Railways a Better Investment Than Blackstone for China Investment Corp

Remember when private equity outfit Blackstone (NYSE:BX) went public in May? The China Investment Corporation (CIC) invested US$3 billion at the time. It was, if memory serves, the first investment by the CIC. How’s that working out now?

<p>Blackstone IPOd at US$38. It closed at US$21.53 yesterday. So on paper, that’s a loss in the neighbourhood of 40%. Not a good start to the fund. But since then, it’s concentrated on investments closer to home…in things like railways.<span id=

CIC invested HK$780 million in China Railway Group Limited (390.HK), the largest railway and tunnel contractor in Asia. Talk about a railroad boom! The company listed in Shanghai and went public this week, too. Its shares were up 69%…in one day. The Hong Kong market, ought to be renamed King Kong, in a respectful way, of course. It has clearly become an epi-bubble off the mainland, with Chinese companies listing and skyrocketing.

<p>It hasn’t been all fairy dust and comet tails for Chinese IPOs lately, or for the Shanghai market. The Shanghai Composite Index lost 18.2% in November. PetroChina (<a href=SHA:601857) —after making a stir and briefly becoming the world’s largest company by market cap, has fallen 37%. And two other IPOs, truck maker Sinotruk (HKG:3808) and dry bulk carrier Sinotrans (HKG:0598) both fell 13% after IPOing.

Dan Denning
Markets and Money

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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