Tishman Speyer

Asia-Latin America Round-up — 14 Apr 2017

Highlights
Trump Lacks Staff for Trade Talks With China — WSJ
Trump Says He Offered China Better Trade Terms in Exchange for Help on North Korea — WSJ
Trump Says Dollar ‘Getting Too Strong,’ Won’t Label China a Currency Manipulator — WSJ
As is the case on many other policy issues, President Trump is hamstrung by the fact that he isn’t fielding a complete team on China. Last week’s summit with President Xi was quickly overshadowed, both by the limpid strike on Syria as well as by the fact that nothing was decided at the summit. While this will have a short term tactical benefit for Chinese investors looking to invest in the US — labeling China as a currency manipulator would have been a significant hurdle to bilateral trade and investment — more concerning is the fact that the President is leaning on (and potentially getting played by) adversarial leaders:

Mr. Trump said he told his Chinese counterpart he believed Beijing could easily take care of the North Korea threat. Mr. Xi then explained the history of China and Korea, Mr. Trump said.

“After listening for 10 minutes, I realized it’s not so easy,” Mr. Trump recounted. “I felt pretty strongly that they had a tremendous power” over North Korea,” he said. “But it’s not what you would think.”

Silvio Berlusconi sells AC Milan to Chinese investors — ESPN
Media magnate, former Prime Minister, and party enthusiast Silvio Berlusconi has announced that — after two years of negotiation — he is selling his stake in AC Milan to  Chinese businessmen Yonghong Li and Han Li, for €740 million.  Il Cavaliere had owned his hometown team for 31 years.

China-Latin America

BYD in talks with Chilean lithium producers — FT
Chinese auto manufacturer BYD (part-owned by Warren Buffett) is talking to lithium producers in Chile about potential deals to secure supplies of the key battery material. The company is considering a range of options from partnerships to supply agreements and direct investments. Chile is one of the world’s largest sources of lithium; Beijing wants to double electric vehicle battery capacity by 2020, and has encouraged producers to invest overseas.

Latin America's oil-dependent states struggling to repay Chinese debts — China Dialogue
As Venezuela circles the drain (President Maduro was pelted with eggs at a rally of supporters this week), China continues to worry about it’s loans to the country, as well as Brazil, and Ecuador, that have both struggled economically of late. This article does not reveal anything new; but that it is coming from a semi-official Chinese source does reveal that they are semi-officially worried.

Asia-Latin America

Bacanora Minerals to supply lithium to Japan’s Hanwa — FT
It’s not just the Chinese that are after Lithium. The world’s largest lithium mine in northern Mexico is going to supply lithium to Japan’s Hanwa, a diversified industrial company that does a lot of work in non-ferrous metals.

Dubai Chamber to lead high-level trade mission to Latin America — Reuters Zawya
The Dubai Chamber of Commerce and Industry is sending a trade mission to  Brazil, Paraguay and Argentina the week of April 15-22. GCC countries rely heavily on imports from Latin America, especially in the category of agricultural and foodstuff products.

China Econ/Policy

Guangzhou R&F Pays $196M to Pick Up Second London Site in Two Weeks — Mingtiandi
Guangzhou R&F bought Vauxhall Square from CLS Holdings for £157.7 million ($196 million) this week. The deal comes just two weeks after the Hong Kong-listed mainland developer made its maiden acquisition in London with the purchase of a pair of adjoining residential sites in south London’s Croydon area for £60 million ($74.8 million).

Tishman Speyer Signs $1.4B Deal with Chinese Online Wealth Manager Creditease — Mingtiandi
Tishman Speyer signed a funding agreement with the wealth management arm of China’s fintech heavyweight CreditEase this week which could provide the US company with as much as $1.4 billion in funding from Chinese consumers. The agreement is over the next three years, and extends a similar deal signed between the two groups in 2015. In 2015 Tishman Speyer struck an investment deal with the asset management divisions of China Life and Ping An that brought in $167 million each from the two Chinese insurance giants for a $500 million  mixed-use project on Boston’s Pier 4. In addition to its Boston deal, the American developer also teamed up with China Vanke back in 2013 for a residential project in San Francisco.

Fosun Buys Out French Property Investment Firm for $48M — Mingtiandi
Fosun Property Holdings, the property investment and management arm of China’s Fosun Group, has inked an agreement to take over PAREF, a French property owner and manager, for around $48 million. This follows through on a binding offer announced at the start of the year. PAREF Group, also known as the Paris Realty Fund, owns various commercial buildings within and outside the Paris area. Fosun has been shopping extensively in Europe over the past two years.

What China can learn from the Pearl river delta — The Economist
The Economist had a big spread last week about the Pearl River Delta, the Southern Chinese megalopolis (at 66m people, it is larger than Britain) that many see as China’s future. Encompassing Hong Kong, Macau, Guangzhou, and Shenzhen, among others, it is less SOE-oriented and more engaging with the larger world ("As a global trading power the region is outranked only by America and Germany”). Notably, it also includes Zhuhai, a city that is to play host to an industrial park to promote China-Latin America cooperation; this puts Zhuhai in context.

First China-bound direct freight train leaves London — People's Daily
The fruit of China’s “One Belt, One Road” initiative, a direct train from London’s DP World to the eastern Chinese city of Yiwu left this week. Carrying "vitamins, baby products and other goods,” the train will take 18 days to travel and change locomotives due to different railway gauges in the countries.

Chinese Blame America for United Airlines — Foreign Policy
Soft power comes in many forms. The news of abusive treatment of a Chinese-American by United and the Chicago Police this week has taken China by storm. The video racked up more than 330 million views on Weibo and WeChat. Beyond the obvious connection of ethnicity, the video plays to Chinese fears about capitalism, red in tooth and nail, as well ass worries about authoritarian governments oppressing individuals in China.

China Elevates ‘Good Cop’ on Trade to Counter Trump Barbs — Bloomberg
Zhang Xiangchen, a Chinese official who is fluent in English and seen as very pro-trade, has been named as the country’s ambassador to the World Trade Organization.

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Asia-Latin America Round-up — 7 Apr 2017

Highlights

Trump’s Bad Deal With China — Politico
China’s growing clout in international economic affairs — The Economist
Averting a Chinese-American trade war — The Economist
Inside the Kushner channel to China — Washington Post
The big news this week is Xi and Trump’s meeting today at Mar-a-Lago. There is a lot of uncertainty surrounding the meeting, not least because Trump’s goals for the bilateral relationship are unclear, if not contradictory. However, China’s interests are well known:

China wants the Trump administration to adopt its concept of “a new model of great power relations,” Xi’s proposal to avoid conflict and focus on cooperation. China also wants Trump to endorse Xi’s signature “One Belt, One Road” initiative, China’s massive regional infrastructure and development project. China also seeks U.S. noninterference in issues it considers core interests, including Taiwan, Tibet and its internal affairs.

Interestingly, that message has been delivered to Trump son-in-law Jared Kushner, who the Chinese see as either an influential princeling, playing a role similar to those played in China; or - more concerningly - an out-of-his-depth novice who will get played.

China’s Currency Takes a Twist Ahead of Trump-Xi Meeting — WSJ
The yuan is up 1% against the dollar so far this year, a rise that began shortly before Donald Trump was inaugurated as president. The rise could complicate a central criticism that Mr. Trump has leveled against China: that it is manipulating its currency downward at the expense of the U.S. to help bolster exports and its economy.

As Trump Meets Xi at Mar-a-Lago, There’s a ‘Wild Card’ — NYT
Guo Wengui is a member of Mar-a-Lago, but maybe better known as the developer of the "Dragon Building,” the Pangu Plaza near the Olympic complex in Beijing. Guo is now in the US because he left China during a corruption scandal linked to the jailing of his political patron, a top security official named Ma Jian. 

Latin America, trade on the line, will watch closely as Trump and Xi meet in Florida — McClatchy DC
Latin American leaders will be watching Mar-a-Lago to be looking for signs of stability and assurances that trade would remain open. Latam will see any signs of protectionism and nationalism as harming trade prospects and creating more inequities in the hemisphere’s trade relations.

Trade After the Trans-Pacific Partnership — NYT
As an example of the region's (and especially the Pacific Alliance’s) interest in pursuing trade in the era of Trump, Chile’s Foreign Minister Heraldo Muñoz wrote an op-ed on Monday stating: "The signal …is clear: Multilateral trade and Pacific integration are alive and kicking.”

Construction in Trump’s crosshairs — The Real Deal
Windows, steel beams, concrete, doors, floorings and entire curtain walls used in New York City skyscrapers and around the country are now regularly imported. These imports could be impacted by Trump’s economic nationalism or House Speaker Ryan’s proposed Boarder Adjustment Tax. Richard Wood, the president and CEO of Plaza Construction is noted, saying the percentage of materials from overseas is steadily increasing, and any restrictions could be damaging unless they are slowly phased in. “Otherwise,” he said, “a lot of domestic companies will be hurt very badly.”

Miami ficou 'cool': trocou o brega pelo cosmopolita — Brazil Journal
“Miami is now more than beaches and shopping centers” to Brazilians, says NP-friend Santiago Fittipaldi. He notes interest in Art Basel and the Pérez Art Museum.

China-Latin America

Why are Chilean fruits so successful in China? — Fresh Plaza
Chinese delegation visits the Chilean fruit industry — Fresh Plaza
Chile’s advantage in the Chinese market is a long time coming. In 1970, they became the first South American country to establish diplomatic relations with China. In 2005, Chile and China signed a free trade agreement; in 2015, they established a bilateral currency swap agreement; and in 2016, they announced the establishment of a comprehensive strategic partnership. Further highlighting the bilateral relationship, a Chinese delegation traveled to Santago last week to meet with Chile's Association of Fruit Exporters.(ASOEX). Led by the director of the Entry & Exit Inspection and Quarantine Bureau of the Port of Shenzhen (CIQ), the delegation also included representatives from the Association for Consumer Products Quality and Safety Promotion (CPQS), as well as representatives of several Chinese import companies.

Peru: 38% of ag companies exporting to China quit within a year — Fresh Plaza
However, there still remain opportunities in the agricultural space. According to the Peruvian Chamber of China Commerce (Capechi), Peruvian agricultural companies who export to China have a high rate of quitting because they don't continue doing business there. The companies simply disappeared or stopped exporting to China and have focused on other markets.  

Gezhouba plans to buy Brazilian utility — China Daily
Chinese construction conglomerate China Gezhouba Group Co announced on Thursday it was spending $200 million to acquire the Sistema Produtor São Lourenço water company in São Paulo in Brazil. In 2013, São Lourenço signed a deal with São Paulo utility Sabesp to manage local water supply and sludge treatment for 25 years. 

Expanding China invests in America's backyard: Latin America — CNBC
While trade between the U.S. and Latin America has doubled since 2000, China's trade with the region has multiplied 22 times, according to OECD economist Angel Melguzio. In fact, Beijing is now the biggest trading partner for the major economies of Brazil, Chile and Peru — and Argentina, El Salvador and Guatemala are well-placed to profit from China's booming demand for global food. Meanwhile, China lends the region a lot of money — around $30 billion in 2015, up from $231 million in 2005. And the funds largely come with no strings attached.

Chinalco to ramp up investment in Peru copper mine — FT
China's state-owned Chinalco said it would step up investment at its flagship project in Peru, as the country becomes an increasingly important to China’s raw materials — copper — needs.

CIC-led group buys stake in Brazil pipeline — China Daily
Sovereign wealth fund China Investment Corp (CIC) said on Wednesday it had-jointly with Canada's Brookfield Asset Management Inc and other institutional investors-acquired 90 percent stake in Nova Transportadora do Sudeste SA from Petrobras, which controls a natural gas transmission asset in southeast Brazil.

Asia-Latin America

Mexico’s Oaxaca eyes economic ties with Korea — Korea Herald
The secretary of economy of Oaxaca and his team spent a four-day visit to Korea working to boost economic ties. Oaxaca is a southern state in Mexico that is heavily agricultural. In order to build further cooperation, Oaxaca is planning to open a Korea desk to promote bilateral investment.

Estados Unidos retira fondo de desarrollo para América Latina — Reuters
In another penny-wise, pound-foolish move, the US has informed the Inter-American Development Bank that we will no longer be contributing toward hemispheric development.

Latin American-Gulf Economic Ties Are Still Largely Aspirational — World Politics Review
Michael Shifter, president of the Inter-American Dialogue, outlines the geographic, political and cultural obstacles that have stymied attempts to deepen ties between Latin American and Gulf countries.

India: The next big opportunity for Latin American and Caribbean trade — Inter-American Development Bank Beyond Borders
According to the report India: Latin America’s Next Big Thing? the opportunity lies in focusing on where India’s emergence will be seen most: trade and investment in goods and services.

China Econ/Policy

HNA backs Tishman Speyer’s bets in Brooklyn, Hudson Yards — The Real Deal
HNA Puts Manhattan Tower on the Block as China’s Mega-Buyer Starts Selling — Mingtiandi
HNA Property Group — an arm of Hainan Airlines — is busy in NYC. They’ve announced plans to sell their 90 percent stake in a 383,983-square foot building on Sixth Avenue in Manhattan. They’ve also partnered with Tishman Speyer on the development of the Wheeler, a 10-story 620,000-square-foot creative office project rising above the Macy’s in Downtown Brooklyn, as well as on the 2.85-million-square-foot, Bjarke Ingels-designed tower known as the Spiral in the Hudson Yards area.

HNA in $375M Deal to Add London Exhibition Centre to Global Portfolio — Mingtiandi
Not content with NYC, HNA is also shopping in London. HNA, together with Bugsby Property, is said to be in talks to acquire the venues division of the UK’s Capital & Countries Properties (CapCo), which owns the Olympia exhibition center in west London, for £300 million ($375 million). The Olympia, a London landmark originally built in 1886, is made up of seven event venues.

China Creates SEZ for Medical Tourism — Marginal Revolution
Hainan Boao Lecheng international medical tourism pilot zone, the first of its kind in the country, was approved by the State Council in 2013. It enjoys nine preferential polices, including special permission for medical talent, technology, devices and drugs, and an allowance for entrance of foreign capital and international communications. The pilot zone also has permission to carry out leading-edge medical technology research, such as stem cell clinical research. The zone is too small to have a significant impact on worldwide R&D but China’s original SEZs soon expanded.

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