Li Ka-Shing is the biggest Brexit loser

Brexit is bad news for Li Ka-shing.

Since Britain unexpectedly voted to leave the European Union, Li’s CK Hutchison Holdings Ltd. and Cheung Kong Infrastructure Holdings Ltd. have fallen more than 8 percent to be the biggest losers among companies on Hong Kong’s benchmark stock index. The city’s richest man had warned Britons against Brexit, saying it would be negative for the whole continent.

As one of the U.K.’s biggest investors, Li, 87, has a lot to lose. He operates Superdrug and Savers stores, ports, the Three phone service, as well as gas and electricity distribution. His Hong Kong-based flagship CK Hutchison generated 37 percent of its total earnings before interest and taxes from the country last year.

"His European exposure will prove to be difficult in the coming years, both from a currency translation perspective, as well as from a fundamental earnings and growth perspective," said Sandy Mehta, chief executive officer of Hong Kong-based advisory firm Value Investment Principals Ltd.

A plunging pound is bad for CK Hutchison’s profits. Every time the currency moves by 1 percent, the company’s recurring earnings would swing 0.5 percent in the same direction, according to Benjamin Lo, an analyst at Nomura Holdings in Hong Kong. Sterling has tumbled about 10 percent in the past two days, the most on record.

Bloomberg

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