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IBDvalueinvestin (99.66)

Chinese stocks will rally big Soon, How do I know?

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July 01, 2009 – Comments (2)

Its because I keep watch of new funds being raised and where they are going to be invested. 

See below $1B in funds raised to invest in Asia.

 

June 30, 2009
#2009-033
Carlyle Asia Growth Partners IV Raises $1.04 Billion to Support High Growth Asian Businesses; Investors Increasingly Attracted to Opportunities in China and India

 

http://www.carlyle.com/Media%20Room/News%20Archive/2009/item10723.html

Hong Kong - Global private equity firm The Carlyle Group announced today it has successfully closed its fourth Asian growth capital fund, Carlyle Asia Growth Partners IV (CAGP IV), a sector-agnostic growth capital fund which invests in high growth private companies with strong local management and leading market position in China, India, Korea and other key Asian markets. Despite a difficult fund-raising environment, the fund raised $1.04 billion in only 14 months from a broad geographical range of investors.

The closing of CAGP IV reflects improving investor sentiment towards China and India as the two major economies begin to stabilize and show signs of emerging from the downturn. Nearly 40% of CAGP IV’s limited partners are new investors, demonstrating growing demand for exposure to China and India.

“We are delighted with the support we have received from our investors, especially given challenging industry-wide fundraising trends. This is an excellent time for long-term investors to seek value in China and India. Our new fund offers access to high growth opportunities with no leverage, providing attractive risk-adjusted returns. Despite the economic downturn, most of our growth capital portfolio companies have achieved growth rates in the range of 20-50% over the last year,” said Wayne Tsou, Managing Director and Head of Carlyle Asia Growth Partners.

“The Chinese domestic consumption story is developing well. China’s strong economic performance, successful implementation of its stimulus plan and incentive measures for small and medium-size enterprises are attracting international firms and investors to the Chinese market,” added Tsou.

Carlyle also believes that India’s promising demographic fundamentals, mature capital markets and skilled workforce make it well-positioned for further growth.

"The strong entrepreneurial culture in India has created many potential investment opportunities for Carlyle. India’s emerging middle class is fuelling strong domestic consumption, while the outsourcing and re-engineering of various products and services from all over the world to India continues to grow at a lively pace. India’s growth story is sustained by its vibrant capital markets, a resilient banking system and a pro-business stable government," said Shankar Narayanan, a Carlyle Managing Director responsible for CAGP’s investments in India.

Existing investors have been encouraged by the success of CAGP IV’s predecessor CAGP III, which has made 22 investments in two and half years across more than ten sectors including energy, consumer, technology, business services, education, industrial, healthcare, real estate and media, 80% of which were made in China or India.

David M. Rubenstein, Carlyle Co-founder and Managing Director, said, "The Carlyle Group raised $19.9 billion in new capital last year, and this fund close builds on that momentum. Asia remains a core focus of our global business, and Carlyle continues to devote more resources to China and India. CAGP is one of the largest growth capital platforms in Asia and has consistently provided investors with exposure to the very best of the region’s opportunities."

Carlyle Asia Growth Partners IV is the fourth fund managed by the Carlyle Asia Growth Capital group, which has an aggregate committed capital of approximately US$2 billion. The group invests through a team of local professionals in six offices - Beijing, Hong Kong, Mumbai, Shanghai, Seoul and Tokyo. CAGP brings significant support and value to portfolio companies through its vast international business network, deep local insight from its native investment team, experience in a broad range of industries, expertise in business management, and strong leverage in global M&A and capital market fundraising. This has allowed CAGP’s portfolio companies to expand capacity and seek acquisition opportunities.

CAGP IV is more than 50% larger than its predecessor CAGP III by capital commitment and has already made its first investment in a leading Chinese high-end women’s fashion company Ellassay.

* * * * *

About Carlyle Asia Growth Capital Partners

In the last ten years, Carlyle Asia Growth Partners (CAGP) has grown to become one of the largest growth capital platforms in Asia. It seeks out and invests in outstanding local entrepreneurs, management teams and emerging leaders across sectors in the largest Asian economies, including China, India, Korea and other key Asian markets. It takes a sector-agnostic, country-specific investment approach. Its investment professionals, who are native to their respective countries, are spread across six offices in Beijing, Shanghai, Hong Kong, Mumbai, Seoul and Tokyo. CAGP manages investments in more than ten sectors: consumer & retail, energy & power, education, financial services, healthcare, industrial, real estate, technology & business services and media. CAGP’s significant investments include Focus Media, HaoYue Education, HongHua, and Xtep. The team manages four funds with total asset under management of approximately US$ 2 billion.

2 Comments – Post Your Own

#1) On July 01, 2009 at 6:04 PM, Nainara (< 20) wrote:

Carlyle's success in raising funds demonstrates investor interest in China over the past 14 months, but per your blog title, you have not established why you think this will translate into China stocks rallying soon.

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#2) On July 01, 2009 at 9:11 PM, IBDvalueinvestin (99.66) wrote:

Asian Growth to Lure Stock Investors Back, Halbis Capital Says

By Chua Kong Ho

http://www.bloomberg.com/apps/news?pid=20601089&sid=aGUi69VbVNr4

June 29 (Bloomberg) -- Asia’s economic growth, led by China and India, will lure global investors back to the region’s stocks after the first weekly funds outflow since March, Halbis Capital Management said.

Investors withdrew $660 million from funds investing in Asia excluding Japan in the week ended June 24, according to EPFR Global data, as stocks in the region became the most expensive in six years in relation to U.S. markets.

“I can see how some money is being taken off the table, some profit taking,” Ayaz Ebrahim, who helps oversee $26.9 billion as chief executive officer of Halbis in Asia Pacific, said in a June 26 interview. He expects positive returns over six to 12 months as “Asia still displays stronger relative growth, especially driven by China and India.”

The World Bank, formed after World War II to fund health and development projects in poor countries, this month raised its growth forecast for China even as it said the global recession will be deeper than it previously predicted.

“Money will look for places where it is seeing growth,” Ebrahim said by phone from Hong Kong. He’s “overweight” on China and India, and favors property stocks on the view that interest rates will remain low across Asia for a “period of time.”

Halbis, a unit of HSBC Global Asset Management that doesn’t comment on individual stocks, increased its allocation to financial stocks from the end of last year and is “not very keen” on so-called deep cyclical stocks such as shipbuilders, Ebrahim said.

‘Still Very Difficult’

The company’s Asia ex Japan Equity Smaller Companies Fund has posted a 49 percent return this year, compared with the 32 percent advance in the MSCI Asia Pacific excluding Japan Index, according to data compiled by Bloomberg. The U.S. Standard & Poor’s 500 Index gained 1.7 percent and Europe’s Dow Jones Stoxx 600 Index added 3.1 percent this year.

Aberdeen Asset Management Plc’s Hugh Young said June 25 the outlook for company earnings is “still very difficult” and recent stock market gains are an “exceptionally strong bear- market rally.”

Emerging-market stock funds lost $1.87 billion in the week ended June 24, the first week of net outflows since early March, according to EPFR Global, a Cambridge, Massachusetts-based research company that tracks funds with $10 trillion in assets. Investors also pulled $457 million from Latin American equity funds, the research firm said in a statement dated June 25.

Best Performers

More than half of the 10 best-performing stock benchmark indexes in the world this year are in Asia, data compiled by Bloomberg show. China’s Shanghai Composite Index climbed 61 percent, the third-best performer, while India’s Bombay Stock Exchange Sensitive Index jumped 53 percent.

Stocks on the MSCI Asia Pacific excluding Japan Index trade at 19 times earnings, the most expensive relative to the Standard & Poor’s 500 Index since the week ended June 27, 2003, weekly data compiled by Bloomberg show.

“Valuations today are not as cheap as they were five, six months ago,” said Ebrahim, who turned “overweight” on China last October and increased his Indian stocks holdings in the first quarter. “While I don’t expect markets to run the way they were running, over six to 12 months, I expect positive returns” as long as the global economy doesn’t deteriorate further, he added.

The World Bank increased its forecast this month for China’s economic growth to 7.2 percent in 2009 from a prior prediction of 6.5 percent. The global economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington-based lender said.

To contact the reporter for this story: Chua Kong Ho in Singapore at Kkchua6@bloomberg.net

Last Updated: June 28, 2009 22:28 EDT

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