Chillin' out till it needs to be funded
And now institutional investors everywhere are hungry. As FT broke the news, the most popular currently are the new Dim Sum bonds with Japanese Orix and McDonalds and Caterpillar cemented their superb financial performance with new Capital in Chinese Renminbi. Unilever is in on the secret too. Of course the Amsterdam/Europe based food and personal care giant did stay away from raising street prices in Beijing after there was a scamper for shampoos and detergents ahead of its price hike.
Chinese investors have of course also been having a lot of Buffalo Wings with their beer in the United states. Equity investments by the Chinese and the reverse mergers listing Chinese Water companies and other in New York were more of last year’s flavour as Chinese institutions have till now taken almost $20billion Renminbi/Yuan out for the Dim Sums from the Americans
After a lot of scares from the peripherals in Europe and the munis in the USA the fixed income market has finally completed its cycle of pricing in a higher global peg on inflation and now its time to fuel growth with Corporate debt rather than the frying fat from governments. Sounds like it is more tasty now everywhere has whetted up their appetite.
China’s municipal corporations have yet to default on much and for every Barbie from the US there is a Pizza Hut or a Starbucks at the Palace. IT does not change the truth that while China got almost $200 billion in FDI flows in 2010, Europe got $300 bln and that Asia is cheaper for everyone and with a higher magnitude of growth pencilled in, it is likely yet the smaller portion of the portfolio than the DMs in absolute terms. But as we have been saying, that will be sustained more by Asian investors and outward M&A as also is unlikely to be sustained as the larger Dollar flows come to India and China. (India recd $35 bln in 2010)