China Investing Craze Flows to Middle East
When there is a sea-shift in perception on a given investment opportunity, it may mean that there is more than a little froth in said market or opportunity.
That seems to be what is going on in the Chinese stock market and real estate market, as large investment inflows are apparently flowing into China from the Middle East recently, up from an undisclosed tiny amount in the past. The article below, translated out of Modern Weekly, talks about this phenomenon in more detail:
China Investing Craze
Middle Eastern tycoons are ponying up tons of “oil dollars” in their new bid for China.
Welcome to China, generous Middle Eastern tycoons!
Long before ICBC had formally begun its circuit to elicit IPO subscriptions, two middle eastern investment groups had already bid for a $3.5 Billion stake in China’s latest banking IPO.
After finishing its soliciting in Hong Kong, ICBC’s quest for IPO funding for what was to be the biggest IPO ever was split into two directions, the Middle East and Europe. Middle Eastern investors seemingly didn’t even care too much about price and just wanted “in” to this giant Chinese IPO.
When the dust had cleared and ICBC was no longer searching for subscribers for the largest IPO ever, there was HK$4 Trillion from international purchasers chasing China’s largest banking IPO, including large sums from Kuwait, Saudia Arabia, and Qatar.
Chinese banking stocks were in short supply, however. According to the Industrial Times, Saudi Prince Alwaleed bin Talal bid $2 Billion to place a stake in ICBC’s IPO. Last time (during the Bank of China IPO), this “Middle Eastern Warren Buffett” was able to buy a $2 Billion stake, but this time he was only able to secure $390 Million out of the $2 Billion he bid on the ICBC IPO, leaving him rather disappointed.
Chinese people had always heard that Middle Eastern countries are “oil flowingly-wealthy”, but it was rare to see many traces of Middle Eastern investors in China. Now, however, dollars are flowing from the Middle East to the Chinese market like oil gushes forth from Middle Eastern oil refineries. The total amount of Middle Eastern investment in China has already surpassed 60 Billion RMB.
Middle Eastern oil countries, with their penchant for searching for investment opportunities anywhere and everywhere around the globe, are using quite a few different methods to dig for gold in the Chinese mainland. In addition to believing in the future of Chinese companies by investing in Chinese banking stocks, real estate in China has also been attracting a good bit of Middle Eastern attention.
In the recent past, Middle Eastern investing flows eagerly chased high returns in the [once] hot real estate markets of London and New York. In 2006, Middle Eastern investors were newly attracted to the profits to be had from Far Eastern real estate. Even with the Chinese government placing some restrictions on foreign investment in Chinese real estate, Middle Eastern tycoons are still quite eager to invest in Chinese real estate. In contrast to the larger funds of America and Europe, Middle Eastern investing capital is largely held in private funds. Because of this, the individual negotiation capability of Middle Eastern investment funds is quite strong.
Since Middle Eastern investors are not very familiar with China’s many markets, they often choose Chinese partners to make more reliable investment decisions in China. The “China” strategy of Dubai’s largest real estate company, Emaar, is to first find strategic Chinese partners in Shanghai and Beijing, and then to help them build large scale residential communities with everything from shopping centers to hospitals.
Middle Eastern tycoons don’t like to make short term trades. They instead look toward the long term benefits of any transaction, and make decisions quietly and swiftly. Big hearted Middle Eastern tycoons are bringing a different investing style and flair to the Chinese market.