Shares in billionaire Li Ka-shing’s Singapore-listed Hutchison Port Holdings Trust extended losses Friday, as there is no end in sight for a strike at a Hong Kong port operated by one of Mr. Li’s companies.
HPH Trust ended 1.2% lower Friday, down more than 4% on the week. The broader Straits Times Index closed flat. The strike, which has dragged on for three weeks, has severely interrupted operations at the port. Hutchison operates 16 of Hong Kong’s 24 deep-water ship berths and has a 70% market share in terms of port handling volumes.
On Friday, Global Stevedoring Service Co., one of the external contractors employed by Mr. Li’s Hongkong International Terminals, said it won’t renew the service contract with HIT when it expires June 30. The contractor said it will wind-up the company and lay off its staff.
“Hong Kong faces serious competition from equally efficient regional ports [that] have lower operating costs, and if all parties do not consider the proposals with an open mind and try to understand the challenges that the industry is facing, workers across the [city’s] entire logistics industry will suffer,” Global said in a statement Thursday.
More than 400 Hong Kong port workers have been on strike since March 28, demanding a 20% pay rise from HIT. This week, they extended their action to the headquarters of Mr. Li’s Cheung Kong (Holdings) Ltd. in Central district. Cheung Kong has the largest stake in Hutchison Whampoa Ltd. , which runs HIT.
Citigroup Inc. said in a note this week that the strike has dented HPHT’s revenue by around HK$100 million (US$12.9 million), or less than 1% of its estimated earnings before tax, interest depreciation and amortization for this fiscal year ending Dec. 31.
Although the amount is relatively small, Citi said wage pressures could increase if all the subcontractors decide to negotiate their own terms with Hutchison HIT hires at least five subcontractors for its port operations.
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