Mainland firms invest US$20.5b overseas
Cashed-up mainland firms have almost doubled their spending on overseas assets, investing US$20.47 billion between July and September.
Mainland outbound investments jumped 190.4 per cent in the quarter from the same period last year, taking the total for the year to US$32.87 billion, the Ministry of Commerce said yesterday. Much of the growth was attributed to government incentives.
Some economists said mainland investors had seen their confidence restored compared with the third quarter last year when the global financial crisis struck.
'Outward investments have risen rapidly in the past year, and there is a clear trend that it will continue in the next decade,' Nomura International economist Sun Mingchun said. 'State-owned firms have a lot of cash, which means they have greater capacity to expand abroad.'
He expected companies in the financial and manufacturing sectors to be the most sought-after targets of mainland investors.
Mainland firms, particularly deep-pocketed state-owned ones, snapped up mineral and mining assets and manufacturing companies across 112 countries in the first nine months, during which about 43 per cent of the total investments were direct, the ministry said. However, the investments excluded acquisitions in the financial sector.
One of the largest deals cut last quarter was Yanzhou Coal Mining's US$2.9 billion acquisition of Australian counterpart Felix Resources in August, which won Australian government approval last week.
The mainland's largest steel producer, Baosteel, agreed to pay A$286 million (HK$2.04 billion) for a 15 per cent stake in Australian iron ore explorer Aquila Resources in August.
Encouraging mainland companies to invest abroad is part of Beijing policymakers' strategy to combat the global financial crisis.
The ministry has so far this year beefed up taxation incentives, financial assistance, insurance services and foreign exchange arrangements to boost outbound investments while assembling trade delegations to Europe, the United States and other markets to set the stage for mergers and acquisitions.
In addition to mineral resources and mining, banking and financial services were prime investment areas encouraged by the ministry.
Morgan Stanley chief economist Wang Qing expected the outward investment incentives would remain in place for some years as the central government wanted to induce foreign exchange outflows to help ease pressure on yuan appreciation.
Market speculation about the prospect of a stronger yuan exchange rate flared after the mainland recorded 8.9 per cent in economic growth in the third quarter and was well on track to meeting its annual target of 8 per cent this year. That growth compared with 7.9 per cent in the second quarter and 7.7 per cent in the first three quarters of this year.
Investment push in mining, banking and financial services
Number of countries in which mainland companies have made acquisitions: 112