Is there no end to China’s buying spree?
Today's Financial News - Posted September 22, 2009
It is impossible to deny China is strategically buying anything related to the global commodities market. It is a move that will ensure its international dominance for generations to come.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): China’s commodity buying spree continues. But this time it is taking a different twist.
China Investment Corporation, a sovereign wealth fund, announced earlier today it has shelled out $850 million to grab a 14.5% stake of commodity-giant Noble Group. The critical deal gives China even more leverage over the world’s commodity markets.
With a national economy supposedly growing by close to 10% annually, one of China’s most volatile economic variables is the ever-speculative commodities market. With more and more of its national wealth in the hands of the free market, Beijing is doing all it can to reduce its risk and increase its power.
Getting a sizeable stake in a supply-chain powerhouse like Noble is a strong step towards ensuring its dominance.
While much of China’s recent action in the commodities sector focused on energy and mineral resources, Noble offers a much more diverse exposure.
The company has ethanol operations in Brazil, soybean crushing facilities in China and is a leading force in Australia’s mining industry, plus a diverse array of other related offerings.
By dumping Beijing’s excess cash (there’s plenty to go around) in the company, China gains much more than secure long-term investment.
It gains a foothold in a sector vital to every economy on the planet. It is not good news for Uncle Sam, especially when we consider the fact the purchase was made with dollars earned thanks to America’s whopping trade deficit.
“Red” hot buying spree
On a similar note, China Natural Gas (NASDAQ:CHNG) announced it recently sold more than 850,000 new shares of its stock in a recent offering that led to proceeds of $54.7 million.
Even after soaring by over 300% over the past six months, shares of the Chinese natural gas distributor remain in high demand as investors ponder the growth potential of the $185 million company as China’s commodity consumption rises.
Recent investors are already reaping strong rewards. Share price is up by 15% so far today.
While this acquisition has little to do with China’s Commodity Carry Trade, it is important to recognize the action. It proves investors are willing to pay a premium for the company’s future revenue stream, even as the company expands its share base in an effort to expand its capabilities. It is a surefire sign of commodities-market bullishness.
With all this news, it is impossible to deny China’s commodity sector is red hot and is getting even hotter.
Want to take advantage of the action? Read my latest special report.
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September 22nd, 2009 at 1:27 pm
Two words… Buy Gold!! And do it in a hurry. They (China) are also positioned to purchase more of this commodity than all other nations combined. Hold onto to your hats folks…and your precious metals too. Mortgage Backed Securities & Commercial (MBS) are more likely to encounter another BIG BANG!!!
W Lewis
VOYAGEHOMELOANS