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China's overseas investments surge

Chinese oil groups eye stake in Spain's YPF: reports
Two giant Chinese oil companies are interested in buying a 30-percent stake in an affiliate of Spanish oil major Repsol, media reported Friday. The China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC) are ready to pay four billion euros (5.6 billion euros) for the stake in YPF, Repsol's Argentine affiliate, the ABC newspaper said, quoting sources close to Repsol. It said that an offer is expected in the coming weeks. CNPC is China's largest energy producer and CNOOC its biggest offshore oil and gas producer. Repsol YPF announced Thursday it had received interest but no firm offers for a minority stake in YPF. ABC said talks were continuing through the bank Goldman Sachs, which has been in touch with a number of Asian groups, of which CNPC and CNOOC appear the most interested. Repsol bought YPF in 1999 for 15 billion dollars in what was the biggest sale of the privatisation programme of then Argentine president Carlos Menem. Last year, it sold a 14.9 percent stake to Argentina's Grupo Petersen in a deal which included a buy option for an additional 10 percent. China's government-backed oil companies are jostling with each other to make landmark overseas acquisitions, seizing on the economic crisis -- and the accompanying low asset prices -- in a bid to feed the country's rapidly expanding economy.

China fund to buy 1.5-bn-dlr stake in Canadian miner
China's sovereign wealth fund said it would buy 1.5 billion dollars worth of shares of the Canadian mining company Teck Resources Ltd. The purchase by the China Investment Corp would amount to a 17.2 percent equity stake in Teck, giving the 200-billion-dollar wealth fund a 6.7 percent voting interest in the mining company, the corporation said Friday. "CIC is acquiring the Class B Shares for investment purposes as a long-term passive financial investor and has agreed to hold the purchased shares for at least one year following closing," the corporation said on its website. "The aggregate purchase price will be 1.5 billion dollars in cash." The deal is expected to be finalised by July 14, it added. (AFP Report)
by Staff Writers
Beijing (UPI) Jul 3, 2009
China, sitting on the world's largest foreign exchange reserves of about $2 trillion earned from burgeoning trade surpluses, has been on a spree to invest its money overseas while attracting inward foreign direct investments.

As China's overseas direct investments skyrocket, some estimates say they could soon overtake China's FDIs.

"ODI is one way to relieve the growing pressure that China is under because of increasing foreign exchange reserves and to promote the internationalization of the yuan," one analyst told the China Daily.

In April, Standard Chartered Bank estimated that China's ODIs in 2009 could range from $150 billion to $180 billion as the country acquires foreign assets in every major economic sector in keeping with its explosive economic growth. The projected FDI for 2009 is $80 billion to $100 billion.

Chinese media reports say last year's ODIs totaled $52.1 billion and FDIs $92.4 billion.

By any measure, these amounts are staggering and explain why the world's third-largest economy in gross domestic product terms after the United States and Japan continues to grow even in these difficult times brought on by the global financial crisis.

In fact, the global slowdown, which has led to a decline in the prices of overseas resources, is only spurring more Chinese investments overseas.

Unlike in the past when it discouraged Chinese companies from making overseas ventures to preserve precious foreign exchange, the government is now doing the opposite.

A China Daily report Thursday focused on whether China's ODIs will soon overtake its FDIs and quoted officials and experts as saying it was unlikely at least this year partly because Chinalco, or the Aluminum Company of China, had failed in its $19.5 billion bid to boost its stake in Rio Tinto, the giant Anglo-Australian mining company.

Also, the report said that even though Chinese National Petroleum Corp. along with British Petroleum, had won a bid to develop Iraq's biggest oilfield, it wouldn't significantly increase China's overall ODI this year because deals concluded in the previous months were of "small volume."

In other high profile acquisitions, Sichuan Tengzhong Heavy Industrial Machinery took over U.S. auto giant General Motors' Hummer brand.

Beginning Aug. 1, the Chinese government plans to relax foreign exchange curbs to allow firms to invest abroad, with up to $30 billion expected to flow out.

Chinese experts say with many foreign firms hurt by recession eager to sell their assets, they expect a wave of Chinese ODI outflows.

On the other side, China is also taking measures to arrest the decline in FDI flows into the country. The plan is to relax restrictions on foreign investment, the commerce ministry has said.

China's foreign direct investments in May totaled $6.38 billion, down 17.8 percent from the same month of last year. The May figure was the eighth consecutive monthly decline but wasn't as steep as April's 22.5 percent on a yearly basis. FDIs in the first five months totaled $34.05 billion, down 20.4 percent from the same period of last year.

The government also wants to invite foreign-funded companies to be listed in the country. The plan, which is also an effort to build Shanghai into a major international financial hub, calls for high-quality foreign firms to go public in China.

In fact, some domestically incorporated foreign banks have already announced plans to issue yuan-denominated bonds.

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Asia is testing ground as music industry seeks to boost sales
Hong Kong (AFP) July 3, 2009
Rampant piracy and a crumbling market for CDs has put the music industry in Asia under immense pressure, but experts are hoping that technology and social media will help fill the gap. While demand for music continues to rise across the region, the global economic downturn has accelerated the Internet-fueled fall in sales of physical music. "Consumers are enjoying more hours of music ... read more







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