China’s CK Hutchison Faces Backlash Over Port Deal with U.S. Firm BlackRock

China’s Hong Kong and Macau Affairs Office (HKMAO) reposted a commentary criticizing CK Hutchison’s port deal with U.S. firm BlackRock as a betrayal of China, sending shares of the Hong Kong-based conglomerate sharply lower on Friday.

The repost of the critical state media commentary by China’s governing body overseeing the territory highlights the complex geopolitical pressures the firm faces, as investors worry the deal could be derailed without Beijing’s backing.

CK Hutchison said last week it agreed to sell most of the global $22.8 billion ports business, including assets it holds along the strategically important Panama Canal, to a group led by BlackRock. In total, the consortium will control 43 ports in 23 countries. U.S. President Donald Trump, who has called for the waterway to be removed from what he says is Chinese ownership, has hailed the deal.

On Thursday, the Ta Kung Pao newspaper based in Hong Kong published a commentary saying the deal “betrays and sells out the whole of Chinese people,” neglects national interests and shows CK Hutchison is profit-seeking. The commentary, reposted on HKMAO’s website, said the U.S. would constrain China’s maritime trade and Chinese companies would face great risks in logistics and supply chains, impacting China’s Belt and Road initiatives. “This deal is an act of hegemony by the U.S., which uses its state power to infringe upon the legitimate rights and interests of other countries through despicable means such as coercion, pressure, and inducement,” the commentary wrote.

Shares of CK Hutchison closed down 6.4%, underperforming a rise of 2.1% in the benchmark Heng Sang Index. A Hong Kong-founded and -listed firm owned by billionaire Li Ka-shing, CK Hutchison has said its business operations are independent from China.

Hong Kong’s edge as an international financial center is expected to erode further as it gets squeezed by geopolitical tensions, executives and analysts said. Some shipping companies are moving operations out of Hong Kong and taking vessels off its flag registry.

This is not the first time billionaire Li has been in Beijing’s crosshairs. In 2015, Chinese media commentaries criticized him for abandoning China by extensively selling his assets at a time of economic tension in the country.

While CK Hutchison agreed to negotiations with the BlackRock consortium on an exclusive basis for 145 days according to a statement, the deal has not been finalized yet.

(Reuters)