China Invests $20 Billion Overseas in 3Q

Chinese firms definitely pulled out their checkbooks this quarter.

According to a report published by the Ministry of Commerce (MOFCOM), Chinese companies invested US$20.5 billion overseas in the 3rd quarter for a year-on-year increase of 190%. Who are the buyers? Mainly state-owned companies (SOE's). What did they buy? Almost exclusively natural resources in over 100 countries. Over 40% of the transactions involved acquiring a controlling stake. These statistics exclude financial sector acquisitions and off-take deals (such as China's US$10 billion arrangement with Brazil's Petrobras).

Here (below) is a chart showing China's share of world commodity usage.

Comments

[Mad Hedge F...:]

nsd Those of you searching for the “newnormal” better take a close look at the China National Offshore OilCompany’s (CNOC) efforts to top Exxon Mobil’s (XOM) $4 billion bid fordevelopment rights to a giant new field off West Africa. This is onlythe latest chapter in a global bidding war for essential resourcesthey, and we, need. Long gone is the day when the Standard Oil Companyonly needed to deliver King Saud a new Cadillac every year to assurerights to his kingdom’s oil supplies, even though it often had to betowed by teams of camels, as there was no refining capacity yet on thepeninsula. Decades later, I was part of a SWAT team at Morgan Stanleywhose schmoozing kept the crude flowing and the cash surplusesrecycling. Having grown up in the desert near Indio, California, I wasthe only one in the company who actually liked caravanning out into thedesert to scoop up cooked rice with my fingers off of giant brassplatters, and guzzle illicit Johnny Walker Red, said to be smuggled inby a wayward member of the royal family. I never did get used to thesheep brains, though. But I digress. To the current generation of oiltraders, I might as well be talking about the Pax Romana than the PaxAmericana, which is now equally ancient history. The hard truth is thatthey are out there bidding against the new 800 pound gorilla in themarket, as are others for coal, iron ore, copper, gold, silver, wheat,corn, soybeans, and myriad other essentials. If you have any doubtsabout China’s acquisitive determination, look at the chart belowshowing that the Middle Kingdom’s outbound direct investment isoutstripping inbound investment for the first time. Will the PebbleBeach Golf Course next? For you and I, this means we can count on theprice of everything to go up in the future, a lot. Keep food,commodity, and energy ETF’s permanently on your radar, like thePowerShares agricultural (DBA), the Rogers International Commodities(RJI), and the Oil Trust (USO). Jim Rogers, are you listening?

Oct 28 04:27 PM

[Ben Gee:]

China is doing exactly the right thing when it invest overseas. China's growth were the result of oversea investment in the past 30 years. Now, China is not only helping itself with acquisitions but putting money back into the world economy when money is in short supply. This is definitely mutually benefitial.

Oct 28 10:51 PM