Investment Contrarians

Chinese companies

China’s Hunger for Resources Could Make You Money

By for Investment Contrarians | Feb 6, 2013

China’s Hunger for ResourcesChina continues to grow at a rate far above the levels seen in the other industrialized countries. And to fuel its expected superlative growth over the next decade, which could be the country’s golden years in spite of what some critics are saying, the country will need raw materials, based on my stock analysis.

The country has always been a major importer of raw materials, including metals, oil, and forestry, but my stock analysis suggests China is aggressively pursuing exploration in oil and metals. China has also looked to add resource companies via takeovers around the world in such places as Canada, the United States, and Africa in order to have some control over resource reserves, according to my stock analysis.

A recent example of this was the Canadian government’s somewhat surprising approval of the $15.1 billion takeover of Canada-based Nexen Inc. (NYSE/NXY) by China state-owned CNOOC Limited (NYSE/CEO) to go through. The deal was initially thought to be axed by the Canadian regulators and government, citing the security concerns of a takeover of oil reserves by the Chinese government-controlled CNOOC. Canada has rejected takeover bids from Chinese companies in the past, citing the need to safeguard its mineral and energy resources, so this deal was a surprise. Based on my stock analysis, I suspect Canada may have felt pressured to approve the deal, as the country wants to open up more trading with China; a rejection of this deal by the Canadian government would not have looked good in the eyes of the Chinese government.

The reality is that there will be compromises as far as acquisitions of foreign … Read More