An aggressive business strategy has made mall owner and operator Link REIT (Link Real Estate Investment Trust) both the stock market darling in the latest rally and the whipping boy of officials and social activists.

All it has done really is to behave just like any other well-managed and proactive publicly-listed company that is dedicated to maximizing shareholders' return. Link REIT was established to take over the money-losing malls and markets owned and operated by the government in some of the low-cost housing estates.

In this case, the privatization of public assets has been a success. By upgrading those shopping malls to maximize rental return, Link REIT has consistently maintained a healthy earnings growth and higher-than-average dividend payout to shareholders. That has not gone unnoticed by investors who have been flocking to the counter which is widely seen as a safe haven in these uncertain times.

The public should be pleased with the results because the government has remained a major shareholder in the company.

But, instead of gratitude, the company has earned the scorn not only of social activists but political leaders as well for its relentless pursuit of profit at the expense of the many low-income consumers in neighboring housing estates.

In slick television ads, the company is trying to impress the public with the message that it has helped improve the quality of life in the neighborhood of its malls by creating a pleasant environment for shopping and entertaining. Apparently, these ads and other public relations efforts by the company have failed to quell public protests organized by consumer groups and displaced shop owners.

While urging Link REIT to consider its social responsibilities, the government has said it has no intention of "nationalizing" the company by making a public offer of the shares it doesn't already own.

The government, as a major shareholder, hasn't specified how Link REIT can fulfill its social responsibilities without compromising the interests of its many minority shareholders.

One alternative is for the government to divest from the company and use the profit from the share sale to build malls and markets for rent at subsidized rates to keep prices down. But that would be an open admission that the original privatization plan that led to the creation of Link REIT was a colossal mistake, which it is not.

The government was right to have trusted the market. Let it work things out.

(HK Edition 07/06/2016 page9)