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From C** Money
China is buying foreign firms at a record rate
February 03 HONG KONG
Ready, set, shop! Chinese firms are opening their wallets for a record global shopping spree as they look to make up for slowing economic growth at home.
Just one month into 2016, Chinese companies have announced plans to buy 66 foreign companies worth $68 billion. That's equivalent to 60% of the value of all such deals last year, according to Dealogic.
The latest takeover came Wednesday: State-owned ChemChina offered $43 billion for Switzerland's Syngenta, a global supplier of pesticides and seeds. If approved by regulators, the purchase would be the largest overseas takeover ever by a Chinese corporation.
A broad range of Chinese companies has fueled the record start to the year. And the deal flow is expected to continue, experts say.
With growth in the U.S. and Europe strengthening, and China slowing down, foreign takeovers can help companies "cushion themselves against economic fluctuations," according to Boston Consulting Group.
Overseas purchases are also a way for Chinese firms to expand quickly globally. And with China's currency losing value, CEOs may want to buy before the yuan loses any more ground.
Cushion = hedge
As the yaun falls, the more buying power foreign currency has in relation to the domestic currency. Essentially the loss of the yaun is offset by the increase in foreign currency - hence the hedge.
I haven't personally seen companies buying other companies as opposed to investing in foreign currency, but I don't see why companies can't be bought for similar reasons.
Clever clever.
Thanks for the fix
Check out the WSJ article on the same, they claim China have spent $102b already this year, as opposed to $105b the whole of last year (which is still an insane amount).
19-Mar-2016 19:34:02
