HONG KONG • US President Donald Trump once called himself the "king of debt''. Mr Hui Ka Yan, China's richest property mogul, has a stronger claim to the title.
No one has become wealthier on the back of a corporate borrowing binge than Mr Hui. His junk-rated China Evergrande Group is not only the nation's most indebted developer, it also has the highest leverage among companies underlying the world's largest fortunes.
With a net worth of US$35 billion (S$47.4 billion), Mr Hui is the 26th richest person in the Bloomberg Billionaires Index. Everyone above him for whom data is publicly available - from Amazon.com's Jeff Bezos to Las Vegas Sands' Sheldon Adelson - has grown their fortune via companies with far more conservative balance sheets.
In many ways, Mr Hui, 60, is more emblematic of recent trends in global business. Worldwide corporate debt has swelled by 26 per cent over the past decade to US$132 trillion as companies have taken advantage of historically low interest rates to fund growth. Many have also used borrowed cash to repurchase shares and boost dividends.
As investors debate how long the good times will last, Evergrande has emerged as an extreme example of the tug-of-war between bulls and bears. The company's stock has trounced the market in recent years while becoming, at the same time, a favourite target of short sellers.
Evergrande this week increased its year-to-date issuance of dollar bonds to US$6.7 billion - the most in Asia, excluding Japan - even as analysts sounded alarms about the firm's massive debt burden.
Mr Hui, who grew up poor in Henan province and quit his job at a state-owned steel company in 1992 to try his luck in real estate, has so far managed to push the limits of investors' tolerance for leverage without triggering a loss of confidence.
Evergrande's stock has jumped more than 200 per cent over the past two years as the company repurchased millions of shares and distributed a US$2.2 billion dividend in late 2018. It sold US$1 billion of bonds on Monday at yields around 10 per cent - high for a company of its size but well below levels that signal financial stress.
Mr Hui, who founded Evergrande in 1996 and turned it into China's biggest developer by revenue, has profited from the firm's borrowing spree in more ways than one.
He invested US$1 billion of his own money in some of the firm's bonds in October, an unusual move aimed at calming market jitters over the size of Evergrande's debt burden. He has gained an estimated 16 per cent on his investment as sentiment improved.
Optimists point to Evergrande's repeated pledges to reduce leverage and say the company's massive land holdings provide sufficient backing for its debt. Evergrande's core profit, adjusted for property revaluations, foreign-exchange fluctuations and the fair value of financial assets, rose a faster-than-estimated 93 per cent last year.
The firm's mountain of debt remains a significant risk. Net liabilities have quadrupled over the past five years to about US$78 billion, while its financial leverage is more than twice as high as the industry average.
Sceptics say Mr Hui is burning through too much cash as he expands into a plethora of new businesses. He has branched into everything from hospitals to artificial intelligence to soccer and has vowed to take on Tesla to be the world's biggest maker of electric cars.
The ventures have aligned with the priorities of China's ruling Communist Party, but it is far from clear that they will be successful.
"There is a fair bit of uncertainty regarding the diversification into new businesses such as electric vehicles," said Mr Luther Chai, an analyst at CreditSights Singapore. "These investments require huge amounts of upfront capital and will take time to turn profitable, if they succeed."