Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China Showing Surprising Interest in the U.S. Stock Market Food Sector

Stock-Markets / Sector Analysis Jun 03, 2013 - 06:23 PM GMT

By: InvestmentContrarian

Stock-Markets

George Leong writes: Over the past few years, we have seen an increase in takeover activity in North America’s stock markets by China-based companies. The takeover targets have largely been in the energy and resources areas, where China is in search of alternative sources of raw materials.


In 2009 and 2010, Chinese energy firms made about $48.0 billion in stock market acquisitions in North America, according to the International Energy Agency (IEA). China has major investments in the oil-rich Canadian tar sands in Alberta, and I expect to see more Chinese capital flowing into the North American stock market.

The biggest takeover in the stock market from a Chinese company to date was the $15.1-billion takeover of Canada-based Nexen Inc. (TSX/NXY) by CNOOC Limited (NYSE/CEO) in February 2013.

I was aware that the Chinese strategy to accumulate raw materials globally via the stock market would continue, but I was quite surprised to hear about the proposed takeover of the world’s largest pork producer, U.S.-based Smithfield Foods, Inc. (NYSE/SFD) by China’s largest pork producer, Shuanghui International Holdings Limited in a $7.1-billion deal. At issue is not the takeover price, since it was 31% above the closing price of the prior day, but it was more due to the surprise that China is interested in America’s food sector.

While it was obvious that the Chinese want oil and minerals investments in the stock market, the fact that China is moving into this country’s food sector might become an issue.

The Smithfield deal could represent the largest takeover of an American company in the stock market by a Chinese company and the second-largest after the Nexen deal in Canada. However, the deal must first be cleared by The Committee on Foreign Investment in the United States, which, in 2005, ruled against the Chinese takeover of U.S.-based oil company Unocal. But this Smithfield deal is different, since pork is not considered a security safeguard like oil or technology.

On the surface it may seem like the Chinese want access to the much higher quality U.S. pork, which is likely the major reason for the proposed deal, given the recent stories we have heard about the inconsistent quality of pork in China. For this reason, the Smithfield deal makes sense for Shuanghui.

Of course, the fear is that the deal would open the way for pork to flow into the United States from China despite the fact that Shuanghui is telling us that would not happen. If this is true, then it could be a good deal for Smithfield and its workers, who would have access to the American company’s pork products and could ship them to the massive Chinese market, where pork is the top meat consumed.

“The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui’s distribution network,” said Shuanghui Chairman Wan Long. (Source: “Shuanghui International and Smithfield Foods Agree to Strategic Combination, Creating a Leading Global Pork Enterprise,” Smithfield Foods web site, May 29, 2013.)

It will be interesting to see if the takeover is approved, because it could set in play more takeovers in the stock market from Chinese companies down the road in areas such as food and agriculture—areas where demand is surging in China and where there is no national security risk to America.

Yet I couldn’t imagine a Chinese company buying Hormel Foods Corporation (NYSE/HRL) in the stock market, unless, of course, the Chinese love eating “SPAM.”

Source:http://www.investmentcontrarians.com/stock-marke...

George Leong, B.Comm.

http://www.profitconfidential.com

We publish Profit Confidential daily for our Lombardi Financial customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you! What you read in the popular news services, be it the daily newspapers, on the internet or TV, is the news from a “reporter’s opinion.” And there’s the big difference.

With Profit Confidential you are receiving the news with the opinions, commentaries and interpretations of seasoned financial analysts and economists. We analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe today’s financial news will mean for you tomorrow!

© 2013 Copyright Profit Confidential - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in