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State-owned media commentary calls port sale a betrayal

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China's Hong Kong and Macau Affairs Office reposts

commentary

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CK Hutchison ( CKHUF ) shares drop 6.4%

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Comments highlight political risks for HK firms, analysts

say

(Updates share prices)

By Clare Jim and James Pomfret

HONG KONG, March 14 (Reuters) - China's Hong Kong and

Macau Affairs Office (HKMAO) reposted a commentary criticising

CK Hutchison's ( CKHUF ) port deal with U.S. firm BlackRock ( BLK ) 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 ( CKHUF ) 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 ( BLK ).

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 ( CKHUF ) 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.

"It is power politics packaged as a 'business behaviour'."

CK Hutchison ( CKHUF ) and the HKMAO did not immediately respond to

requests for comment.

Shares of CK Hutchison ( CKHUF ) 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 ( CKHUF ) has said its business operations are

independent from China.

Hong Kong's edge as an international financial centre 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, Reuters reported.

Trump, meanwhile, is planning an executive order to

charge fees for China-linked vessels at U.S. ports, in a bid to

resuscitate American shipbuilding and disrupt China's supply

chains.

Vera Yuen, a lecturer at the University of Hong Kong's

business school, said the commentary was a "manifestation of

political risks and a cautionary lesson for companies that want

to do business with both sides.

"You cannot do both at the same time," she said.

This is not the first time billionaire Li has been in

Beijing's crosshairs. In 2015, Chinese media commentaries

criticised him for abandoning China by extensively selling his

assets at a time of economic tension in the country.

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 been finalised yet.

"The risk of the deal has increased," said Thomas Kwok, head

of equity business of CHIEF Securities. "CKH is now caught in

the middle; if it doesn't sell, it would continue to be bothered

by the U.S.; but if it sells it would upset Beijing."

"We need to watch where this will lead CKH to now; if it

would go through litigation to keep the Panama port, or they

will need to communicate with Beijing."