China’s shopping in Italy
Generali is People's Bank of China latest purchase
At the beginning of August, The People's Bank of China, Beijing's giant central bank, has taken a 2.014% stake in one of Italy's largest insurance companies Generali, Italy's biggest insurer and Europe's third-largest sector player by market capitalization. This is not the first time that China buys a portion of some of the biggest Italian companies, rather the latest purchase of what is developing as a string of strategic acquisitions in major European firms.
During the last few months, China has invested something like 3 billion euros in high-profile companies, and Italy has become one of its favourite targets after it "slipped back into a slight recession that sparked a sell-off in domestic stocks and bonds." Indeed, Rothschild data proves that 10 per cent of all Chinese transactions with European companies have been conducted in Italy, leading to the signature of 35 among deals and acquisition.
Dring the last few months, China's central bank has bought up shares in Italy's Torino-based biggest automaker Fiat; top domestic telecoms operator Telecom Italia, the world's biggest cable-maker Prysmian, leading oil and gas operator Eni and domestic utility giant Enel.
The Chief Eurozone Economist at UniCredit, Marco Valli, commented to Reuters that "Rather than sticking to low-yielding Italian government bonds, the Chinese are looking to diversify their investments, with a focus on high-profile companies with global footprint." Reuters has noticed that "contrary to other Asian central banks, the People Bank's of China had continued to invest in Italian state debt - albeit at shorter maturities - even at the peak of the euro zone crisis. But a fall in Italian government bond yields to record lows earlier this year has made these assets less attractive."
There are three reasons justifying China's interest in Italian companies. First, their attention to quality and details. Second, the consolidated, prestigious and trusted brands they carry. Third, the fact that Italy offers good deals in almost every sector, from fashion to hospitality, from energy to technology.
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