GPCA 2010: CHEMICAL COMPANIES SHOULD LOOK EASTWARD FOR NEW SOURCES OF CAPITAL

摘要

Petrochemical companies may soon look eastward for sources of capital to finance investments, Victor Chu, chairman of First Eastern Investment Group (Hong Kong), told attendees at the fifth annual GPCA conference currently being held in Dubai. Capital is likely to become more scarce and expensive over the next few years, Chu say. “The era of readily available and cheap capital is over due to consolidation of the banking and capital markets,” Chu says. However, new sources of financing are likely to emerge from China. RMB-based finance is rapidly developing, Chu says. The offshore RMB market in Hong Kong is growing, with RMB usage growing to about 200 millionRMB ($30 billion) in the last three years, representing growth of 100%/year-on-year, Chu adds. “Producers need to tap these offshore RMB reserves especially for medium-size projects where short-to- medium-term financing is needed. It has become easier to access the RMB market in a short period of time,” he says. Meanwhile, the Shanghai Stock Exchange may be a viable option for multinational chemical companies who have subsidiaries or production facilities in China, Chu says. “You need to be a local player if you are committed to China in the long-term.” Companies listed on the Shanghai Stock Exchange have a higher valuation than in the West, he notes. Private equity players in China are also becoming eager to fund international chemical companies with production in China, Chu adds.