Ask The Best And Brightest: Will Chinese Firms Back GM's IPO?
Either CNN Money’s Chris Isidore just rained all over GM’s IPO parade with his headline The auto rebound is a myth, or GM’s IPO is going to need a lot of support from abroad. With GM planning on dropping billions of dollars worth of stock on the market, investors interested in supporting US-market growth have quite a bit of cold water to deal with. Isidore’s piece is a good place to start. As has been the case for some time, GM’s real growth opportunities appear to be in developing economies like the so-called BRIC (Brazil, Russia, India, China) countries. The Chinese are notoriously cash-rich, and hold a special affection for General Motors which is the second-largest foreign automaker in China. And with Chinese sales outstripping America’s sluggish sales, China is already GM’s most important market. GM’s Chinese partner SAIC recently took a majority stake in their “Shanghai GM” joint venture and was given the keys to GM’s Indian market operations for its trouble. Why wouldn’t Chinese firms like SAIC move on a chunk of GM’s equity when it goes to market? Given how perennially popular US sovereign debt has been with Chinese investors, why wouldn’t a Chinese corporation love to become business partners with the United States government? But how would Treasury react? Would the White House rather hold onto GM than let Chinese investors take it piece by piece? Or is this all just too terribly paranoid to consider?
More by Edward Niedermeyer
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The key question is what the government wants. Not the US but China. As we've seen in the last few years, if the gov't doesn't like the idea, it ain't gonna happen. Hummer anyone? Bertel probably needs to chime in here, but just because there's money out there they may look for more about attitudes, particularly Washington's and put the kibosh on any substantial stakes taken in the IPO.
Interested in the China market? There're SAIC (Shanghai Auto, not the U.S. defense co.), Guangzhou Automobile, FAW that'll give you all the exposure you need (and its associated risks). Why invest in an old company still burdened with a combative UAW(will they strike or not is always an unquantifiable risk), high cost and still blood-letting Opel division? And can anyone tell me how much of the 'new' GM's profit is still coming from the N. America market?
Why are Australia and New Zealand considered 'emerging markets'?
The way this administration has been shoveling public money into SEIU, maybe they'll pick up a few percent.