Ratings agency Moody's Investor Services has put Citic Pacific on a negative rating watch following the conglomerate's continued investment shift away from Hong Kong to China.
Moody's said yesterday it had changed its ratings outlook on Citic Pacific's Baa3 issuer rating and its senior unsecured bonds to negative from stable, citing risks that a continued shift in business focus northwards could pose an earnings gap.
The downgrade came after Citic Pacific sold its 50 per cent stake in Festival Walk, a prime shopping centre in Kowloon Tong, for $6.2 billion, and said last Friday that it planned to invest the proceeds in a 49 per cent stake in a Shanghai Shipyard Land Development project, valued at a projected $21.1 billion over three phases.
In contrast to the negative reaction from Moody's, analysts who have long criticised the company for lacking a focal point, welcomed the move to become more business oriented.
However, some said more needed to be done as the company had claimed it would now commit to infrastructure-related investments.
'Investors have called our strategy into question, saying it is too diversified. We are now in the process of refocusing our investment profiles,' managing director Henry Fan Hung-ling told the South China Morning Post.
