The year of 2015 completed with a flurry of deals and news that trigger our thoughts for what to look for in 2016. While the volatility of Chinese stock market still very much in place, there are more happening in the outbound investments than most expected.
On the last day of 2015, Financial Post has reported that CIC, one of the major sovereign funds from China, has exited Canada quietly after more than 5 years’ presence. It is understandable for the fund to make such move because most of their investment transactions have been in distress. We are not talking about just negative returns, but the shear magnitude of the amount and losses incurred in these investments. It is mainly due to the fact that the natural resource markets have been in terrible shape so there is really nowhere to hide for such a major group.
But if we are thinking that the Chinese money have dried up or actually leaving the country…..think again. Fission Uranium (TSXLFCU) announced on Dec 21 that they have secured a strategic investment of CAD $82 M from the Chinese group CGN Mining, a subsidiary of one of the 2 major nuclear powerhouses in China – China General Nuclear, which used to be called China Guangdong Nuclear because of its base location. The Chinese groups, especially CGN, has been following the Canadian Nuclear space for many years but finally chose this timing to invest into a junior. If the commodities market has not bottomed, it is certainly very close to it. Such an investment not only helped the industry as a whole, but also most importantly saved the Fission brand after its failed merger with Denison Mines just few months ago.
Another news broke out before the holidays on the Albertan Energy side. The debt-ridden Long Run Exploration (TSX:LRE) has finally found a willing buyer to take care of all their assets and liabilities. Who is willing to pay the bill? Again some groups from China…..though it’s unnamed, NAI500 would be surprised if the group has no operating experience in the energy field. It is most probably a group with strong industrial experience and top people coming out from the major Chinese oil giant companies.
So as the major state own groups licking their wounds after rounds of unsuccessful deals, new players from private sector are entering with new hope and strategy in place, hoping to make their investments work this time around.
By Gilbert Chan, President of NAI500
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