Mainland investors see promise in Latin America

Chile is the top destination for future transactions, with 72 percent of respondents to a Baker McKenzie survey planning to invest in Chile next year, followed by Brazil with 66 percent and Mexico with 61 percent.

Latin America offers Chinese investors attractive opportunities in energy, consumer goods and technology, multinational law firm Baker McKenzie said.

The mainland was the fourth-largest overseas investor in Latin America between 2012 and last year, putting US$28.5 billion into the region, Baker McKenzie Partner Tracy Wut Oi-cing told a Hong Kong General Chamber of Commerce (HKGCC) seminar on Tuesday.

Foreign Minister Wang Yi invited Latin American and Caribbean countries to join the Belt and Road Initiative when he attended the China and Community of Latin American and Caribbean States Forum in Chile last Monday.

Zhuhai hosts the China-Latin America and the Caribbean Business Summit at the end of this year; many Latin American companies will attend the event for networking.

HKGCC Americas Committee Vice Chairman Thomas Wong Wa-sun reckoned China is now promoting trade with Latin America using the platform of Zhuhai, since the city is next to Macao and close to Hong Kong. He also anticipated logistics trade flows using the Hong Kong-Macao-Zhuhai Bridge, which will open in a few months. Macao, like Latin American giant Brazil, is a former Portuguese territory.

“Latin America’s interest in China is increasing,” said Le Xia, Asia chief economist at Spanish banking group BBVA. “We used a data set to find how frequently Chinese infrastructure was mentioned by local media. It shows that Chinese investment becomes a more and more hot topic in Latin America. That’s a good foundation for further cooperation.”

However, dealmakers will need to overcome barriers such as regulatory hurdles, insufficient information, valuation gaps and cultural differences to execute transactions.

Wut suggested dealmakers seek local advisers to help navigate the regulatory environment. When they are faced with valuation gaps, she proposed the acquirer and acquired companies should be transparent about the basis of valuation.

Chile is the top destination for future transactions, with 72 percent of respondents to a Baker McKenzie survey planning to invest in Chile next year, followed by Brazil with 66 percent and Mexico with 61 percent.

The surveyed respondents are 125 dealmakers from North America, Europe and Asia who have completed at least one merger & acquisition transaction in Latin America in the past three years.

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