The Strategist

China's Richest Businessman Threatens to Cease Investments in the UK

03/17/2016 - 15:25

Li Ka-shing, China's richest businessman and Chairman of Hutchison Holdings Board of Directors intends to reduce investment in the British economy if Britain refuses membership in the European Union. It is reported by Bloomberg.

EdTech Stanford University School of Medicine
EdTech Stanford University School of Medicine
Hong Kong billionaire has warned that if the UK goes out of the EU, then Hutchison will certainly reduce the investment in its economy. Li Ka-shing said that probability of Brexit (output) is not high, in case of "the British care about their self-interest."

Forbes magazine estimated Li Ka-shing’s wealth at $ 30.6 billion. The billionaire is one of the largest investors in the UK.

Earlier, Bloomberg decided to analyze probable consequences of Brexit. The separation would be so damaging to the pound, that 29 of 34 economists surveyed by Bloomberg decided that the currency would fall against the dollar to $ 1.35 or even lower. Last time, such a level of the pound-dollar pair was recorded in 1985.

Twenty-three of those surveyed economists believe that once the referendum on withdrawal from the EU is held, the pound will not be able to recover from the current course during three months. Seven economists believe that the British pound will fall immediately to $ 1.20 after the vote.

The pound may fall immediately after the vote in the referendum, but is likely to recover some of its losses, said Peter Dixon, an economist at London-based Commerzbank AG. He predicts the pound above $ 1.25 to $ 1.30 in a week after the vote.

"Voting for the UK’s output from the European Union would hit the pound hard," - said Nick Kounis, Head of Macro & Financial Markets Research at ABN AMRO Bank N.V. in Amsterdam.

Kounis is one of the respondents surveyed by Bloomberg, who said that the pound would fall below $ 1.20 during the week after the vote in the referendum. He believes that in addition to the economic slowdown, the pound will experience pressure from capital outflows and concerns over the growth of the current account deficit.  

Recall that February 19, Brussels and London have agreed on a special status for the UK in the EU at the summit of Heads of State. London was entitled to withdraw from the deepening of political integration with the EU. In particular, Cameron defended the right for his country to remain outside the Schengen area, to monitor the flow of migrants into the country in its sole discretion, as well as to limit their social benefits.

The second concession, which was made for the island nation - the recognition of the EU as a multi-currency union, where calculations in Swiss francs and pounds can go along with the euro. This is an essential condition Cameron, given that the City of London remains one of the global financial centers and do not want to lose its influence, including in the countries - former British colonies.

The third condition is increased the EU's competitiveness made by lowering the burden on businesses and greater regulatory flexibility.