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Failed listing shows HK's strength

"The case does highlight the independence and robustness of the judicial system in Hong Kong, which we believe is extremely important and is the cornerstone of an international financial center."

Sally Wong, executive director of the Hong Kong Investment Funds Association

Jade Lam started her first day of the year by clutching a protest sign taped to a skinny bamboo pole and parading with hundreds of others who fear politicians are ruining Hong Kong's image as a global financial capital.

The event that angered the 52-year-old housewife enough to join a demonstration for the first time in her life was a recent botched stock listing for what would have been the world's largest property trust.

The derailed deal -- worth about US$3 billion -- involved the government's sale of 151 shopping centers and 79,000 parking spaces to investors.

The protesters accused opposition lawmakers of sabotaging the listing -- called the Link Real Estate Investment Trust -- by getting a 67-year-old public housing tenant to file bogus lawsuits alleging it violated the housing code.

"There will be various bad effects now on Hong Kong's image as an international financial city," said Lam, who was among the half million individual investors who signed up for the offering.

Just hours before the stock was to be listed two weeks ago, officials decided to shelve the offering until the court made a final decision about whether the deal was legal. The elderly tenant, whose legal challenge has failed twice, can file one last appeal.

The deal's failure was a huge embarrassment to the government, but opinions are mixed about whether it will hurt Hong Kong's image as a business-friendly place. Some say the controversy will attract attention to Hong Kong's strengths that have long impressed foreign investors.

"The case does highlight the independence and robustness of the judicial system in Hong Kong, which we believe is extremely important and is the cornerstone of an international financial center," said Sally Wong, executive director of the Hong Kong Investment Funds Association.

Albert Cheng (鄭經翰), an opposition lawmaker who has supported the elderly tenant's lawsuit, also said that businesses should appreciate that the rule of law didn't bend to pressure by investors and the government.

"This wouldn't have happened in Shanghai or Singapore. I probably would have been arrested for being involved in such a thing there. So it really makes Hong Kong stand out," said Cheng, once the host of a popular radio talk show.

Cheng said that companies know that it's not good to invest in places where the law isn't respected. He added that Hong Kong's government deserves most of the blame for pushing ahead with the listing before clearing all the legal hurdles.

The bungled stock listing would likely astonish many skeptics who thought that when the British handed Hong Kong back to China seven years ago, the territory would gradually absorb many of the mainland's bad habits: Murky laws interpreted by corrupt officials.

Protester Hamish Wong didn't buy the argument that the property trust controversy would damage Hong Kong's solid image as a financial capital with a solid legal system.

But the 55-year-old engineer said he joined the demonstration because he thought politicians like Cheng were meddling with business issues just to embarrass the government and expand their influence.

Wong also thought that the real-estate deal would be a watershed issue that would cause people to rethink recent political trends. Many Hong Kongers who were once politically apathetic have supported or even joined massive pro-democracy protests.

But Wong said that after the property trust debacle, many will realize that society has become too politicized and the pendulum will swing closer to the middle again.

"I think people are awakening to a new reality in Hong Kong," he said.
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