CK Hutchison’s surprise sale of global ports sends stock surging amid unfolding trade war

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Hong Kong tycoon Li Ka-shing during a news conference in Hong Kong on May 20, 2011 before his retirement. Photo: Reuters.

The company announced overnight that it would sell 80 per cent of Hutchison Port Group which owns 43 container ports in 23 countries, including a 90 per cent stake in two Panama ports that have been the target of US President Donald Trump’s ire.

The surprise sale came amid an unfolding trade war that Trump seems to be encouraging on multiple fronts as he vowed to slap tariffs on America’s trading partners from China to Mexico. An estimated 80 per cent of global commerce is shipped by sea, and CKH has been one of its biggest beneficiaries for several decades, operating 53 ports in 24 countries.

The disposal of the majority of CKH’s port business is “a surprise, given [that] most of the other ports are not in regions directly exposed to current geopolitical tensions”, JPMorgan’s analyst Karl Chan said.

Hong Kong tycoon Li Ka-shing during a news conference in Hong Kong on May 20, 2011 before his retirement. Photo: Reuters.

“We think this might be an opportunistic deal where the initial discussion of disposing of Panama ports may expand to most remaining ports”, said Chan, who has an “overweight” recommendation on the stock. “Based on our understanding of the management philosophy of CKH, any deal is possible as long as the price is right.”

The sales proceed of US$23 billion would generate US$19 billion in cash for CKH, substantially higher than Morningstar’s US$10.5 billion valuation of its port assets. CKH shares jumped by almost a quarter in Hong Kong trading on Wednesday, their biggest intraday surge on record, to as much as HK$48.20 per share.

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