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Title: Hold China, Shun Dollars (Hong Kong billionaire Lee)
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Published: Jan 18, 2007
Author: staff
Post Date: 2007-01-18 20:56:55 by tom007
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Views: 77
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Hold China, Shun Dollars Russell Flannery, 01.18.07, 6:00 PM ET Hong Kong billionaire Lee HONG KONG - A row of investment awards from some of the world's largest financial institutions lines the wall of the 76th floor conference room at Henderson Land, the main company owned by Shau Kee. Skeptics say Lee's success owes mainly to good ties with bankers and a popular name, helping him to get early access to IPOs. Among the big winners that he bought into early: China Life (nyse: LFC - news - people ), the Bank of China, Industrial and Commercial Bank of China and Nine Dragons. Yet there's no arguing with his accomplishment: At $16.5 billion, Lee's wealth increased the most among the 40 billionaires on our Greater China Rich List, gaining $5 billion, or 44%, from a year earlier. He ranked second only to Lee Ka-shing, the world's richest Chinese and the still-reigning icon of Hong Kong's business success. On our list of the world's richest people in 2006, Lee ranked No. 37. Lee, expecting to add to his own legend, sees more good times to come from the main growth engine of his new wealth: China. "There is risk, but the risk/reward ratio makes it worth investing in," Lee said in an interview. "China is enjoying a very healthy boom, and there are a lot of opportunities unseen and undreamed of only 20 years ago." What he's not optimistic about is the U.S. dollar. "I am a bear on the U.S. dollar," he says. "The U.S. has a mountain of debt. I don't believe in debt. Ever since I was young, I have seen how paper money has suffered. If a country is encouraging a lot of debt, at the end of the day, they have to repay. If they don't, there will be big turmoil." Lee makes it clear that he doesn’t foresee a short-term collapse of the dollar, but notes: "Let me say that I'm less confident in holding dollars than renminbi and other foreign currencies, such as the Australian dollar, followed by the Euro and the yen." Lee's winning calls in the past year follow a career in property. Now 79, Lee started the Henderson Land in 1972. His core listed companies in Hong Kong today also include Hong Kong and China Gas, Miramar Hotel & Investment Co. Ltd. and Hong Kong Ferry (Holdings) Co. Ltd. But the wealth Lee has from his private investment portfolio, where he does his personal investing, now surpasses that of the public companies he controls. Speaking in the Cantonese dialect through a translator, Lee attributes his overall success to his ability to change with the times and seize new opportunities that have arisen in Hong Kong. "To be a good businessman, it is important to be flexible and up to date," he says. What is still changing these days, he says, is the importance of China. "Geographically, the No. 1 place to invest is China," he says. Above all, Lee believes, the best way to put money into China is through equities, particularly blue-chip companies. For China investors, blue-chip means: "The best companies covering a market of 1.3 billion people," Lee said. Luckily for investors, he says, many are available at prices that are valued fairly. The growing number of big-cap listings in Hong Kong and China offers investors ever-wider choices in terms of industries and geographical coverage, says Lee, who doesn’t consider himself to be a short-term trader. "Once I've picked my shares," he says. "I sit on them." "Be patient," he advises. "The best strategy is to invest long-term, like Mr. Buffett." Lee sees some similarities, for instance, between a stock that he's clearly happy to be holding--China Life--with U.S. insurance giant American International Group (nyse: AIG - news - people ). Like AIG in the U.S. in recent decades, China Life is well placed to benefit from a long-term rise in insurance coverage and spending in China, he says. Lee suggests that his appeal to companies offering IPOs comes at least in part from that very buy-and-hold philosophy. "We have actively approached the managements of IPO companies and demonstrated to them that we are long-term investors," he says. "Our investments in their companies will help (with) IPO prices." But what about iffy corporate governance at some Chinese companies? "China is on a learning curve," Lee says. "In the past, the legal system and the accounting system were not good enough." Today, however, China is moving toward international standards. "The legal system is better. And people are better educated. Corruption is being dealt with. I am confident that China is on the right track. In the future, China will become even better," he says. Another reason for holding Chinese equities, as well as Chinese properties, he reasons: currency exposure. "Holding those assets in China is equivalent to holding the renminbi," he says. He adds that he is also looking to increase his investments in Chinese properties, especially in second-tier cities where the potential for price gains is relatively high. "I feel those properties can easily double in three to four years," Lee says. Lee also thinks Chinese demand for oil makes that commodity a good bet, which explains the presence of PetroChina (nyse: PTR - news - people ) in his portfolio. "As a developing country and world factory, China has solid demand for oil. The replacement for oil isn’t easy [to develop]." Although gold is a inflation hedge, "oil is even more so, because it supports industrial production as well global transportation. So I am a long-term bull on oil. The current consolidation in oil is only for a relatively short time," he says. Indeed, gold doesn't seem to hold much luster for Lee, period, given his optimism about China's growth. "Equity is alive, but gold is a dead asset, meaning not growing by itself and not a business that one can run," he says. In the past year, anyway, high-flying Lee clearly hasn't had many dead assets in his portfolio.
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Ahhhhh What does that stupid billionaire chink know???
What he's not optimistic about is the U.S. dollar. "I am a bear on the U.S. dollar," he says. "The U.S. has a mountain of debt. I don't believe in debt. Ever since I was young, I have seen how paper money has suffered. If a country is encouraging a lot of debt, at the end of the day, they have to repay. If they don't, there will be big turmoil."
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