Hong Kong’s richest man Li Ka-shing’s CK Hutchison Holdings has shocked the market by selling the Panama Canal and other ports, making a profit of over $19 billion in cash. Reports have revealed that since US President Trump reiterated his intention to reclaim the Panama Canal in his inauguration speech, this deal has been in the works in Hong Kong. Li Ka-shing himself has been personally involved in the negotiations, allowing CK Hutchison to swiftly exit the political turmoil and make a significant profit.
On Tuesday, CK Hutchison announced in a statement to the Hong Kong Stock Exchange that they had reached a preliminary agreement with a consortium led by US company BlackRock to sell core assets of its global port business, including a 90% stake in the Panama Ports Company.
This transaction will give the US consortium control of the main ports of the Panama Canal, with the White House urging to free these facilities from “Chinese Communist infiltration.”
The deal is expected to yield over $19 billion for CK Hutchison, significantly exceeding analysts’ valuation of its port assets at $13 billion, a news that jolted the market and boosted CK Hutchison’s stock price sharply within two days.
The Australian Financial Review reported on Thursday that since Trump reiterated his goal to reclaim the Panama Canal on January 20, this deal had been brewing in Hong Kong. CK Hutchison believed that selling the Panama Canal ports solely due to political sensitivity might not be wise, but saw it as an opportunity to reverse the downturn in its stock price in recent years.
It was reported that retired founder Li Ka-shing, his son and chairman of CK Hutchison Li Tzar Kuoi, as well as BlackRock CEO Larry Fink, were all involved in the negotiations through video conferences and phone calls, with the deal being finalized in a matter of weeks.
While CK Hutchison’s Executive Director Frank Sixt stated that the deal was purely commercial and unrelated to recent political news regarding Panama ports, it is widely believed that CK Hutchison sold the ports under geopolitical pressure.
An unnamed Hong Kong financial scholar told Taiwan’s Central News Agency on Thursday that if CK Hutchison continued to operate the Panama Canal port amidst escalating geopolitical tensions, they would face more uncertainties, including possible lawsuits and increased pressure and threats from the US. With ports worldwide, failure to resolve issues with the Panama Canal port could impact operations elsewhere.
An unnamed Hong Kong political commentator remarked that while many view Li Ka-shing’s sale of ports as succumbing to US pressure amid geopolitical maneuvering, it could also be seen as a calculated business move. As the founder of a top multinational corporation with a global footprint, Li Ka-shing possesses international vision and strategy to navigate various political pressures, possibly looking at this move as retreat for future gains.
Senior Hong Kong investor Shao Zhiyao, in an interview with Lianhe Zaobao, believed that Li Ka-shing’s decision to sell the Panama port business was entirely politically driven. “After Trump’s threat to reclaim the Panama Canal, the Panamanian government has softened its stance, including withdrawing from China’s Belt and Road Initiative. CK Hutchison’s sale this time is to avoid being the battlefront in Sino-US conflicts, circumventing international geopolitical conflicts.”
Shao Zhiyao pointed out that in recent years, with global economic uncertainties and cash being king, coupled with an ideal transaction price for the project, this was a positive development for CK Hutchison, reflected in the surge in the company’s stock price on Wednesday.
Panamanian President Jose Raul Mulino, after meeting with US Secretary of State Rubio in February, indicated that Panama was reviewing certain Chinese companies operating in Panama, including a 25-year concession granted to Hong Kong’s CK Hutchison in 2021 to operate ports at the canal’s two entrances.
Sources disclosed to Bloomberg that Mulino was weighing the possibility of canceling the contracts held by CK Hutchison.
President Trump has repeatedly expressed his desire to reclaim the Panama Canal. In his inauguration speech on January 20, he stated, “As we build the Panama Canal, we spent more money than ever before and lost the lives of 38,000 people. This gift that we shouldn’t have given has treated us very badly, and Panama has broken its promise to us.”
Trump emphasized, “Most importantly, China is operating the Panama Canal, we didn’t give it to China, we gave it to Panama. We’re going to take it back.”
He has previously warned that if Panama doesn’t change its unfair fee practices regarding the Panama Canal, the US will demand the country’s government return control of the canal, built by and gifted from the US. Trump mentioned the possibility of using military force for this purpose.