Timing Is Everything (For ODI)

Related entries: Corporate News, General, Investment

More on Chinese overseas direct investment (ODI), and lucky break for Citic Securities.

As world markets suffer turmoil, China’s new breed of overseas investors have been walking through a mine field. There are some bargains to pick up, but timing is critical, as Citic have found – no doubt to their everlasting joy. The International Herald Tribune reports:

    “China’s Citic Securities Co. on Tuesday called off a deal to invest in Bear Stearns Cos. after the troubled Wall Street bank was acquired by JP Morgan Chase & Co.

    Bear Stearns’ near-collapse was a setback for Citic Securities, one of an array of Chinese financial institutions that are trying to expand abroad by forging ties with more experienced foreign partners.

    The November 2007 agreement called for Bear Stearns and Citic to cross-invest US$1 billion in each other and to launch a Hong Kong joint venture to offer capital markets services across Asia.

    But the basis of the deal “no longer exists” following Bear Stearns’ sale Sunday to JP Morgan due to a liquidity crisis, Citic Securities said in a statement sent to news organizations.”

Had there been a high-profile loss for Citic on Bear Stearns it could have had negative implications for the development of Chinese ODI. Losses on the Blackstone investment have been severely criticized already. This one looks like a lucky escape.

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