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Hong Kong leader says opposes use of "coercion" in trade

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US President Trump has hailed CK Hutchison ( CKHUF ) ports deal

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Chinese authorities have started looking into sale

-Bloomberg

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CK Hutchison ( CKHUF ) shares fall as much as 4.9%

(Recasts, adds details throughout)

By Clare Jim

HONG KONG, March 18 (Reuters) - Hong Kong is opposed to

"bullying tactics" by foreign governments, the city's leader

said on Tuesday when asked about conglomerate CK Hutchison's ( CKHUF )

port deal with U.S. firm BlackRock ( BLK ) amid reports that China is

also scrutinising the sale.

CK Hutchison ( CKHUF ) said this month it had agreed to sell

most of its global $22.8 billion ports business, including

assets near the strategically important Panama Canal, to a group

led by BlackRock ( BLK ).

The deal has become highly politicised, with U.S. President

Donald Trump hailing the deal after previously calling for the

Panama Canal to be removed from what he says is Chinese control.

Other American politicians have said CK Hutchison's ( CKHUF )

operation of the ports represented a security risk to the U.S.

due to its reliance on the trade of goods through the canal.

"(The Hong Kong) government urges foreign governments to

provide a fair and just environment for enterprises," Hong Kong

leader John Lee told reporters at his weekly press conference.

"We oppose the abusive use of coercion or bullying tactics

in international economic and trade relations."

On Tuesday, Bloomberg News reported Chinese authorities have

begun looking into CK Hutchison's ( CKHUF ) ports transaction, directing

multiple agencies to review the deal for potential security

risks and antitrust violations.

Beijing's examination of the deal doesn't necessarily

mean any action will be taken subsequently, the report added, as

large deals often attract regulatory attention.

CK Hutchison ( CKHUF ) did not immediately respond to a request for

comment on the report. It has previously said the deal is

"purely commercial in nature and wholly unrelated to recent

political news reports concerning the Panama Ports".

It was not immediately clear what levers, if any, China

could pull to block the deal, given the business that CK

Hutchison ( CKHUF ) is selling is outside China and Hong Kong, while the

company itself is registered in the Cayman Islands.

Hong Kong leader Lee told reporters "any transaction

must comply with legal and regulatory requirements", adding the

city would handle it "in accordance with the law."

Shares of Hutchison fell as much as 4.9% on Tuesday, hitting

their lowest since March 4.

A Hong Kong-founded and -listed firm owned by

billionaire Li Ka-shing, CK Hutchison ( CKHUF ) has said its business

operations are independent from China.

A week after news of the ports deal, China's Hong Kong

and Macau Affairs Office reposted two commentaries criticising

CK Hutchison ( CKHUF ) and saying the sale was a betrayal of China that

neglected national interests.

While CK Hutchison ( CKHUF ) agreed to negotiations with the BlackRock ( BLK )

consortium on an exclusive basis for 145 days according to a

statement, the deal has not yet been finalised.

Hong Kong's edge as an international financial centre is

expected to erode further as it gets squeezed by geopolitical

tensions, some executives and analysts have said.

As the controversy escalates, two sources told Reuters on

Monday that CK Hutchison ( CKHUF ) will not hold earnings conferences

after it reports results on Thursday, a highly unusual move for

the conglomerate.