China has criticized the deal to sell Panama Canal ports to BlackRock as “spineless” and a betrayal. The backlash has caused a significant drop in CK Hutchison’s stock price due to potential investor concerns about Chinese intervention. The sale is valued at $22.8 billion, and while initially seen as beneficial for CK Hutchison, the critical commentary poses risks for the transaction.
China has expressed strong disapproval of a proposal to sell ports in the Panama Canal to BlackRock, deeming the move as “spineless groveling” and a betrayal of the Chinese populace. This condemnation was conveyed through a commentary by the state-owned Ta Kung Pao newspaper and subsequently shared by the Hong Kong and Macao Affairs Office, leading to a decrease of more than 6% in the share price of CK Hutchison, the owning company.
The criticism appears to reflect investor concerns regarding the potential for Beijing to intervene and halt the transaction. Dan Baker, a senior analyst at Morningstar, noted that while there is no requirement for Chinese regulatory approval since CK Hutchison maintains its existing Chinese ports, external influences could jeopardize the deal. Baker stated that the market seems to be reacting to this possibility.
Earlier this week, BlackRock and a consortium of investors announced plans to acquire the ports of Balboa and Cristobal, situated at both ends of the canal, for $22.8 billion from CK Hutchison. Additionally, they intend to purchase CKH’s majority stake in 43 other ports across 23 countries, with the transaction characterized as an “agreement in principle.”
Former U.S. President Donald Trump has previously expressed intentions to “take back” the Panama Canal from Panama, which gained control of it in 1999 through a treaty with the United States. Trump has linked Chinese involvement in port operations to concerns about their influence over the canal.
The sale was initially perceived as a favorable opportunity for CK Hutchison, which is backed by prominent investor Li Ka-shing, to divest a politically sensitive asset while attaining a lucrative sale price. The company projected cash returns exceeding $19 billion from the transaction, significantly surpassing prior estimates of the port’s value.
However, the recent critical commentary from a government-aligned newspaper could complicate matters for CK Hutchison. The article accused the company of “profit-seeking” at the expense of national integrity and loyalty to the Chinese people, urging it to reconsider its stance in light of the situation’s gravity. The commentary highlighted the need for the corporation to carefully assess its position related to such a pivotal issue.
Constructed by the United States and completed in 1914, the Panama Canal has played a crucial role in facilitating international trade and military logistics. Approximately 4% of global maritime trade and over 40% of U.S. container traffic passes through this vital waterway, which has been under Panamanian control since 1999, contrary to Trump’s assertions regarding Chinese management of the canal.
The proposal to sell Panama Canal ports to BlackRock has drawn intense criticism from China, highlighting concerns over national integrity and investor sentiment. The backlash raises potential risks for CK Hutchison amidst fears that Chinese government intervention may impede the sale. The commentary underscores a complex interplay of political and economic motivations surrounding vital infrastructure, emphasizing the strategic importance of the Panama Canal in global trade.
Original Source: keyt.com
