Asia-Latin America Round-up — 31 Mar 2017

Highlights

Looking sweet in the C-suite — The Real Deal Miami
Miami’s top commercial brokers said the increased appetite for Miami office assets is being driven by deep-pocketed institutional investors abroad. Major international players accounted for three of the five largest office deals in South Florida last year: Zara’s Amancio Ortega’s $516.6 million Southeast Financial Center purchase, Japanese trade conglomerate Sumitomo Corp.’s $220 million purchase of the Miami Tower and the Spanish family-owned Masaveu Corp.’s $175 million acquisition of a majority stake in the Courvoisier Centre on Brickell Key.

Some in the industry have expressed fears that political and economic turmoil abroad, as well as President Donald Trump’s foreign trade and immigration policies, will put a damper on activity. Many of these elements have already affected South Florida’s residential market. However, others say that it’s exactly that uncertainty abroad — as well as over what Trump will do next — that is the main motivation for buyers’ rushing to place such large bets on the Miami office market. “Just about always, the United States is the safest country for [foreign investment]; the one with the most transparent laws,” said Hermen Rodriguez, a senior managing director with HFF who helped broker the Southeast Financial deal. “In times of volatility, it seems like most of the foreign capital wants to be in the United States.”

Trump Administration Signals It Would Seek Mostly Modest Changes to Nafta — WSJ
Like Obama and George W Bush before him, President Trump’s plans to “tear up NAFTA” have run up against reality. The more modest proposed changes closely track both Hillary Clinton’s campaign proposals as well as changes that were to be made under the Trans-Pacific Partnership (TPP) agreement.

Trump Administration Lays Groundwork to Keep Big Tariffs on Chinese Goods — WSJ
However, it is not all roses, as the Department of Commerce is preparing a review of China’s “market-economy status” under the World Trade Organization. The review is expected to be announced as early as this week, just days before the Mar-a-Lago meeting between Xi Jinping and Trump. Beijing has said members of the WTO were required to start treating it as a market economy in December 2016, on the 15th anniversary of its membership. The Obama administration declined to do so. Adopting full market-economy status would involve changing the way the U.S. conducts trade cases and likely make it harder for American firms to win big punitive tariffs against Chinese companies blamed for dumping products on the U.S. market or selling goods that benefit from improper subsidies. The U.S. has dozens of punitive tariffs on steel products and other allegedly dumped products.

China-Latin America

Peru becomes China-led AIIB prospective member — Andina
Venezuela approved to join Asian Infrastructure Investment Bank — Xinhua
Peru and Venezuela have become a prospective member of the Asian Infrastructure Investment Bank (AIIB). The countries have joined the China-backed institution in an attempt to gain access to low-cost long-term financing for major infrastructure works.

Chinese investors move in, take large slice of Latin American pie — China Daily
Chinese companies are forming the mainstay of foreign direct investment in Latin American and African markets as globalization suffers setbacks elsewhere, according to law firm DLA Piper:  "A growing percentage of our clients who are investing directly in Latin America are from the Chinese mainland, from sectors including energy, infrastructure and technology and so on.”

China state firms eye land around Panama Canal: waterway authority — Reuters
The Panama Canal Authority will officially open a tender to develop about 1,200 hectares of land - roughly the size of 1,200 football fields - around the waterway by the end of this year into a logistics park on land previously used by the United States military for target practice. Unclear where exactly this land is, but we suspect it is next to the Panama Pacifico development. China Communications Construction Corp, its subsidiary China Harbour Engineering Company and China Railway Group  are all mentioned as showing interest in the project.

American Airlines and China Southern Mull Alliance — Investopedia
American Airlines Group Inc and China Southern are in talks about a potential alliance that would merge the world's largest airline by fleet and revenue with China's biggest carrier. Air traffic between the two countries doubled from 2010 to 2015, and with most of the growth coming from outbound Chinese travelers. A beginning step into the Chinese market by American Airlines would be a boon for Miami International Airport, which is a big hub for AA. In 2015, Delta Airlines purchased a $450 million (3.55 percent) stake in China Eastern Airlines.

China’s R&F Buys London Site for $74.8M Despite Capital Controls — Mingtiandi
Guangzhou R&F Properties acquired a 5.5 acre London residential site for £60 million ($74.8 million) from a local real estate player. R&F was able to fund this purchase despite China’s announced capital controls, which it claims are endangering deals to acquire a chromium mine in Angola and to develop an agricultural program in Cambodia.

Blackstone Nearly Triples Money on SeaWorld Amid Controversy — Bloomberg
Blackstone agreed Friday to sell its remaining 21 percent stake in the theme-park operator to China’s Zhonghong Zhuoye Group Co. for about $449 million.

China’s Tencent Buys 5% Stake in Tesla — WSJ
The owner of WeChat bought a 5% stake in the electronic automaker for $1.8 billion. Tesla’s revenue in China more than tripled last year to $1.07 billion—a faster rate of growth than in the U.S., where sales about doubled to $4.2 billion. China made up 15% of Tesla’s $7 billion in revenue last year, compared with about 8% in 2015.

China Life to further diversify foreign investments — Asia Asset
China Life Insurance, the largest insurer in China, is looking to further diversify its foreign investments within the confines of regulatory controls on such moves, according to vice president Zhao Lijun. Mr. Zhao said China Life pursues overseas investments in three ways: through external mandates – where it outsources offshore investments to external managers – which currently amounts to about $1.3 billion; direct investments in alternative assets such as real estate; and overseas private equity investments.  

“Although the tightening on capital outflow imposed by the Chinese government last year affected our overseas investment plan, we believe Chinese enterprises will have to expand their turf overseas in the long run,” he said. “The company already has a number of overseas projects in the pipeline. It will strictly follow the government’s policies to carry out the investments.”

Mexico's governors tap investors in China, elsewhere — Reuters
Billionaire Carlos Slim And China's JAC Motors To Manufacture Cars For Latin American Market — Forbes
In a joint venture with China's JAC Motors, Mexican telecom tycoon Carlos Slim Helu's Giant Motors will begin manufacturing cars in  Mexico to sell in the Latin American market. The 4.4 billion peso ($230 million) alliance between Mexico’s Giant Motors and China's JAC Motors will manufacture vehicles in Mexico's central state of Hidalgo. Last month Giant Motors announced a joint venture with Moldex, a subsidiary of Grupo Bimbo, a Mexican-based multinational that is the world’s largest bread maker, to manufacture a made-in-Mexico electric vehicle.

Government of St. Lucia Unveils New Plans for Pearl of the Caribbean — St. Lucia Times News
The government of St. Lucia recently revealed that they will begin construction on the 700-acre Pearl of the Caribbean entertainment complex, beginning with a racetrack. The proposal will see the land sold to DSH Caribbean Star Limited — the Caribbean subsidiary of a Hong Kong based registered management and investment company — for a reported $90,000 per acre.

Asia-Latin America

UAE's DP World eyes Panama Canal opportunities — Emirates 24|7
DP World said that chairman Sultan Ahmed bin Sulayem met with Panama President Juan Carlos Varela last week to discuss potential logistics and industrial parks and other projects. DP World’s other operations in Latin America include logistics centres in the Dominican Republic and Peru and a 50-year concession for the under construction deepwater port at Posorja in Ecuador.

GLP Bidding War Shows Promise of Logistics Platforms in Asia, US — Mingtiandi
Global Logistic Properties — backed by Singapore sovereign wealth fund GIC — has reportedly shortlisted at least three groups in the bidding for the Singapore-based warehouse operator. The three groups bidding for the industrial property developer with logistics facilities in China, Japan, U.S. and Brazil and an estimated market value of US$8.9 billion were said to be: a management-backed consortium that includes Chinese investment firms Hillhouse Capital Management and Hopu Investment Management; a Warburg Pincus-led investor group; and the Blackstone Group.

Qatari Fund to Sell $900 Million Holding in Santander Brazil — Bloomberg
Qatar Investment Authority, the Persian Gulf country’s sovereign wealth fund, is selling as much as $900 million-worth of shares in Banco Santander SA’s Brazilian unit, taking advantage of a more than 75 percent rally in the stock over the past year. Following the completion of this offering, QIA expects to remain the second-largest shareholder of Santander Brasil after Banco Santander. Santander Brasil’s shares have rallied as the bank has recovered after years of underperformance, as well as easing of crisis concerns in the country.

China Econ/Policy

Anbang, Kushner End Talks on NYC Tower as Conflicts Cited — Bloomberg
The company owned by the family of President Trump’s son-in-law announced that “Kushner Companies is no longer in discussions with Anbang about 666 5th Avenue’s potential redevelopment, and our firms have mutually agreed to end talks regarding the property.” They claim to be in talks with other, unnamed, potential investors.

Fosun CEO Liang Xinjun Steps Down Amid Reports of Discord — Mingtiandi
Fosun CEO Liang Xinjun is leaving the company he co-founded more than 25 years ago, according to an announcement by Guo Guangchang, the billionaire chairman of the Shanghai-based investment conglomerate. The CEO is supposedly stepping down due to health reasons. Company vice president and former CFO Ding Guoqi is also leaving the Hong Kong-listed company. 

Mingtiandi quotes sources saying relations among Fosun’s senior executives had changed since Guo was detained by in Shanghai in December 2015, as part of Xi's anti-corruption crackdown. Since then, friction between Guo and Liang, was supposed to have grown to the point where the two were "no longer able to work together effectively."

China pledges to uphold Paris climate commitments — FT
China moves to gain international prestige while adhering to policies that will benefit the government with people choking on pollution.