Hong Kong future in hands of tycoons


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By Alex Frew McMillan

HONG KONG, China -- Perhaps the best sign of the health of Hong Kong's economy is that none of the city's tycoons are willing to discuss it in public. Or at least in front of Beijing.

With Hong Kong's handover to China now five years old as of July 1, questions are flying about its future as a Chinese city.

CNN approached Li Ka-shing, the richest man in Asia, for an interview on the subject. No reply from his holding company, Cheung Kong Holdings.

The same from his son and likely heir to the company, Victor Li.

"Their schedule is very tight and they cannot come to any interviews," a spokeswoman said.

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CNN also contacted Cheng Yu-tung, founder and patriarch of New World Development. The real-estate company has put at least 20 percent of its assets in China.

But there has been no reply yet.

Walter, Thomas and Raymond Kwok all declined an interview request on the subject. They run Sun Hung Kai Properties, Hong Kong's largest property group, which they inherited from their father, Kwok Tak-sing.

"All three of the Kwoks will be unavailable for the next little while," head spokeswoman May Lau told CNN.

"Nonetheless, we would be interested in participating in another story or feature if that would be acceptable to you, and I will try to set something up in the near future," she added.

A sick society?

Hong Kong has been described as a "sick society" (full story). Its suicide rate is widely considered to be at a record rate.

Though money appears to flow freely through the city, it is essentially a services hub built around banking, shipping, law, communications, tourism, restaurants and brokerage services.

Those industries have not been performing well for Hong Kong, given the strong price -- until recently -- of the dollar to many Asian currencies.

The Hong Kong dollar is pegged to the U.S. dollar at HK$7.8 to $1. Because the dollar has only started to weaken this year, that has left Hong Kong's services at a higher price than most competitors in Asia.

Since February 28, the Japanese yen has gained 10.1 percent against the U.S. and Hong Kong dollars.

The South Korean won has gained 8.3 percent. The Singapore dollar, which is a basket currency that contains the greenback, has gained 3.3 percent.

Tigers backing up

"What the market is telling the Tiger economies is that they have too much capital in their tradeable sector relative to their competitiveness," economist Andy Xie wrote in a report for investment bank Morgan Stanley.

The yen stands at 120 to the U.S. dollar. All the currency movement should benefit Hong Kong services, which will be cheap again for a while.

"I believe that the current dollar adjustment is cyclical," Xie wrote.

What that means for Hong Kong business is not clear. It is up to Hong Kong's tycoons and workers to make sure the economy succeeds, many economists state.

Lack of education


Some critics suggest China, and perhaps Hong Kong, will face serious economic woes as communism undwinds

The tycoons may not be the most-educated people in the world. But they are successful.

"Many of the first-generation post-war tycoons had no formal education," Stephen Brown with Kim Eng Securities, told CNN on Thursday. "They came from refugee families, and they were educated here, so you can imagine the level of education."

Hong Kong is a comparatively new economy. That means it may not need much of a solution for its services to succeed.

Brown believes its services are clearly superior to anywhere else in Asia. That means that, currency aside, businesses can price them how they want.

Hong Kong is regularly rated one of the freest economies in the world (full story). And that is kudos enough for many economists.

As for the tycoons, they should likely remain in their mansions, counting their money.

Time off for vacation

"All those guys should be doing is looking at their cash every day and saying can I make more with it," Brown said. "And investing."

Many experts suggest that Hong Kong will not fully recover until its property-market rebounds. But that may miss the point.

"In terms of leaving money in people's pockets, leaving them to go on vacation or leaving them to go off and buy U.S. dollars, whatever they want, Hong Kong does pretty well," Brown said "People here have a lot of economic freedom."