Hong Kong's "Conghua factor" kicks in at Karaka

While locals have bought many of the top lots, the upper-middle market at the New Zealand Bloodstock Yearling Sale has been attacked by Hong Kong owners looking for new stock to meet the demand of extra ownership permits in the system.

With the Jockey Club's Sha Tin facilities at capacity and requiring an upgrade, the club has invested HK$3.7 billion in the Conghua Training Centre near Gungzhou in Guangdong province. The 160-hectare training centre has been operational since August last year but in anticipation of its launch, the Jockey Club increased the number of owner permits.

As of Wednesday there were 1316 horses in training with the Hong Kong Jockey Club, 42 more than on the same day last year, but with Conghua being capable of holding many more horses meaning an increase in permits, that number will grow in coming seasons.

The HKJC is in the privileged position of having a waiting list of owners, all keen to race horses for the best per-raced prizemoney in the world and for the status attached to owning a top horse in the former British colony.

There are two types of owner permits; one for Private Purchase Griffins (PPGs), horses that have never raced, and Private Purchases (PPs), for tried horses.

In 2016 the number of permits granted each year jumped from around 320 to 440, with a higher proportion of those 120 extra permits now for PPGs.

PPGs now make up more than 70 per cent of the new permits, up from around 55 per cent, marking cultural shift in Hong Kong away from the high-priced purchases from on the track that owners have been famous for in the past.

That all should be good news for Australian and New Zealand breeders, who provide the majority of unraced arrivals in Hong Kong.

"It certainly gives me a little more confidence to stock up and build my inventory," said Tartin Meadow Bloodstock's Paul Chow, who bought three lots – 93, 233 and 526 – out of Karaka Book 1. "There were more than 100 extra permits last year so theoretically there should be more demand. So the bottom line is that I can buy more horses."

Chow, who commonly takes a position on yearlings before progressing them to barrier trials before selling as PPGs, was thrilled to get Lot 233 by Pins, a three-quarter brother to two-time G1 Hong Kong Sprint winner Aerovelocity (NZ) (Pins) for $80,000.

Top northern hemisphere buyer at Karaka for the first time

Perhaps the greatest sign of the trend towards PPGs, and the increased demand for southern hemisphere stock, was the presence at Karaka of highly successful agent Alastair Donald from Sackville Donald.

Donald's most recent success has been with full brothers by Archipenko (USA), Time Warp (GB) and Glorious Forever (GB), and he has been one of Hong Kong's best buyer of PPs in recent years.

Northern hemisphere horses like Designs On Rome (Ire) (Holy Roman Emperor {Ire}), Military Attack (Ire) (Oratorio {Ire}), Viva Pataca (Ire) (Marju {Ire}) and eventual Australian sprint star Redkirk Warrior (GB) (Nownowcato {GB}), all of them tried horses, have formed the vast majority of his purchases.

The bloodstock agent sourced half of the ten-horse field for the recent G3 January Cup at Happy Valley and, remarkably, his runners filled the first five places.

Yet despite all of that European success, Donald has been hard at work at Karaka as he looks for Australian and New Zealand-bred prospects to fill orders from high-profile Hong Kong clients. Buying predominantly for the prominent Lee family and owner Kenneth Lau's Kangyu International Racing, Donald has walked away with four lots including two by Hong Kong's in-vogue sire Pierro, who produced his first Sha Tin stakes winner last weekend with Furore in the L. Hong Kong Classic Mile.

"I think there is more demand and it is interesting how they have split the permits up, the trend is towards PPGs and logically you would think that will continue," he said. "It has to be swayed more towards PPGs, because the number of tried horses you can buy won't change."

Australian and New Zealand breeders the winners

The shift in import policy should be a boon for breeders in New Zealand, with those jurisdiction's horses typically making up around one quarter of Hong Kong's horse population.

Kiwi trainer Paul O'Sullivan has been in Hong Kong for 15 years and was one of nine trainers given first use of Conghua this season, with the numbers of trainers getting access to the state-of-the-art centre set to increase in the coming seasons.

Each of those trainers has been given an extra ten horses each and O'Sullivan said that is a huge positive for his homeland given the New Zealand breed's suitability to Hong Kong's challenging conditions.

"They've had a lot of success and they are much more affordable than other horses from around the world, they are the bargain horses," O'Sullivan said.

Still, quality always costs, but bloodstock agent Stuart Hale was happy to bid $500,000 for Lot 423, a Savabeel colt that is a half-brother to Hong Kong's rising sprint star Regency Legend (NZ) (Pins).

The already sought after lot caught another pedigree update on Sunday when Regency Legend made it three-for-three carrying top weight in Class Two, an impressive achievement for a three-year-old against older horses.

It took some arm-twisting but Hale eventually convinced Regency Legend's owner Wong Shun-yuen to part with a cool half-a-million.

"I just said we have to have him," Hale said. "He ticked every box for me, I arranged a budget for Mr Wong, and I wasn't going to leave Karaka without him."

Another sign of how confident Hong Kong owners are with the progress in Hong Kong is the fact Hale put his hand up for the half-million dollar lot even though Wong does not hold any new permits.

Hale said the new purchase would stay in New Zealand and be prepared to race and said the trend towards Hong Kong owners buying more at yearling sales wasn't just because of more PPG permits.

"I think it is much more difficult to buy tried horses, the PPs, now," Hale said. "It's because of syndication, and because many of the horses I want can have so many owners. It is two or three times as hard to buy a horse off the track, three or four years ago I could call up and I think there was a 85 per cent I could buy it, today I am a 35-40 per cent chance of getting it. It's not so much getting the big, sole owners to agree to a sale, it's about the getting an owner with a small percentage to agree. If the offer is NZ$500,000 then NZ$25,000 to the owner with 5 per cent doesn't sound so appealing for a nice horse."

Upper Bloodstock

Also active at the sale were new Hong Kong group Upper Bloodstock, which includes members of the ownership of former top line sprinter Blizzard (Starcraft {NZ}) and handy 4-year-old Superich (NZ) (Red Giant {USA}).

Upper Bloodstock bought two lots including the half-brother to former Hong Kong Horse of the Year Able Friend (Shamardal {USA}), Lot 312, for NZ$220,000. "Actually most of Able Friend's siblings have been disappointing but we loved this lot on type," Upper Bloodstock's Ross Lao said. "He looked like a real runner. We will leave our horses in New Zealand until we decide what to do with them. It's a nice climate and healthier environment. There is more natural grass and of course it is more affordable to keep them here."

Of course the Hong Kong Jockey Club is also a significant buyer at Australian and New Zealand yearling sales and its man on the ground Mark Richards came away from Karaka with three yearlings, Lots 15, 573 and 678, at an average price of $265,000.

The Jockey Club has increased its presence at yearling sales in recent years, spending more per lot and buying more horses as the club moves back to two separate Hong Kong International Sales per year.

Hong Kong trainer Peter Ho also spent big, signing for four lots at an average of $245,000, including NZ$340,000 for Lot 82 by Pins, out of Karaka book 1 and indicated he will be sticking around for book 2.

"I think there is a lot of value here, I have been happy with what I have been able to get so far," he said.