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Thursday, March 26, 2009

Hong Kong Billionaire Says It’s Time to Buy

Published: March 26, 2009

HONG KONG — The oracle of Hong Kong has spoken. And his message: it’s time to consider buying stocks and real estate.

Daniel J. Groshong/Bloomberg News

Li Ka-Shing reported on Thursday that his companies had severe profit declines in 2008, but he said that “if you buy in a slow market, in the medium term you get good returns.”
The proclamation on Thursday by Li Ka-Shing, the self-made billionaire who controls some of Hong Kong’s largest companies and carries enormous sway among investors throughout Asia, was made at a rare public appearance.

Exuding confidence, Mr. Li joked with reporters and looked anything but depressed about the sharp fall in profit his companies reported Thursday.

Whether Mr. Li is proved right about stocks and property — and he certainly has a lot to gain personally if he is right — his comments come at a time when stock markets have rallied on hopes that the economic slump may be bottoming out.

“If you have money in your pocket,” Mr. Li said, consider buying into stocks. As for the property market in Hong Kong, he said, “history tells us that if you buy in a slow market, in the medium term you get good returns.”

Mr. Li advised against borrowing to invest what remains a shaky and volatile environment.

Even though couched with caution, Mr. Li’s comments were enough to echo around the investment world and helped send the Hang Seng index up 3.6 percent Thursday.

Mr. Li is the man the local media call “Superman” and liken to the investor Warren E. Buffett, who controls Berkshire Hathaway. Considered one of Asia’s most powerful men, he is also one of the continent’s most generous philanthropists.

In the last year, as the economic crisis has dragged on and deepened, Mr. Li has jumped in from time to time to try to restore confidence.

Last September, shortly after the collapse of Lehman Brothers caused the world financial system to convulse, savers in Hong Kong lined up outside the Bank of East Asia, one of the territory’s best-known and biggest banks, responding to rumors that the bank was in trouble. Mr. Li let it be known that he had been buying shares in the bank, an expression of confidence that quickly helped put an end to an old-fashioned bank run.

And this month, HSBC was trying to raise $18 billion in a rights offering, prompting the bank’s shares to fall sharply. A majority of local residents here own shares in the bank, which is now based in Britain but has its roots in Hong Kong. When it appeared that the rights offering might falter, Mr. Li — along with several other Hong Kong tycoons — pledged to put about $300 million of his own funds into the issue.

Still, it has been a difficult year for Mr. Li, and the Superman title sat a little awkwardly on him on Thursday, after Cheung Kong Holdings and Hutchison Whampoa, the flagships of the property-to-ports-to-electricity conglomerate he controls, both reported declines in net profit of more than 40 percent for 2008.

Small wonder, given that the rapid slowdown in the global economy had tipped Hong Kong, along with the United States, Japan and others, into a recession and put a damper on the breakneck growth of neighboring China.

Rental and property prices in the territory, a mainstay of the conglomerate’s earnings, are expected to tumble further this year, hitting developers hard.

But the Cheung Kong group is not just any Hong Kong company, and Mr. Li is not just any Hong Kong company chairman. Thursday’s event was not just any annual news conference, but the pinnacle of the Hong Kong earnings season, complete with a boisterous media scrum that regularly lends the bespectacled and affable Mr. Li the aura of a pop star.

The complex network of companies Mr. Li controls — three of them members of Hong Kong’s benchmark Hang Seng index — epitomize the hustle and bustle of entrepreneurial Hong Kong and its roller-coaster economy.

And Mr. Li himself has the kind of rags-to-riches history that inspires every Hong Kong resident. The Cheung Kong group and its various interlinked companies grew out of the humblest beginnings imaginable: a plastic-flower manufacturing business the young Mr. Li set up in the 1950s.

Five decades later, Mr. Li is now one of Hong Kong’s leading developers of residential, commercial and industrial properties — about one in seven private residences here were developed by the group.

Hutchison Whampoa, of which Mr. Li also is chairman, operates businesses as diverse as ports, hotels, supermarkets and drugstore chains, and is a major telecommunications operator in Hong Kong and abroad.

Cheung Kong Infrastructure, headed by Mr. Li’s son Victor, and HK Electric, one of the territory’s dominant power companies, also belong to the Cheung Kong/Hutchison stable of businesses.

Together, these businesses are a cross section of Hong Kong’s economy and reflect more than any other company the territory’s boom-to-bust character: riding the wave of Asia’s breakneck growth in recent years, and now suffering in line with the slowing global economy.

Mr. Li’s personal fortune has fallen as well, having slipped to 16th in the Forbes annual ranking of the world’s richest people, down from 11th in 2008, with a fortune now worth $16.2 billion — down from $26.5 billion a year ago.

Tuesday, March 3, 2009

Bullish Obama Suggests Nation Should Buy! Buy!

March 03, 2009 1:29 PM

By Jake Tapper and Sunlen Miller/ABC News

President Obama told Americans to take a look at investing in the stock market this afternoon, a remarkable utterance for an American president, especially as the Dow Jones Industrial Average proceeds on its course Southward.

"What you're now seeing is ... profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it," the president said on a day that trading continued to hover under 7,000.

The president predicted that Americans' consumer confidence would improve as they see the stimulus bill "taking root."

"Businesses are starting to see opportunities for investment and potential hiring," he said. "We are going to start creating jobs again."

President Obama made his comments in the Oval Office during a photo opportunity with British Prime Minister Gordon Brown, where the two world leaders took a handful questions from the media.

Asked about the troubles of the stock market, seeming to reflect investor insecurity about the Obama administration's economic plans, the president said he was "absolutely confident that they will work, and I'm absolutely confident that credit's going to be flowing again, that businesses are going to start seeing opportunities for investment, they're going to start hiring again. People are going to be put back to work."

Obama said he wasn't focused on "the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing." he compared the Dow Jones Industrial Average to a daily tracking poll in politics. "You know, it bobs up and down day to day," he said. "And if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong."

But the president also made sure to convey that the problems in the economy were deep-seated. "The banking system has been dealt a heavy blow" due to "lax regulation, massive over-leverage, huge systemic risks taken by unregulated institutions, as well as regulated institutions." These issues are "working their way through the system. And it's not surprising that the market is hurting as a consequence."

The president said his "main message to the American people is to just recognize that we dug a very deep hole for ourselves. There were a lot of bad decisions that were made. We are cleaning up that mess. It's going to be sort of full of fits and starts, in terms of getting the mess cleaned up, but it's going to get cleaned up. And we are going to recovery, and we are going to emerge more prosperous, more unified, and I think more protected from systemic risk having learned these lessons than we were before."

Brown and Obama both said they'd been discussing the ways all the major countries around the world could coordinate stimulus packages as well as, Obama said, "a common set of principles, in terms how we're approaching banking, so that problems that exist in emerging markets like Hungary or the Ukraine don't have these enormous ripple effects that wash back onto our shores."