Friday, November 04, 2011

Rising tide of China investments in Malaysia

By Bilqis Bahari

Kuala Lumpur: Cash-rich Chinese are splurging their money on Malaysian assets and equities in recent weeks.
The move comes just after Malaysia witnessed a wave of Japanese companies buying up local assets.

During the past couple of months, Japanese investors bought some RM4.48 billion worth of Malaysian assets.

Among the notable acquisitions from them were the purchase of CI Holdings Bhd's Permanis Sdn Bhd for RM820 million, Motor Trader and Autocar Asean magazines for RM109.7 million, Khazanah Nasional Bhd's 30 per cent stake in Integrated Healthcare Holdings Bhd for RM3.3 billion and HPI Resources Bhd for RM258 million.

Now the new trend seems to be originating from China and to a lesser extent, Taiwan.

"Investors from China accumulated a lot of cash in the last couple of years and they are looking for a place to put their cash to work," said Pong Teng Siew, Jupiter Securities head of research.

Indeed, Malaysia has seen many Chinese investors, be it from mainland China, Hong Kong or Taiwan, aggressively investing in local stocks, properties and projects.

"Some people think that it is because these investors are worried that the booming China market will fall, and that is why they are moving their funds to other markets, including Malaysia," an industry observer said.

Chinese companies invested some RM3.1 billion in recent period. They include investments made by Wenzhou Foreign Trade and Economic Cooperation Bureau in the East Coast Economic Region (ECER)'s special zone in Kuantan, Zhuoda Real Estate Group in an Iskandar Malaysia project, as well as a Chinese firm, which partnered Mah Sing Group Bhd in the Icon Residence Mont' Kiara project, to name a few.

On Bursa Malaysia, Chinese investors purchased shares in several listed companies. They include Hong Kong-based Christian Kwok-Leun Yau Heilesen, who today controls some 24 per cent of GPRO Technologies Bhd.

Heilesen also bought a combined 19.9 per cent shares in DVM with Raymond Yip Wai Man in August this year. However, he sold his stake in less than three weeks.

This month, two Chinese nationals - Xu Sheng and Jiang Chuan Yi - have emerged as substantial shareholders in Envair Holdings Bhd, controlling some 13.5 per cent of the company.

They each bought eight million shares in Envair at between 27.3 sen a share and 35 sen apiece.

In August, Fong Shu Cheong, a Chinese national in Hong Kong, became a subtantial shareholder of Cybertowers Bhd by buying 12.11 million shares, or 12.11 per cent, of the company last Friday.

Analysts said Chinese firms or businessmen investing in Malaysia is not unusual since it is only natural for them to forge links with foreign businesses.

"The primary motivation for them to invest in other countries is to establish linkages with overseas businesses. They could tap into the market by importing or exporting their products or our products," Pong said.

Edmund Tham, head of research at Mercury Securities, said the reason for the Chinese to invest depends on the value of the business or investment.

He added that as long as Malaysian businesses relate to their core business and there is value in the investment, they will come to Malaysia.

"The question of why Malaysia (being a preferred destination) depends on the business opportunity whether it is suitable for their business, if there is high risk for them and if the returns are good.

"They evaluate this on a case-to-case basis. Therefore, they don't just invest only in Malaysia, but other countries as well," Tham added.

With the influx of funds from Japan and China buying into Malaysian assets, properties in Malaysia will appreciate and continue to appreciate.
Investors should pay attention to property counters now.