Power Financial Corp. is unfazed by the current rout in Chinese markets.
Power Financial and its parent Power Corporation of Canada — founded by Paul Desmarais Sr. who ventured into China in the 1970s — are in the world’s second-largest economy for the long term and will keep their eyes open for more opportunities, said Chief Executive Officer Jeffrey Orr. The Power companies recently bought direct and indirect interests in China Asset Management Co.
“When you are in China you expect you’re going to have some periods where it’s going to be more volatile,” Orr told reporters after Power Financial’s annual meeting in Toronto on Thursday. “There will undoubtedly be ups and downs and the government will do what it needs to do to stabilize for the long term.”
The Chinese government’s push to cut leverage in the financial sector has erased some $450 billion from the value of Chinese stocks and bonds since mid-April, spurred debt-sale cancellations and compelled the People’s Bank of China to inject cash into jittery money markets. The tightening campaign adds to a nine-month-long effort by the central bank to curtail excessive borrowing by gradually raising interest rates.
China’s the only Asian country Power Financial is looking into, as the company otherwise prefers to focus on growing its market share in Europe and North America, Orr said. The U.S. in particular is a country where the company could find acquisition opportunities, he said.
Desmarais helped former Prime Minister Pierre Trudeau — father of Canada’s current leader — open up relations with China by establishing the Canada China Business Council in 1978.
“If we make investments into China, we will do so typically with a strong Chinese partner,” Orr said. “It’s a longstanding relationship.”by Sandrine Rastello Bloomberg