November 28, 2017 / 11:48 AM / a year ago

CORRECTED-Hong Kong's CK Asset steers clear of Belt and Road

(Corrects to “common law” in paragraph 4)

HONG KONG, Nov 28 (Reuters) - CK Asset Holdings is avoiding investment in countries included in China’s Belt and Road initiative at this stage because it focuses only on developed economies with mature legal and banking systems, a company executive said on Tuesday.

The Chinese initiative involves the funding and building of global transport and trade links in more than 60 countries, but CK Asset’s Justin Chiu said it remains risky for companies to invest heavily in these countries before governments have resolved issues such as flow of capital.

“The banking system needs to be good; we can’t have money not able to come out after going in,” Chiu said on the sideline of the MIPIM private equity real estate conference.

“We emphasise the legal system. If it uses common law we are familiar with, that’s even better. That’s why we have many investments in the UK and Australia.”

In a forum at the conference, Chiu said that controls on the flow of capital are a significant impediment to investment, saying it can even be difficult for companies to open a bank account.

“It’s very risky for the private sector to go into a new market,” he said. “We have to wait until governments sort out this flow of capital, with the local government or with the host country, before we can start large-scale investment.”

On real estate investment in China itself, Chiu said margins in coastal cities are becoming thin, pushing CK Asset more towards commercial and hotel opportunities in the western cities such as Xian and Yunnan. (Reporting by Clare Jim; Editing by David Goodman and David Evans)

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