CK Hutchison Holdings (0001.HK)

[edragon]

Precisely, "one man's meat is another man's poison".
Djibouti, Laos, Zambia, Kyrgyzstan, Sri Lanka, Laos, Malaysia & others may consider it a blessing instead of a "debt trap" as rumoured.  You got to hear it from the horse's mouth to learn the truth.

[specuvestor]

Well, if people feel uncomfortable with the risk, then the public can opt to use other currencies like EUR, YEN, etc. Its up to them to decide on the risk, compare against alternatives, etc. However, none of the other alternate debt markets are large, liquid and deep enough compared to US.  US still has an independent central bank that targets the inflation level, which will keep the purchasing value of the USD, and that meant the value of the USD holdings. So, despite the debt level, public will still use US debt market.

I believe Japan is in a much worse debt shape among the developed countries or those with large economies.  Japanese government debt or borrowing has been the highest so far and much past doom/gloom articles have been written on it, but its still surviving.  Looking at the absolute numbers is misleading, and its more accurate to compare it to the countries GDP.

Japan government debt to GDP at 255%
Singapore govt debt to GDP at 168%
United States govt debt to GDP at 122%
United Kingdom govt debt to GDP at 97.6%
China  govt debt to GDP at 83.4%
Australia govt debt to GDP at 43.3%

https://worldpopulationreview.com/countr...ntry#title
* This ratio does not consider the countries' surplus or reserves. Singapore government debt ratio looks high, and they are the government bonds, Treasury bills, etc... aggregated and then compared to the GDP.

Debt-to-GDP ratio is an economic metric that compares a country’s government debt to its gross domestic product (GDP) (which represents the value of all goods and services produced by the country). Typically used to determine the stability and health of a nation’s economy, debt-to-GDP ratio is expressed as a percentage and offers an at-a-glance estimate of a country’s ability to pay back its current debts. It is typically evaluated alongside related metrics such as GDP per capita, GDP growth, GNP, and GNI per capita.


Nations with a low debt-to-GDP ratio are more likely to be able to repay their debts with relative ease. Nations whose economies struggle to produce income or which have an oversized debt tend to have a high debt-to-GDP ratio. Debt-to-GDP ratios above 77% can hinder economic growth and (in some cases) place a country at risk of defaulting on its debts, which could wreak havoc on its economy and financial markets.

Just like a company, if you use debt to boost efficiency, productivity or value chain through education, infrastructure, etc rather than build a bridge to nowhere then the debt can be good in the medium term. Simplistically lower debt is better but if growth outpaces debt then it is generally ok.

Unlike a company a country has sovereignty which allows 1) print money 2) Tax 3) Nationalise assets. Hence you have South America Russia etc that defaults and nothing much anyone can do except bar them from global markets for 10-20 years until certain vested interest returns and memory fades.

And the ability to print money means countries like Japan and Singapore or Zimbabwe will never default if it issues local currency debt. Singapore issues a lot of special debt for CPF purpose hence net debt after reserve it is still positive which is why the SGD is strong. So those that say CPF will default is clueless. The question is whether inflation and FX will kill the value of the currency like Zimbabwe. You can be fully paid and not default with worthless banana money that is equivalent to default from the lenders' point of view.

Which leads us to why hard currencies like USD and Euro are internationally recognised and use as reserves. But the US doesn't need a reserve as some claiming to use Crypto, Gold etc, ever since the Fiat system. It is more important that faith in the currency is not tarnished which is why US have that wayang debt ceiling debate to preserve the integrity of the USD rather than print unconstrained. And Russia tried to coerced China to sell US debt during the GFC which China refused. Ironically the financial impact on Russia from Ukraine war from a reserve point of view is limited cause Russian government sold all their treasuries and MBS during GFC.

The Asian Financial crisis happened cause Thailand pegged to USD at 25 but has higher interest rate hence thai companies borrowed cheaper USD loans for a free carry and when it becomes impossible for the reserves to pay off those USD loans the crisis happened cause Thailand can't print USD to repay the loans. Ditto Indonesia, Korea etc. Nowadays the Fed since Bernanke solve this problem for short term using swap lines to prevent a "USD bank run" per se. There's a big difference if the debt is in local currency or foreign currencies.

Hope this helps to clarify some of the details and sorry for off topic but thought it's important to have better understanding of the difference

[specuvestor]

And now back to CK. I think this business is relatively not as big as when they had Hutch 3G and Hutch India (which Superman Li sold at uncanny timing)

https://www.reuters.com/business/ck-hutc...025-03-28/