Asia-Latin America Round-up — 5 May 2017

Highlights

Chinese Conglomerate HNA: ‘Everyone Is Passionate, Full of Hormones, Dying to Achieve Things’ — WSJ
Chinese Conglomerate HNA Becomes Deutsche Bank’s Biggest Shareholder — WSJ
The Wall Street Journal has profiled the acquisitive HNA Group, noting that after $6 billion in overseas acquisitions to the end of 2015, last year the company spent almost $30 billion outside of China. The company's total assets, at around $146 billion in 2016, grew more than four times since 2010, when the company first started acquiring overseas companies. Separately, HNA has now become the largest shareholder in Deutsche Bank, raised its stake to 9.92% through a UK subsidiary. 

China’s scrutiny of capital outflow could crush trophy US deals: former China Orient exec — The Real Deal
Ludwig Chang, the recently retired co-founder of COAMC International, a subsidiary of leading state-owned asset management firm China Orient Asset Management, said the Chinese government is taking a skeptical look at moves to buy major real estate assets in the U.S. – and that clampdown may have already caused some casualties:

“Some insurance companies, who shall remain unnamed, have had two or three failed transactions,” he said. “One was a building on Fifth Avenue that was quite well known. I think those are the handiwork of the new insurance regulatory regime.”

After Failed Talks With Kushner, More Trouble for a Chinese Tycoon — NYT
Rumors circulate of Chinese government detaining Anbang chief Wu Xiaohui — The Real Deal
Anbang Threatens Lawsuits, Denies Reports of Wu’s Detainment — Mingtiandi
After pulling out of a potential deal to invest in Kushner Co’s 666 Fifth Avenue, Anbang Insurance has had a bad week. First, there were rumors that chief Wu Xiaohui had been detained by Chinese authorities. This follows a similar incident over a year ago in which the head of Fosun was detained at Shanghai airport for 48 hours to “assist in an investigation.” More concerning are allegations made in Caixin, as reported by the NYT:

“Anbang’s shareholder structure is like a maze,” Caixin said in an article published online on Saturday and in print on Monday. It said that Anbang’s meteoric growth and acquisitions raised suspicions of financial sleight of hand, including capital injections coming from companies linked to Mr. Wu. “The left hand has been helping the right hand to inflate capital,” the article said.

China-Latin America

China’s Warming Relations with Mexico — Inter-American Dialogue
After years of what many have considered to be strained relations between China and Mexico, the two countries are slowly warming to one another. A series of deals and agreements—some of them with hefty price tags—have materialized in recent months in a number of potentially growth-promoting sectors.  As of 2015, Mexico exported around $6 billion to China, but imported over $60 billion from the Asian nation. the IFC’s China-Mexico Fund made its first investment in Mexico— a $140 million commitment to US-backed Citla Energy—just last year. The $1.2 billion fund also plans to target Mexico’s manufacturing, agribusiness, services, and banking sectors. Huawei is a critical partner in Red Compartida, a Mexican government initiative to build an open-access wholesale wireless network that will cover 92.2% of the country’s population. 

Alibaba continues to expand its platform with new Argentina agreement — The Street
Alibaba: acuerdo con el Gobierno y planes para abrir una oficina — Clarín
Jack Ma paid a courtesy call to Argentina President Mauricio Macri in Buenos Aires this week. They signed an MOU that declares Alibaba's e-commerce platforms “official channels” for two of Argentina’s main exports: wine and fresh foods. According to Clarín, "next month, Ma plans to analyze the possibility of putting an Alibaba office in Argentina”

Asia-Latin America

1st Japan House promotion center opens in Sao Paulo — The Mainichi
Sao Paulo, the Japanese cultural hub of Latin America — The Japan Times
The first Japan House communication center to promote the country's culture and arts overseas held an opening ceremony Sunday in Sao Paulo attended by Brazilian President Michel Temer and Japanese Deputy Prime Minister Taro Aso. Japan also plans to open the cultural promotion facility in London and Los Angeles this year. São Paulo is reputed to be the city with the largest population of people of Japanese descent outside of Japan.

Infosys plans to hire 10,000 U.S. workers after Trump targets outsourcing firms — Reuters
India-based IT services firm Infosys plans to hire 10,000 U.S. workers in the next two years and open four technology centers in the United States, starting with a center this August in Indiana. 

Miami’s real estate drawing Middle Eastern buyers — Miami Herald
Local broker Farid Moussallem notes that every month, the Miami Association of Realtors announces the top 10 foreign countries that use its website to search for Miami real estate. This list typically features the “usual suspects” month after month, such as Colombia, Canada, Brazil, Venezuela, Argentina and France. However, the most recently published report (from January 2017) included an unfamiliar newcomer: Turkey, ranked at No. 7. Despite the rhetoric in Washington DC, according to Moussallem: "The prosperous Middle Eastern individuals with whom I work do not feel unfairly ‘targeted' in any respect and feel no need to protest or complain."

China Econ/Policy

Can China Become the World’s Clean Energy Leader? — CFR
China holds a third of the global market share for hydropower, wind power, and solar energy. The country’s private sector invested $32 billion in 2016 toward international clean energy projects, adding to the $102.9 billion invested a year prior by the government into domestic renewable energy. Many of these investments were made in major developing countries, including Brazil. The surge has been driven by two primary factors: the first is air pollution; the second factor is energy security. The authorities see diversifying energy sources, especially building up clean energy, will be key for China’s energy security.

Huawei, Chinese Technology Giant, Is Focus of Widening U.S. Investigation — NYT
The Gray Lady Seems Pretty Gray About Export Law — Export Law Blog
Late last year the US Treasury's Office of Foreign Assets Control (“OFAC”) sent a subpoena to Chinese telecom manufacturer Huawei. The subpoena, according to the newspaper, asks for information on the company’s dealings with “Cuba, Iran, Sudan and Syria over the past five years.” Worth noting that Huawei has not been accused of wrongdoing — as an administrative subpoena, the Treasury document does not indicate that the Chinese company is part of a criminal investigation.

CIC Plans to Boost Overseas Investment — Bloomberg
One fourth of CIC’s $800 billion in AUM is invested outside of China. CIC see itself as a potential matchmaker between companies it is investing in overseas and the Chinese market. In this video, CIC EVP Bin Qi also sees the need for China to improve attractiveness to institutional investors.

China’s Credit Slowdown Poses a Threat to Global Growth — WSJ
Given China’s weight in the global economy, the constraints on credit growth and currency exports being pursued by the authorities are seen as weighing down on the global economy, and in particular Latin American companies: "The reason to be concerned about China now is that a slowdown in credit hurts growth and could spread to the rest of the world, piling pressure on commodity producers."

Trump, who likes to do business by phone, is acquiring a reputation for pestering Xi, China's president — NYT
Live by the phone, die by the phone. Apparently Donald Trump, known for liking the personal touch that phone calls give him, is being a little too thirsty with reaching out to President Xi Jinping. Chinese officials state that Xi does not appreciate being treated like a midlevel official.

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