DRAGON INDEX™ hits 2601 points.

Industries

Dragon Index™ hits 2601 points

Despite a drop in ODI Flow (-5%), Index grows because ODI Stock (+10%) is still growing faster than GDP (+7%)
Europe makes a comeback this half year with 63% of all Industry & Services deals

This A CAPITAL DRAGON INDEX™ analyses the first half year 2014,
by purpose, by region, by type of Chinese investor, by type of transaction.
A special focus on Europe, North America, Africa and Private Firms is available.

Download A CAPITAL Dragon Index 2014 H1 here

Planets

  • Analysis

1. Chinese ODI Pursues Fast Growth

Chinese Outbound Investments (ODI) fell 5% over the first 6 months But already 20bn USD Deals announced
• 43 Billion USD invested overseas during 2014 H1 (vs 45.6 Billion USD in 2013 H1)
• 17.1 Billion USD invested in companies=Mergers & Acquisitions (vs 24 Billion)
• M&A fell 27% and represent 41% of all outbound investments (vs 53%)

Resources remain main driver (43%) but Drop 63% due to missing mega deals (last year Nexen)
• Resource investments at 7.5 Billion USD (vs 20.6 Billion)
• Number of deals dropped by 65% (17 vs 6), 100% done by SOEs in 2014 H1 (vs 12% Private in H1 2013)
• Industry & Services increase 64% , to 10.1 Billion USD.

=>TRADITIONAL RESOURCE PLAY DROPS AND IS NOT (YET?) COMPENSATED BY THE INCREASE IN INDUSTRIAL/SERVICES. THE NEW ODI PLAN NOT AS EASY TO IMPLEMENT ?

SOE* remain driving force (72% of all M&A vs 92%), as well as Takeovers (69% vs 74%)
• But Private Firms outpace SOEs in deal numbers (30 deals, vs 23 SOEs)
• Private investments Boom (+123%) in deal value (5.0 Billion USD vs 2.2 Billion USD)

=> SOES DOMINATE IN DEAL VALUE BUT ARE LESS ACTIVE THAN PRIVATE FIRMS IN INDUSTRIAL/SERVICES SECTOR : LESS INTEREST OR DIFFICULT TO ACHIEVE SUCCESS?

2. Chinese ODI Changing Patterns

Europe is Back at 7.1 Billion USD (+150%),
• Investment Up in France (Peugeot/Dongfeng)
• EU very attractive for Private Investors : 44% of all Private Chinese Investments to Europe
• Private Chinese investment in Europe represents 31% of total Chinese investment in Europe
• USA drops (1.9 Billion USD, -90% Mainly due to Mega deal last year with Nexen)

=>EUROPE KEEPS THE LEAD FOR INDUSTRIAL AND SERVICES

Private Investors BOOM, +123% with 44% in Europe, 38% in North America
• Number of deals increase 72%, Deal Value increase 123%
• Half of Private Chinese Investments amount to North America

=>NORTH AMERICA ATTRACTED MIDDLE SIZE DEALS FROM PRIVATE CHINESE INVESTORS

Industry & Services (Non Resources) Boom (+76%)
• 10.9 Billion USD (vs 6.1 Billion), mainly in Europe (58%, 6 Billion USD as much as full year 2013)
• Asia down 66% with 0.9 Billion USD (from a exceptionally high base of 2.6 Billion USD)

=>CONFIRMATION THAT CHINESE INVESTORS INCREASINGLY SEEK ADDED VALUE SERVICES AND TECHNOLOGY TO ADDRESS EVOLVING NEEDS OF CHINESE ECONOMY

ODI at 68% of FDI in First half of 2014 (vs 82% for the full year)
• A CAPITAL forecasts ODI to equal FDI in the next 3 years
• Forecast confirms A CAPITAL estimates made early 2012
=> A CAPITAL CONFIRMS FORECAST OF HALF-A-TRILLION USD ADDITIONAL ODI UNTIL 2016