Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>China's swift and sudden abolishment of its Covid rules triggered across-the-board outperformance for Hong Kong stocks. The HSI is up ~13% since early December 2022. </li>
<li>A strong rebound of inbound tourism and the resumption of normalised travel between Hong Kong and the mainland should underpin the city's recovery.</li>
<li>The retail sector, notably the high street shop segment, should lead this post-Covid recovery in terms of both rents and prices. </li>
</ul>


China's swift and sudden abolishment of its Covid rules triggered across-the-board outperformance for Hong Kong stocks. The HSI is up ~13% since early December 2022. 
A strong rebound of inbound tourism and the resumption of normalised travel between Hong Kong and the mainland should underpin the city's recovery.
The retail sector, notably the high street shop segment, should lead this post-Covid recovery in terms of both rents and prices. 


Hong Kong Property: Retail Reopening Front-Runners

Asia Real Estate News Tracker, Asia Real Estate Tracker

Asia Real Estate Tracker

Asia Real Estate News Tracker

Tracking developments across Asia's regional real estate markets

<ul><li>Hong Kong Exchanges and Clearing Limited (HKEX) is purchasing 9 floors at Exchange Square in Hong Kong for $810 million, marking the top deal of the year.</li><li>The California Public Employees' Retirement System (CalPERS) fund has acquired an office tower near Shanghai Xintiandi for $316 million.</li><li>Mitsubishi Estate has started construction on a $1.7 billion office project in London, further solidifying its presence in the city's real estate market.</li></ul>

Hong Kong Exchanges and Clearing Limited (HKEX) is purchasing 9 floors at Exchange Square in Hong Kong for $810 million, marking the top deal of the year.The California Public Employees' Retirement System (CalPERS) fund has acquired an office tower near Shanghai Xintiandi for $316 million.Mitsubishi Estate has started construction on a $1.7 billion office project in London, further solidifying its presence in the city's real estate market.

Asia Real Estate Tracker (25-Apr-2025): HKEX buys 9 floors at Exchange Square for $810M.

Event-Driven

<ul>
<li>In a rare move, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson (JM SP)</a>-controlled <a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a> has <a href="https://links.sgx.com/FileOpen/HKLH0424%20SGX.ashx?App=Announcement&amp;FileID=842372" target="_blank" rel="noopener">sold</a> nine floors (147,025 square feet) of One Exchange Square to <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> for HK$6.3bn (US$810mn).</li>
<li>HKL plans to use the proceeds to provide enhancements to the property sold,  the reduction of net debt; and for a share buyback. Shares are up 9% as I type. </li>
<li>HKL is focussed on divesting US$4bn to US$6bn of its balance sheet assets in the next three years. HKL's CEO Michael Smith: "Recycling capital is our top priority right now".</li>
</ul>


In a rare move, Jardine Matheson (JM SP)-controlled Hongkong Land (HKL SP) has sold nine floors (147,025 square feet) of One Exchange Square to HKEX (388 HK) for HK$6.3bn (US$810mn).
HKL plans to use the proceeds to provide enhancements to the property sold,  the reduction of net debt; and for a share buyback. Shares are up 9% as I type. 
HKL is focussed on divesting US$4bn to US$6bn of its balance sheet assets in the next three years. HKL's CEO Michael Smith: "Recycling capital is our top priority right now".


Hongkong Land (HKL SP) Recycles Nine Floors Of One Exchange Square

Mandarin Oriental International / Event-Driven

<ul>
<li>A sale - partial or otherwise - of <a href="https://www.smartkarma.com/entities/mandarin-oriental-international-ltd" target="_blank" data-smartkarma-citation="entities:4773:1" rel="noopener">Mandarin Oriental International (MAND SP)</a>'s One Causeway Bay (OCB) was always on the cards. But I didn't see an Offer coming. </li>
<li>Concurrent with the sale of 13 floors of OCB to <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson (JM SP)</a> is seeking to take out MAND's minorities at US$3.35/share by way of a Scheme.</li>
<li>That's a 52.3% premium to undisturbed, and a 53.7% premium to NAV. Unlike the 2021 <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic (JS SP)</a> Offer, Matheson is required to abstain from voting on this takeover. </li>
</ul>


A sale - partial or otherwise - of Mandarin Oriental International (MAND SP)'s One Causeway Bay (OCB) was always on the cards. But I didn't see an Offer coming. 
Concurrent with the sale of 13 floors of OCB to Alibaba (9988 HK), Jardine Matheson (JM SP) is seeking to take out MAND's minorities at US$3.35/share by way of a Scheme.
That's a 52.3% premium to undisturbed, and a 53.7% premium to NAV. Unlike the 2021 Jardine Strategic (JS SP) Offer, Matheson is required to abstain from voting on this takeover. 


Mandarin Oriental (MAND SP): Matheson's Full Offer

<ul>
<li>On the 27th October, <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> announced an Offer for 88.04%-held <a href="https://www.smartkarma.com/entities/mandarin-oriental-international-ltd" target="_blank" data-smartkarma-citation="entities:4773:1" rel="noopener">Mandarin Oriental International (MAND SP)</a>, after MAND concurrently announced the partial sale of OCB to Alibaba.  </li>
<li>MAND will pocket US$925mn from the sale. The privatisation will set Matheson back ~US$500mn. Alibaba is ostensibly funding MAND's privatisation. And then some.  </li>
<li>Last week Matheson announced it will undertake a US$250mn buyback, which is expected to  complete in 2026.</li>
</ul>


On the 27th October, Jardine Matheson Holdings (JM SP) announced an Offer for 88.04%-held Mandarin Oriental International (MAND SP), after MAND concurrently announced the partial sale of OCB to Alibaba.  
MAND will pocket US$925mn from the sale. The privatisation will set Matheson back ~US$500mn. Alibaba is ostensibly funding MAND's privatisation. And then some.  
Last week Matheson announced it will undertake a US$250mn buyback, which is expected to  complete in 2026.


Hong Kong

Hongkong Land is a major listed property investment, management and development group. 

The Group owns and manages more than 850,000 sq. m. of prime office and luxury retail property in key Asian cities, principally in Hong Kong, Singapore, Beijing and Jakarta.  The Group also has a number of high quality residential, commercial, and mixed-use projects under development in cities across Greater China and Southeast Asia.  In Singapore, its subsidiary, MCL Land, is a well-established residential developer.  

Hongkong Land Holdings Limited is incorporated in Bermuda and has a standard listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore.  The Group’s assets and investments are managed from Hong Kong by Hongkong Land Limited.  Hongkong Land is a member of the Jardine Matheson Group.

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