Chinese Investment in Energy and Materials to Soar

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In the latest figures from Thomson Reuters Deals Express, China’s Cross Border Outbound acquisitions rose to US$45.2bn so far this year from 129 deals, compared to just $7.6bn from 111 deals for the same period in 2007.

Chinese outbound investments are likely to soar, given the particularly strong Chinese appetite in the natural resources and energy sector.

Paul Chow, a partner at Linklaters specialising in M&A who advised Rio Tinto on the unsolicited acquisition by the aluminium consortium (Chinalco and Alcoa), told ALB that China’s outbound investment will “accelerate”.

“A large proportion of the domestic banks’ foreign reserves, accumulated through recent IPOs and recapitalisations, are US-dollar based. As the US dollar has depreciated, the banks have an incentive to convert this cash into assets and, increasingly, assets to be found overseas,” said Chow (pictured). “The RMB gaining strength over the dollar is, in parallel, also making foreign investment easier.”

In the latest figures from Thomson Reuters Deals Express, China’s Cross Border Outbound acquisitions rose to US$45.2bn so far this year from 129 deals, compared to just $7.6bn from 111 deals for the same period in 2007.

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