Hong Kong’s richest family loses $8 billion in a single year

If ever there was a bad time to own the biggest developer in the world’s most expensive real estate market, this would be it.

Just ask the Kwoks. The family behind Hong Kong’s largest property empire has seen its fortune shrink by almost $8 billion in the past 12 months, the steepest drop among Asian clans on Bloomberg’s ranking of the worlds wealthiest dynasties.

Battered by Hong Kong’s worst political and economic crises since at least 1997, shares of the Kwoks Sun Hung Kai Properties Ltd are now trading at less than half the value of the company’s net assets within a hairs breadth of the most depressed level on record.

The sell-off is more than just bad news for Hong Kong’s richest family, which will endure with a diminished net worth of $30 billion; it also reflects a sobering outlook for the city as a whole.

With its portfolio of office towers, hotels, shopping malls and apartment blocks, Sun Hung Kai has more riding on Hong Kong’s success than almost any other company. The stocks dismal performance. especially at a time of soaring equity valuations globally, points to mounting investor concern that the free-wheeling financial hubs best days are over as China tightens its grip on the city like never before.

Long-term value

The long-term value of these assets is tied to Hong Kong and the integration of Hong Kong into China, said Gilles Hilary, professor at Georgetown University’s McDonough School of Business, referring to the city’s developers as a group. Growth in the future will not be as high as in the past.

While the Kwoks have repeatedly expressed confidence in Hong Kong and the group’s chairman came out in support of the city’s controversial new national security law, they’ve also been taking steps to diversify particularly into mainland China.

Sun Hung Kai, which appointed its first board member from the mainland in August 2019, is building one of its biggest-ever commercial projects in Shanghai and paid $1.9 billion last year for a parcel of land in the coastal city of Hangzhou. The firm’s largest new investment in Hong Kong is also geared toward China: In November, it spent a record $5 billion for land that sits atop a new cross-border railway station. China’s Ping An Life Insurance later acquired 30 per cent of the project.