HONG KONG (Reuters) - Concerns are mounting over CK Hutchison's planned sale of its Panama ports to a U.S.-led group amid significant delays, shedding light on Beijing's tightening grip over Hong Kong and the implications of rising global tensions, analysts warn.

The completion of key documentation for the sale, initially due to be finalized by April 2, has been postponed, with insiders indicating that the timeline was non-binding. CK Hutchison has not commented publicly on the matter. This transaction is a component of a larger agreement in which a consortium led by BlackRock aims to acquire 43 ports across 23 countries.

The deal, projected to net CK Hutchison over $19 billion, has faced fierce criticism from pro-Beijing media, framing it as a betrayal of Chinese interests and a potential national security risk. Beijing’s scrutiny has also intensified, assessing the deal's implications for fair competition.

Analyst Steve Vickers, who heads a political and corporate risk consultancy in Hong Kong, expressed gravity over the situation: “This issue bodes ill for Hong Kong, regardless of what comes next,” he stated, highlighting that capitulating to Chinese pressures could severely damage Hong Kong's reputation for autonomy and security, particularly in the eyes of Western investors.

Since the onset of the COVID-19 pandemic and the implementation of a controversial national security law by Beijing, Hong Kong has been grappling with economic difficulties and has gained a reputation for a tightening authoritarian regime.

Recent reports from the U.S. State Department suggest an overarching trend of centralization under Beijing's authority. While Beijing allows Hong Kong limited differentiation from mainland policies, it is clear that these allowances serve to further Chinese interests.

Christopher Beddor, Deputy China Research Director at Gavekal Dragonomics, emphasized that Beijing seemingly views CK Hutchison as a company that must adhere to the national interests of China, with potential repercussions for non-compliance, suggesting that other Hong Kong conglomerates may similarly be affected by this precedent.

Former U.S. President Donald Trump had previously characterized the BlackRock deal as a promising step towards “reclaiming” the Panama Canal, leaving it uncertain how U.S. reactions would unfold should the negotiations falter. However, sources maintain that discussions with BlackRock are ongoing.

The tumult surrounding this deal threatens to overshadow Hong Kong's ambitions to project itself globally through large-scale events, which officials hope will foster a positive narrative about the city. Last week, the Hong Kong Rugby Sevens took place in a newly constructed 50,000-seat venue, a highlight of an event lineup that includes Art Basel, performances by global music acts like Coldplay, and a much-anticipated football tournament featuring top European clubs.

As Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, points out, there are distinct yet conflicting perceptions of Hong Kong. “On a social level, Hong Kong remains safe and is benefiting from global trends,” she noted. However, in business circles, there is a growing sentiment that “Hong Kong is now under a different regime,” reflecting a complex and challenging reality for the city moving forward.

Amid these developments, stakeholders in both Hong Kong's social and business spheres are left wondering what the future holds for the city caught between competing interests.