December 03, 2008

Chinese overflowing FOREX reserves to propel overseas acquisitions

Xinhua reported that China has accumulated at least USD 2 trillion of foreign exchange assets over the past 30 years, which is expected to stimulate more mergers and acquisitions overseas.

Mr Guo Shuqing chairman of China Construction Bank said contrasting the fast growing hoard held by government and residents, China's fixed-assets due to overseas investment reached USD 100 billion by the end of last year, which is obviously disproportionate with the huge stockpile.

Mr Jiang Jianqing chairman of ICBC's on the ongoing China Economic Development forum said Chinese banks are expected to stage more M&A abroad also a challenge for them.

Mr Guo said on the forum considering clients demand and risk dilution, Chinese banks are eager to go global, stressing CCB sticks to localization, other than direct control of the banks. He cautioned Chinese banks to be careful because of their lack of experience.

Mr Jiang Jianqing said compared with leading global banks, overseas performance is still weak in Chinese banks. Overseas assets account for only 3% of the total, while overseas profits take up 3.6%. He noted the Chinese banking sector has gradually strengthened its presence after going public and introducing strategic investors globalization is a must trend for them.