, DC, this week, and its leaders addressed the crowd of scientists and entrepreneurs with words that seemed to be more for administration higher-ups than for the choir to whom they preached.

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New York commits $1.4 billion to renewable energy projects

On Friday, New York Governor Andrew Cuomo announced that his state would commit $1.4 billion to 26 renewable projects, including 22 solar farms, three wind farms, and one hydroelectric project. The outlay is a huge sum compared to what most states spend on renewable energy.

At the same time, the governor denounced the Trump administration’s plan to open nearly 90 percent of offshore federal waters to oil drilling. Cuomo asked that Interior Secretary Ryan Zinke exclude two areas off the New York coast from lease sales, citing concerns about oil spills like the BP Deepwater Horizon disaster in 2010 in the Gulf of Mexico. Cuomo noted that Florida has been able to obtain verbal approval that lease sales won’t be held in waters adjacent to the Florida coast (although some officials in the administration have contradicted that exemption).

The renewable projects will be sited throughout the state and were chosen by New York State Energy Research and Development Authority (NYSERDA) based on the proposed cost of each project, the project’s ability to create local jobs, and developer experience in building renewable projects in New York.

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Why the blockbuster Saudi Aramco IPO may never happen

Saudi Aramco’s partial privatization has loomed over the oil market for the last two years, influencing expectations about oil prices, but what if it never happens?

The possibility of selling a minority stake in the giant oil company was first mentioned in a newspaper interview published in January 2016 by then-Deputy Crown Prince Mohammed bin Salman.

The possibility merited little more than a brief mention in a section about economic reforms, diversification and privatization of state assets.

But this passing reference has spawned an enormous amount of activity from consultants, bankers, stock exchanges, governments and journalists all competing to benefit from the sale of the century.

Saudi Aramco has reportedly prepared a set of corporate accounts to international standards and commissioned an external audit of its oil reserves ready for investors.

The pending sale has triggered a scramble among stock exchanges, including in the United States, the United Kingdom and Hong Kong, to secure a slice of the listing, with each receiving government backing.

Technical preparations for a sale appear to have been largely completed over the last two years but the actual date for any sale has been repeatedly pushed back.

The decision on whether, where and when to list shares lies with the government rather than Aramco, which means that it is in the hands of the newly promoted crown prince.

But there is still no timeline for a decision, let alone an actual listing, and the timetable now appears to have slipped into 2019.

Saudi policymakers have indicated shares will be listed on the domestic stock exchange but there is in fact no firm commitment to list them internationally.

The government has a range of options, from a domestic-only listing, a private sale of shares to a strategic partner, an international listing, or some combination of any of these three.

The longer the decision is delayed, the more likely it is that the sale will not occur, or will be scaled back to a listing on the domestic stock market.


It would not be the first time that a major strategic initiative has been substantially modified or quietly dropped.

Saudi Arabia’s gas initiative was launched in 1998, another point when oil prices had slumped and the kingdom’s finances were under pressure.

The gas initiative was part of a broader package of reforms aimed at diversifying the economy, reducing the role of the government and increasing the involvement of the private sector.

The initiative attracted significant interest from international oil firms but meandered for several years without making progress before being quietly shelved around 2002.

The question is whether the partial privatization of Saudi Aramco will meet the same fate.

Reform efforts in Saudi Arabia tend to be cyclical. Slumping oil prices and revenues push diversification and privatization onto the political agenda, only for momentum to be lost when prices recover.

Like the gas initiative, the proposal to sell shares in Aramco was made when prices were at cyclical lows, in early 2016.

Now oil prices are recovering, the imperative to privatize is fading.

A flame from a Saudi Aramco oil installion known as “Pump 3” is seen in the desert near the oil-rich area of Khouris, 160 kms east of the Saudi capital Riyadh.


From the very beginning, the rationale for selling shares in Aramco has never been clear.

Part-privatizing Aramco could lead to improvements in corporate governance. The deputy crown prince mentioned improving transparency and countering possible corruption as reasons in his interview.

Selling shares on the domestic stock exchange could provide a means of giving more ordinary Saudis a sense of ownership and spur the development of a domestic financial services industry.

Selling shares could be the first step towards a much more ambitious diversification of government assets and revenues away from the oil sector.

Or it could simply be a revenue-raising exercise. The plan was mooted when government revenues were at a low point, the budget was running a heavy deficit and financial reserves were falling rapidly.

The sale has always been controversial within Aramco itself, and in parts of Saudi society, with many people quietly questioning whether it makes sense.

Aramco leaders and employees bristle at the suggestion the company has been badly run, arguing that it is in fact one of the best-managed institutions in the kingdom.

Selling shares on the domestic stock market or to foreigners could reduce the benefits of oil wealth for lower-income Saudis if it caused the diversion of funds to already-wealthy Saudi and foreign owners.

Critics fear the decision to sell shares when oil prices are near the bottom of the cycle would undervalue the company.

Finally, the sale is arguably too small to achieve meaningful diversification or raise significant sums of money for the government.

Selling 5 per cent of the company is not enough to achieve meaningful reduction in the government’s dependence on oil.

Even if the sale valued the company at US$2 trillion, as the crown prince has said it is worth, the sale of 5 per cent for US$100 billion would not raise enough money to make much of a difference.

The kingdom still has foreign reserves worth almost US$500 billion and an extra US$100 billion would not be nearly enough to fund the ambitious social and economic transformation projects outlined by the government.


As oil prices have risen, the government’s budget deficit has narrowed and the kingdom’s foreign reserves have stabilized.

The kingdom has sought other sources of financing, including expropriating assets as part of the anti-corruption campaign, which the government hopes will raise US$100 billion.

As oil revenues grow again, the benefits from the sale will start to seem less compared with the inevitable problems and costs, making an eventual sale less likely.

That said, the prospect of a sale has enabled the kingdom to drum up significant interest from bankers and professional services firms.

And it has also allowed it to play off governments including the United States and Britain.

With so many keen suitors, Saudi is likely to keep its options open for as long as possible, and is unlikely to shut the door on an international sale completely.

Still, its leaders appear to be in no hurry to commit to a timetable or venue. In the end, they might settle for a simpler domestic listing, with or without the sale of a small strategic stake to an international investor.

Ultimately, the decision will be taken by Saudi Arabia’s de facto ruler, Mohammed bin Salman, and on this issue, he appears to be in no rush.

© Thomson Reuters 2018

Oil pipeline shortage puts Jim Carr on the hotseat in Houston

HOUSTON — Investors and analysts have grilled both Canadian politicians and oil executives this week on pipeline projects, and Natural Resources Minister Jim Carr tried to soothe concerns over the issue Wednesday.

“The government of British Columbia doesn’t like the pipeline much,” Natural Resources Minister Jim Carr said Wednesday, adding that “the government of Canada is as committed to the project as it was the day we approved it.”

Pipeline constraints have been a theme for both Canadian and, to a lesser extent, Texan oil producers, at Houston’s CERA Week energy conference this year — a sharp contrast to last year, when Prime Minister Justin Trudeau attended and touted his government’s approval of new pipeline export projects.

In Canada, all of the oil export pipelines are full and producers are increasingly shipping their barrels on railway cars given pipeline operators are rationing space on existing lines. The situation has caused the Canadian oil producers to accept discounts as high as $30 per barrel for their oil.

In that context, Carr said his Liberal government remained committed to the project and other export pipelines. He also tried to soothe investors’ fears over Ottawa’s overhaul of the National Energy Board, released last month.

“We think it’s better, it’s more streamlined and it means that good projects will get built,” Carr said.

Still, Canadian oil and gas executives here have spent much of their time fielding questions — from analysts, investors, Canadian and American reporters — about how their businesses have been affected by stalled pipeline export projects.

Cenovus Energy Inc. president and CEO Alex Pourbaix said during a panel discussion Tuesday the cost of the currently large discounts for Western Canada Select to his company was $4 million per day.

Still, Pourbaix told attendees the Canadian energy sector was a stable place to do business relative to other heavy oil-producing regions because “the only issue that needs to get addressed is getting pipelines built.”

The issue was highlighted just as the conference kicked off this week, when the International Energy Agency released its five-year oil outlook on Monday and predicted Canadian oil supply growth would be restrained by full export pipelines leaving Canada.

“Last year, we were here. We were saying, ‘There’s good news for pipelines,’” IEA senior analyst Toril Bosoni said. “Now one year later we’re saying, ‘It’s not so certain.’”

She said the construction timelines of new pipelines — like TransCanada Corp.’s Keystone XL pipeline to the U.S. Gulf Coast, Enbridge Inc.’s Line 3 replacement and Kinder Morgan Canada’s Trans Mountain pipeline expansion — were the biggest uncertainties weighing on the report’s outlook for Canada.

Enbridge president and CEO Al Monaco said some progress is being made.

“I would have to say it’s frustrating, however, let’s not forget that we (as an industry) have been successful at putting projects into the ground,” Monaco said of delays to his competitor’s project, the Trans Mountain pipeline expansion.

“We’ve built a lot of new capacity out of Western Canada in the last decade but it’s harder, it takes longer – that’s our job,” Monaco said.

Mark Little, Suncor Energy Inc.’s chief operating officer, said some of the pessimism on Canadian pipelines is overblown and that the situation will improve.

“The pipeline isn’t built but we do view that certainty continues to increase with this (issue),” he said in an interview Tuesday, referring to Kinder Morgan’s Trans Mountain expansion through British Columbia. “We’re seeing it with actions with the Alberta government. We’re seeing the resolve of the federal government.”

Suncor has also secured all the pipeline space it currently needs to move its oil out of Western Canada and to the U.S. Gulf Coast, Little said.

Despite Suncor’s optimism, the company has indicated it would not proceed with new growth projects in the oilsands until additional export pipelines are built.

“We want to see the certainty of the pipelines going in before we start sanctioning a bunch of growth,” Little said.

“It’s not in our shareholders’ interest to sanction growth and then find out we have no way to move it except by rail — that’s not going to be good for the economics of it,” Little said, referencing the increase in oil-by-rail shipments out of Western Canada since the end of 2017.

Financial Post

Microwaves across Europe are 6 minutes slow due to a Serbia-Kosovo grid dispute

In a press release on Tuesday, Europe’s electric transmission lobby said that ovens, microwaves, and radios across continental Europe could be running almost six minutes slow due to a power grid dispute between Serbia and neighboring Kosovo.

Power-connected clocks on appliances generally tell time by counting the rate of the electrical current, which in Europe is supposed to hold a constant frequency of 50Hz. If that frequency drops below 50Hz, connected appliance clocks will be slow, and if it rises above 50Hz, clocks will be fast. Since mid-January, clocks that are on the Continental Europe Power System, a synchronized area that reaches through 25 countries across the continent, have seen a deviation from grid-time based on an average frequency of 49.996 Hz.

What do grid disputes have to do with anything? Serbia and Kosovo are part of the Continental Europe Power System, and, per an agreement, Kosovo is required to balance electrical supply and demand on its grid, while Serbia is required to help Kosovo manage that balancing. But the agreement between Serbia and Kosovo appears to have fallen apart, and neither side is talking to the other. That has resulted in 113GWh of unmet demand from Kosovo, which, spread across the whole synchronized area, has led to a decline in frequency—not big enough to cause power outages (at measurements below 47.5 Hz and above 52.5 Hz, the grid and devices connected to it disconnect) but big enough to warp time.

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