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Chinese investors cash in on crisis

Scott Tong Feb 10, 2009

Chinese investors cash in on crisis

Scott Tong Feb 10, 2009


KAI RYSSDAL: We’ll see what the opening of the Asian markets brings in a couple of hours. It’s not unusual for an ugly day here to be followed by something similar there. Yet another reminder that the economy, and this financial crisis, is indeed global. There are buying opportunities for investors with the cash and the stomach to jump in.

From Shanghai, Marketplace’s Scott Tong reports Chinese investors showed they have both in two big deals this week.

SCOTT TONG: China holds $2 trillion in foreign reserves, and its companies have deep pockets, too. Today, the state-owned firm Chinalco said it’s in intense talks to invest up to $20 billion in Rio Tinto, the global mining giant. A deal could come Thursday.

Shaun Rein of China Market Research says Beijing’s motivation is to secure commodities.

Shaun Rein: This highlights the demand for China for iron ore, for aluminum, anything that can be used in construction materials. We also see that China is making great strides in trying to improve its access to oil.

Chinalco is already Rio’s top shareholder. And upping its stake could trigger anti-China protectionism in Australia, where Rio’s partly based. But political analyst Malcolm Cook says these days, corporate beggars can’t be, you know . . .

Malcolm Cook: The mood of the country towards foreign investment might be less wary than it was last year, when Australia was benefiting from the best trade since the Korean War, I think.

Chinalco wants a seat on Rio’s board, it wants clout.

So does Chinese insurance firm Ping An in a separate case. Ping is the biggest investor in European bank Fortis. The bank wants to sell off assets, but the Chinese investor’s opposed, and could sink tomorrow’s shareholder vote.

Financial consultant Michael McCormack says it should fail. Fortis is unloading its best assets.

Michael McCormack: It’s a bit like someone telling you, “Yeah, I’m gonna sell your apartment to somebody else, but you can keep this broken toaster.

Chinese investors once walked softly. But the more they invest, the more they want a voice — to put their mouth where their money is.

In Shanghai, I’m Scott Tong for Marketplace.

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