China Life Insurance Group is interested in purchasing AIG’s Asian Insurance unit, to maintain the stability of their Chinese operations.
My Opinion: We are witnessing a paradigm shift in global economics where it is no longer the traditional North American or Western European nations coming to the aid of Asian economies, as we have grown accustomed to. A shift has occurred wherein traditionally strong economies are in financial trouble and the only parties with deep enough pockets to secure their future viability are Asian powerhouses like China, South Korea and Japan and Middle Eastern oil rich nations.
This makes for an interesting scenario particularly as units like AIG’s Insurance is larger than China Life’s operations. The potential value that can be added to the portfolio of firms like China Life is immense, making it a bargain if the deal pulls through.
I expect this scenario to play out in the future on multiple occasions, where Asian corporations can purchase the assets of their former competitors for pennies on the dollar and leverage their expertise to turn them into huge profit generators. Now is the time to look at Asian firms with healthy cash flows and strong balance sheets as they may be looking to gain from some M&A action very soon.
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