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Li Ka Shing: Buffett of Asia

Via Bloomberg, an interesting article on Li Ka Shing, a man many consider to be akin to an Asian Buffett.  As the report notes:

“…Many will see optimism in news that hedge-fund managers are making a comeback after suffering their darkest year on record in 2008. Stock markets are indeed recovering amid hopes that the worst of the global economic recession has passed. The MSCI World Index jumped 8.4 percent in July, bringing its year-to- date advance to 14 percent.

Don’t believe the hype, says Asia’s second-richest man [Hong Kong billionaire Li Ka-shing].

“The worst is over for the global economy,” Li said in Hong Kong on Thursday. “Yet it’s too optimistic to say the global economy has reached a turning point. The degree of decline has shrunk, but that doesn’t mean it has stopped shrinking.”

Buffett of Asia

Li’s views carry great weight. He is to Asian investors and entrepreneurs what Warren Buffett is to bettors in New York or Chicago. Li’s oracle credentials were buttressed in 2007 when he warned China’s stock bubble would burst, and boy did it ever. Home prices also have risen 15 percent since March, when he told investors to buy Hong Kong real estate. The 81-year-old is routinely called “Superman” thanks to his investing acumen.

It’s doubtful that Li is talking up his position. His Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd. have little to gain from falling asset prices. Cheung Kong, for example, is the world’s second-largest real estate developer by market value.

Li also could be wrong; no investor or entrepreneur gets things right all the time. Take John Meriwether, who roiled global markets when Long-Term Capital Management LP collapsed in 1998. In July, Bloomberg News reported he was planning to shut his hedge fund.

Yet Li has a point when he says investors should be “cautious” about buying shares, especially with borrowed money.

Risks Remain

Even if the worst is over, Asia’s reliance on U.S. growth is a clear and present danger to the outlook. Only once the world’s biggest economy starts growing 4 percent or 5 percent a year can policy makers in export-dependent Asia breath easy. Even Treasury Secretary Timothy Geithner doesn’t seem to be expecting those kinds of growth rates anytime soon.

Asia also needs to brace for the day when the Federal Reserve begins taking stimulus out of the economy. Fed Chairman Ben Bernanke seems anything but comfortable with holding short- terms rates near zero. Steps to normalize monetary trends could crimp global growth.

Hedge funds are riding high after a dismal couple of years. It has yet to be seen, though, if recent performance figures are merely a recovery from deep losses or the beginnings of a bull market. It could very well be the former.

Hong Kong’s benchmark Hang Seng Index has risen 45 percent this year, after plunging 48 percent in 2008. Li’s Hutchison, the world’s largest container port operator, has gained 50 percent in 2009.

China’s Export Woes

Anyone who thinks those gains can continue should consider the number 22. That’s how much China’s exports fell in percentage terms in the first seven months of this year. Global trade is evaporating before our eyes. It’s good news that the declines are less severe than in 2008, yet things are still deteriorating at a rate that doesn’t inspire confidence.

If the U.S. isn’t booming, Asia will need to look for growth from within. Japan, the region’s biggest economy, is in recession with few prospects for a rebound. Asia’s No. 2 economy, China, is growing close to 8 percent, yet it’s not spilling over into needier economies as hoped. That goes for India’s nearly 6 percent growth, too.

Those assuming Asia will continue booming may be ignoring just how interconnected the global economy is these days. Li’s Hutchison is a good example of that phenomenon. It operates container terminals in 49 ports including Hong Kong; Felixstowe, U.K.; Buenos Aires; Freeport, Bahamas; Sohar, Oman; and Amsterdam. Where global demand goes, Li’s fortunes will follow.

Ditto for Buffett; his spending on stocks has fallen to the lowest level in more than five years. The billionaire’s Berkshire Hathaway Inc. has even been under pressure from U.S. regulators to improve disclosure as the recession weighed on results.

The unexpected 0.1 percent drop in sales at U.S. retailers in July is a reminder that the most important consumers may keep cutting back as job losses mount. That would be as bad for Chinese stocks over time as it is for the Dow Jones Industrial Average.

So hedge fund gurus, enjoy your recent spoils. They may be harder to come by in the months ahead.”

This entry was posted on Monday, September 21st, 2009 at 1:17 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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About This Blog And Its Author
Global Buffetts is dedicated to compiling a compendium of elite international money managers & investors.  While the U.S. is indeed home to a number of world-class financiers, the rapid economic development and dynamic rise of financial acumen around the world has changed the playing field in the past decades.  There are now a number of global "Buffetts" plying their trade & demonstrating their expertise in their own markets.  Often, however, there is little written about such individuals as most popular media is focused on the big names in U.S. investing.  This personal interest blog is one individual's attempt to uncover other elite money managers from around the world.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about frontier investment markets at and geopolitical pressures in the global agricultural sector at