HONG KONG - 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.
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 stock's dismal performance - especially at a time of soaring equity valuations globally - points to mounting investor concern that the free-wheeling financial hub's best days are over as China tightens its grip on the city like never before.
Sun Hung Kai's push to increase ties with the mainland is understandable given the challenges in Hong Kong, but it's far from a surefire strategy, said Jackson Wong, asset-management director at Amber Hill Capital in Hong Kong. The city's developers have long struggled to generate outsized returns in China, in part because they lack the guanxi, or personal relationships, that often underpin business success on the mainland, Mr Wong said.
Meanwhile, Sun Hung Kai's stock could become a tempting target for bargain hunters. Anyone who bought when the company's valuation last sank this low in August 1998 would have more than tripled their money in two years, data compiled by Bloomberg shows.