Investment Blog

Trade War Truce On Unstable Grounds

US markets rallied early last week with the announcement of a moratorium on new tariffs between the US and China by Presidents Trump and Xi at the recent G20 meeting in Argentina. While this is a positive step towards de-escalation, it remains unclear whether or not it precedes further resolution of the ongoing US-China trade war.

U.S. Announces Plans for Technology Export Controls

The U.S. Department of Commerce (“Commerce”) Bureau of Industry and Security may soon implement export controls for certain emerging technologies, as per a November 19, 2018 posting.

EU Expands Foreign Investment Guidelines as Chinese Influence Grows

The European Union will tighten rules surrounding foreign investment into Europe, as Chinese investment and influence grows in the region. The European Parliament and negotiators from the 28 EU Member Nations agreed on draft legislation aimed at protecting European strategic interests while promoting investment. Although not mentioned by name, China’s increasing investment in strategic European sectors appears to be the focus of the proposed new law.

China Tops Global FDI Ranking: UNCTAD Investment Trends Monitor

China was the world’s largest recipient of foreign direct investment (FDI) in the first half (H1) of 2018, according to a recent report from United Nations Conference on Trade and Development (UNCTAD).

Chinese Dairy Manufacturing Plant in Ontario Faces Reality of USCMA

On December 1st, 2016, Chinese dairy and infant formula producer Feihe International Inc. announced Kingston, Ontario as the site for their Canadian manufacturing facility. The $225 million, 320,000 ft2 facility is predicted to be one of the largest foreign direct investment projects in Canada by new job creation, with plans to “manufacture up to 60,000 tonnes of dry infant food annually, using milk [split evenly between cow and goat] from Canadian farms.” On October 12, 2018, days after the revised North American free trade agreement was announced, a CBC report stated that several aspects of the agreement could potentially “thwart Feihe’s business plan.” Feihe is the largest Chinese domestic-brand supplier of baby formula.

Amidst Trade War with China, U.S. Announces Interim Regulations on Foreign Investment Review

On October 10, 2018, the U.S. Treasury Department issued interim regulations to conduct a pilot program in accordance with the Foreign Investment Risk Review Modernization Act (FIRRMA), a bipartisan bill that was signed into law in August. The regulations expand the authority of the Committee on Foreign Investment in the United States (CFIUS) to review and scrutinize foreign investment in “U.S. businesses involved in critical technologies related to specific industries.

Li Ka-Shing-linked Husky Launches C$6.4 Billion Bid to Acquire MEG Energy

On September 30th, 2018, Husky Energy announced its intention to acquire MEG Energy in a cash-and-stock offer, comprised of a C$3.3 billion equity stake and the assumption of C$3.1 billion in debt. All in, the deal carries an enterprise value of C$6.4 billion. Analysts have commented that the move could trigger a bidding war, with CNRL, Imperial Oil, and Suncor noted as alternative buyers.

China, Venezuela Expand Economic Ties

On September 17th, President Nicolas Maduro returned to Venezuela after a brief diplomatic trip to China, where he met with President Xi Jinping and other top Chinese officials. Maduro subsequently announced that Venezuela will receive US$5 Billion in Chinese investment over the next year, partially aimed at enabling the troubled South American nation to double oil exports to China. State-owned China National Petroleum Corporation (CNPC) also purchased 9.9% of shares in the oil joint venture Sinovensa, bringing overall Chinese ownership to 49%. China has long been a top financer for Venezuela, having recently committed an additional US$250 Million to boost oil production in July.

Sinopec, China Construction Announce Preliminary Plans for $8.5 Billion Alberta Refinery Project

On September 13, 2018, two major Chinese firms and Alberta First Nations groups announced preliminary plans to develop and operate a bitumen and petrochemical refinery near Edmonton. Subsidiaries of Sinopec and China Construction, in addition to a group of Alberta First Nations, have adopted the name SinoCan Global for the partnership. Sinopec and China Construction, two of the largest Chinese state owned enterprises, appear to be the primary commercial drivers behind the project.

Chinese Influence and Investment in the Pacific Islands

The 2018 Asia-Pacific Economic Cooperation (APEC) meetings will be held in Papua New Guinea (PNG) from November 17-18. PNG’s Foreign Affairs Minister recently confirmed that leaders of Pacific Island nations will attend the summit, in addition to the 21 APEC members. Chinese President Xi Jinping is perhaps the most high-profile summit attendee after it was announced that American President Donald Trump would not attend, opting to send Vice President Mike Pence in his place.

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