Foreigners to be Mostly Kept Out of China's Privatizations
Investments by local insurers and pension funds will not only allow Beijing to tap into massive savings to fund investments as economic growth slows, but it will also allow these institutions to diversify their portfolio away from a dependence on bonds and other fixed income products.
Assets under management in China's pension system totalled $1.2 trillion at the end of 2012, according to newspaper reports.
Insurance companies had assets of 8.289 trillion yuan ($1.36 trillion) at the end of 2013, official data shows. Invested funds totalled 7.687 trillion yuan, of which 29 percent was in bank deposits, 43 percent in bonds, and 10 percent in stocks and related securities.
Opportunities in Energy
For the energy sector, however, analysts said there would be more opportunities for foreign players in areas where they have technological advantages, particularly in the development of unconventional gas resources.
"In areas where the SOEs lack the technological know-how, they will open the doors to foreign companies, otherwise the priority is still local companies," said Michael Yuk, a senior energy analyst at China Merchants Securities.
Sinopec, Asia's biggest oil refiner, said last month that it would sell up to 30 percent of its marketing arm, which owns more than 30,000 petrol stations, in a multi-billion dollar asset restructuring.
While analysts said Sinopec could bring in strategic foreign players, such as Royal Dutch Shell or BP, executives at overseas energy firms are less sanguine.
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