Among the banks helping General Motors Co (GM) with its initial public stock offering next week are two identified by initials only: ICBC and CICC.
People in the US uncomfortable with US federal government’s ownership of GM may want to hear more: One of those banks is the Industrial and Commercial Bank of China (ICBC, 中國工商銀行), one of China’s four big central government banks. The other, China International Capital Corp (CICC, 中國國際金融), is a joint venture run primarily by Central Huijin Investment Ltd (中央匯金), an arm of the Chinese government and Morgan Stanley.
This is the first time Chinese government banks have participated in a major US-issued initial public offering (IPO), according to IPO tracking firm Dealogic.
The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.
Chinese automaker Shanghai Automotive Industry Corp (SAIC, 上海汽車), GM’s partner in China, is finalizing plans to buy about a 1 percent stake, worth about US$500 million, in GM’s IPO, the Wall Street Journal reported on Friday. SAIC is owned by the Shanghai city government.
Other foreign investors that are interested include several sovereign wealth funds located in the Middle East and Asia. The Journal says those funds, which manage the finances of royal families and some nations, could invest US$1 billion in GM’s IPO.
There could be political backlash for US President Barack Obama, who has spent the past week in Asia addressing economic issues, like currency exchange differences between the US and China. Obama has said that China artificially deflates the yuan in an attempt to make its exports cheaper.
Many people in the US were unhappy when the US government bailed out GM, calling the company “Government Motors.”
GM’s stock offering on Thursday will reduce the US Treasury’s stake in the company from 61 percent to 43 percent, and will help payback the more than US$50 billion that taxpayers invested in GM to keep it from collapsing. More stock offerings will happen in the next year or so, letting the government fully divest from the automaker.
“It’s a very political topic, but what Americans need to remember is that General Motors is an international company,” said Rebecca Lindland, an analyst with IHS Automotive. “If we want to get our money back, we need to understand that they have to do business on a global basis.”
The US Treasury has been clear that international investors are welcome to invest in GM, and many outside the US are considering taking stakes in the company.
“We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or -unusual treatment,” the US Treasury said in a recent statement.
The US has become a popular haven for Chinese investors, second only to Australia in attracting Chinese stock investments, said Derek Scissors, a research fellow at conservative think tank the Heritage Foundation. The first half of this year was a record year for China, Scissors said. China has sunk US$45 billion into investments and engineering projects worldwide. About US$1.6 billion of those investments came to the US.
In China, businesses operate with the funding and blessing of the government, said Tim Dunne, director of global automotive operations for J.D. Power and Associates. The government behaves like an interested shareholder, ensuring companies have competent management and ensuring the companies boost economic growth in their regions.
Many Chinese automakers are looking for a way into the US market, he said. China is the largest car market in the world, but the US is the most profitable, he said.
“The amount of money changing hands here is much greater,” Dunne said.
The average selling price of a car in the US is US$27,500, compared with about US$17,000 in China.
“Multiply that over millions of vehicles and it’s quite a difference,” Dunne added.
SAIC and GM already have a long-standing partnership in China — GM could not sell cars in China without partnering with a local business — and it’s unclear what size stake SAIC may take in GM.
The deal would need Chinese government approval.
Michael Maduell, president of the Sovereign Wealth Fund Institute, a California-based group that watches sovereign wealth fund investments, said global investors are looking at the US because they believe the overall market is undervalued. Other potential investors in GM include Abu Dhabi’s Mubadala and Singapore’s Temasek, which are both known for actively investing in companies, Maduell said.
Investors are “looking at emerging markets, like China and India, but all those assets are overvalued,” Maduell said. “America still has a lot of fantastic investment opportunities in real estate and small to mid-cap stocks.”
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts