Chillin' out till it needs to be funded
Even as FDI reforms are welcomed in India and pace of investment (FII exits)shifts radically out of India and Brazil, growing economies in Malaysia, Philippines and Indonesia outward FDI by India and China though encouraging, has been fledgling at best
However, that and the overall grim scenario tendered a hot potato by the US downgrade failed to stop ICBC from entering he lucrative Latin America Banking markets with a 80% stake purchase, delivering much latent value with a purchase price of $800 mln incl its earlier 20% stake
According to Finance Asia
The Standard Bank Group, South Africa’s biggest bank, operates in 17 countries in Africa and 13 in the rest of the world. Since 2008, ICBC has been a 20% shareholder in the group, in a deal that was struck with the intention of creating a banking partnership between Chinese and African banks.
Standard Bank has operated in Argentina for more than 12 years. It explained in a communication to investors that the Argentine operations, while profitable, are the group’s only universal banking operation outside of the African continent.
A regional proliferation of choice – Latin America vs Asia
Growth in Latin America already showing outpacing Asia in key retail lifestyle results like Coke and McDonalds, had been expected first in Brazil and Venezuela but of late with Santander acquisitions, HSBC strategy day and Citi’s mixed bag of results in the region has shifted attention to Mexico and Venezuela and is an unproven mirage given its history of high rent(Mexico) , fiscal instability (Venezuela, Brady Bond countries, ).
Meanwhile back in Asia a new Wealth report by Julius Baer with CLSA is the focus of HNI investors as it projects its first ever paradigm exclusively for Asia
A new wealth destination in Asia
According to the upcoming Julius Baer/CLSA report, by 2015 Hong Kong and Singapore will still have the highest concentration of high-net-worth individuals, as a percentage of the population, however China will have 1.4 million people with an average wealth of $5 million. Indeed, the net worth of China’s wealthy will have grown by a compounded annual rate of 27%. But in percentage terms, the highest increase in high-net-worth individuals will be Indonesia — the increase will be 193%.( Finance Asia )
Julius Baer CEO Boris Collardi espouses that as markets stay in he downtrend, it will be a challenge to prise the cash out from investors thus implying this report is not mislaid after the market direction changed abruptly last week.
Investment Banking and business volumes in China
While the Swiss Julius Baer will suffer because the Swissie moves on up, the Yuan has been peaking and people in the markets in Hongkong have started making uncertain noises about the market’s future. Hongkong has recently ramped up 5X – 6X its Yuan business volumes led by Dim Sum bonds offerings from McDonalds’ and Unilever and others at 2% ( 1/3 the rate in mainland and cheaper than European and US markets also)
Hongkong has also been successfully completing Securities’ firms IPOs after the Prada launch in March announced a seciond coming for the regional market in Asia. Meanwhile Khazanah in Asia (Malaysian SWF) and Temasek itself have also been leading outward investment in other regional economies, Temasek profiting from is earlier China investments in CCB and AgBank
The retail lifestyle markets in Latin America and Asia have however been a good support for Global corporations in this uncertain economy and thence a Standard Bank might be a prudent acquisition for ICBC