Allens Arthur Robinson has acted for Rio Tinto in respect of its agreement with Chalco, a subsidiary of Rio Tinto’s largest shareholder, Chinalco, in relation to the Simandou iron ore project joint venture. The JV agreement will cover the development and operation of the Simandou iron ore project in Guinea, including the planning, construction and management of the mine and associated rail and port infrastructure. Chalco will earn an effective 44.6 percent interest in the project, which is considered to be perhaps the best undeveloped iron ore prospect in the world, by sole funding expenditure of US$1.35 billion. Partner Scott Langford led the transaction, whilst Linklaters acted as UK and US advisers to Rio Tinto. Baker & McKenzie acted for Chinalco.

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After receiving approval from the China Securities Regulatory Commission (CSRC), the Agricultural Bank of China (ABC) launched its Initial Public Offering (IPO), making it the last of China’s “big four” state-owned commercial banks to go public. Having been advised by leading firms like Deheng and King & Wood, ABC, with more retail customers than the population of America, appears poised to achieve the title of the world’s biggest initial public offering, having already raised $19.2 billion through its listing.

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Hong Kong is presently the world’s largest IPO center. However, latest reports from Ernst & Young and PricewaterhouseCoopers (PwC) predict that China is well on its way towards leading the IPO market.

From 2000 to June 2010, companies in China’s mainland raised $188 billion in 495 deals on the leading bourses such as New York Stock Exchange (NYSE), Nasdaq Stock Market, London Stock Exchange and Hong Kong Stock Exchange. Overall, there were 1,114 global deals raising $366 billion in the same period. Hong Kong Stock Exchange was ranked first with 409 deals raising $171.2 billion.

In the near future, PricewaterhouseCoopers (PwC) predicts that domestic PRC companies are expected to raise US$55.7 billion on the Shanghai Stock Exchange this year, while in Hong Kong the figure is expected to be US$47.7 billion.

It can be deduced that the Chinese companies are recovering from the worldwide economic slump and have not been adversely affected by the Europe debt crisis. In terms of fund raising, more Chinese companies choose domestic capital markets as they have become increasingly attractive compared with foreign markets. Domestic companies have raised RMB213bn from 176 IPOs in the first half of the year, more than the RMB187bn raised in the whole of 2009. And according to PwC’s predictions, the total number of new listings on the country’s two bourses in Shanghai and Shenzhen may reach 300 in 2010, compared to 99 last year. Unlike other countries, China has high investor confidence due to increasing listing value and the strict regulations of the China Securities Regulatory Commission (CSRC).

Companies in the BRIC (Brazil, Russia, India and China) countries constituted nearly 68 percent of the total funds raised in the past decade. London stock exchange, NYSE and NASDAQ were ranked second, third and fourth respectively in the report.

Trade analysts by and large have concluded that the European debt crisis would not have a significant impact in Asia. Refer to an earlier blog entry available at http://asialegalblog.com/?p=2562. This entry highlights some other legitimate concerns raised by experts and attempts to blend different views in order to ascertain the risk exposure that Asia faces.

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According to the United Nations Conference on Trade and Development (UNCTAD), global foreign investment dropped 39% to around $1 trillion in 2009, against a high of $1.97 trillion in 2007.  During this time, China had foreign exchange reserves amounting to $2.4 trillion, accounting for 30.7 percent of the world total.  Amidst this backdrop, Chinese companies increased their overseas direct investments (ODI’s) and many of these investments were backed by the Chinese Government.

A particularly prominent ODI was Aluminum Corporation of China’s (Chinalco) acquistion of 12% of Rio Tinto in February 2008.  This purchase was featured in international headlines but its termination in 2009 inspired China to consider a broad overhaul of its rules governing how Chinese companies invest abroad.

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Following the last two years of salary freezes and lowered bonus structures, ex-pat packages in China and Japan have become a hot topic among U.S. and U.K. attorneys looking to relocate from the U.S. and U.K. to Asia. The top firms have weathered the economic crisis just fine according to data gathered by ALB Legal News, and most firms continue to offer competitive packages in Asia in order to attract and retain top legal talent. This is especially true of firms that, as newcomers to a given market, are anxious to increase their ranks.

Firms remain committed to the region, investing resources into their foreign offices, hiring or promoting partners, and offering competitive remuneration packages to their strongest attorneys, especially bilingual ones. While ex-pat packages have for the most part remained stable at top firms, especially in more mature legal markets like Tokyo and Hong Kong, we have seen more variance than ever over the past year. Increasingly there is a willingness to negotiate and make offers on a case-by-case basis.

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Global investment bank Nomura is determined to see the advantages in the post-economic crisis world. Nomura has achieved market gains in Asia ex-Japan and Europe and is now seeking to expand into the US franchise to tap into that market’s massive fee pool. Jesse Bhattal, president and CEO of Nomura’s wholesale department admits that the scale of their investments will “engender several quarters of challenged profitability,” but points to the crucial opportunity to gain a foothold in a market where even a 50bp increase in market share equates to over half a billion dollars in new revenues.

Nomura is just one example of a globally competitive franchises seeing past the disadvantages to the advantages in the post-economic crisis world. Globalization’s pace creates an opportunity for franchises with global platforms to create practical and profitable businesses. Global markets are now at a crossroads when it comes to the importance of new emerging markets versus traditional economic powers, such as the US, Japan, and Europe. The amount of wealth flowing into emerging markets will transform and aid the global economy, with $2.5 trillion of reserves in China alone.

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It has become evident during the recent credit crisis that there is a crucial link between economic progress and robust capital markets. During the late 1990’s, Asian nations suffered through a currency crisis that pushed many into a recession, leading to an increase in unemployment and poverty rates. The Asian region felt the meltdown’s tremendous impact because of the absence of strong local capital markets to lessen the exposure to the economic failure. At the time, the Asian market was plagued by an excessive reliance on bank loans for financing, with many corporations relying entirely on bank liquidity, either in the form of bilateral loans or club loans. Thus, when the banking system fell into disorder, credit risk skyrocketed, sources of funds dried up, and capital investment collapsed.

However, in the current global financial crisis, according to Robert Morrice of Barclays’, Asian nations have managed to avoid the worst of the situation. One is left to wonder how, especially considering that during the past decade, Asian markets have expanded by leaps and bounds, theoretically making them more susceptible to economic instability. The reason is because the prerogatives of the economies of Asia since the past crisis have concentrated on funding their capital requirements through well-developed highly liquid local-currency markets. Such a commitment has reduced the vulnerability of the Asian economies to external withdrawals of capital. The development of reliable Asian capital markets, particularly local currency markets with deep investor bases, has helped to assure long-term and large-scale fund raising. Government measures to supervise and further develop those capital markets have also made them more attractive to large institutional foreign investors. The implementation of benchmark yield curves, risk management systems and essential infrastructure such as market makers, the strengthening of shareholder rights, and liquid secondary trading markets, considerably expanded the region’s investor base, which led to sizeable improvement in the scope of, and access to, capital. Asian corporations seeking to expand their business operations through offshore acquisitions or organic growth in the region can now list on local stock exchanges to secure sufficient sources of funding.

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On June 29-30, 2010, the Inaugural China-International IP Forum will be held at The Peninsula Beijing in China. Organized by Managing Intellectual Property, the conference is designed for Chinese companies operating overseas to develop effective IP strategies and increase their knowledge to protect and enforce their IP outside of their home jurisdictions. Throughout the conference, numerous industry experts will discuss the most recent regulatory issues and practical IP strategies that Chinese companies need to know when expanding their business overseas. The event will be simultaneously translated. To book attendance to the conference, please fill out a booking form and provide it to: Samantha Woo, samantha.woo@euromoneyasia.com, or by fax at +852 2537 5585. For other information about the conference, including the booking form, please go to http://www.managingip.com/stubinfo.aspx?id=6930.

Asian markets must have breathed a sigh of relief after coming out less affected than most countries from the global financial crisis but are now keeping their fingers crossed as the world watches the European debt crisis unfold.

Financial markets are skeptical of the bailout plan, which the EU and the IMF created last month when Greece teetered near default and Spain and Portugal’s financial stability slipped. However, a web poll conducted by the Wall Street Journal revealed trade experts’ positive belief about Asia’s sustainability through the debt crisis. This is supported by the revision of Standard & Poor credit worthiness ratings which have lowered for western countries but have increased for many Asian countries.

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