Chinese companies are investing heavily abroad

Chinese companies are investing heavily abroad

Overseas Chinese investment in the first half of 2012 has been growing 48 % to USD 35.4 billion and against the same period of 2011

It seems that Chinese firms dispose of a combination of abundant cash on the books and bargains to be obtained as foreign asset prices remain depressed. It reflects in addition that the Chinese government encourages Chinese firms to spend more of their foreign earnings on productive assets rather than handing the cash over to the central bank to park in ultra-low yielding government bonds. Most of the Chinese business foreign investment went into the sectors of oil and gas as well as mining and these investments are made to serve China’s appetite for energy and metals. Such deals amounted to USD 9.4 billion or 45 % of China’s outbound M&A (Merger and Acquisition) activity in the first half of 2012. Further targets were aerospace, food and beverage deals in order to cover the appetite for foreign brands and safer food.

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