HK firm exits land purchase tender on economic worries

Hong Kong

HONG KONG-BASED Goldin Financial Holdings has dropped out of a process to buy a land parcel worth about HK$11.1 billion (S$1.93 billion) citing economic uncertainties, as the Asian financial hub's businesses continue to take a hit from China's slowdown.

In a rare move, Goldin said in a stock exchange filing on Tuesday its board had decided to exit the tendering process for land use rights for a parcel in the Kai Tak area of Hong Kong due to "recent social contradiction and economic instability" that would negatively affect Hong Kong's commercial property market.

The firm, with interest in financial and property markets, did not explain what it meant by social contradiction.

Goldin convened an urgent board meeting on Monday, where three executive directors and three independent directors voted to withdraw the tender.

Goldin chairman Pan Sutong, however, disagreed with his fellow board members. He voted to stick with the tender, saying the current situation would not affect the market's long-term growth prospects.

Mr Pan also said that he was confident the acquisition would have brought significant synergies to the development of a nearby existing land parcel held by Goldin, and voted against the resolution.

Gao Min, an independent non-executive director, also voted against the resolution. But because a majority of the board voted for it, the bid was dropped.

Goldin will forfeit a non-refundable deposit of HK$25 million paid to the Hong Kong government.

Hong Kong's economy expanded at its slowest pace in nearly 10 years in the first quarter due to weaker exports and as the former British colony was buffeted by the ongoing US-China trade war, along with cooling property prices and volatile stock markets.

The government has maintained its forecast for Hong Kong's full-year 2019 growth at 2 to 3 per cent, compared with 3 per cent growth in 2018.

Despite economic weakness, home prices in one of the world's most expensive property markets rose for the fourth straight month in April, government data showed last month.

But analysts have said the rising price trend may not be sustainable, especially as trade tensions between China and the US intensify again, leading to a plunge in transaction volume.

Hong Kong is bracing for rare strikes and continuing protests over proposed legislation that would allow extraditions to mainland China.

Local companies have said they would suspend work or allow flexible office hours on Wednesday to accommodate workers planning to demonstrate near the city's Legislative Council. REUTERS, BLOOMBERG