Mispricing China (I)

By Sampson Iroabuchi Onwuka

As August approaches, there is the question of what is really happening on the ground in Nigeria. Chinese oil companies already in Nigerian are probably reaching in via connection, to enhance their portfolio by August in Nigeria. They are doing so in dollars, which makes it difficult for anyone to see any clear difference between a company like Shell, Exxon Mobile, Texaco, and a company such Sinopec and Petro China. They may have the barge of Chinese outfit and so on, but their profit is noted internationally in dollar terms and they are therefore not Chinese Companies in market terms.

The other Crude oil companies that come from Asia, especially China, seem to have originated from Hong Kong, whose stock exchange and companies are quite expensive given their imitation of dollars as in Hong Kong dollars. Much of the companies instituted through Hong Kong are the product of UK and many European countries, so having Chinese looking people and faces in Nigeria, does not mean that these people are Chinese in just about everything and at least in paycheck. So they can wear the face of China and bring down the assumption that they are the cheaper and in money terms better alternatives, but these are European companies in Asian disguise.

In common sense, it is the exchange rate that makes economy of China look a better alternative to dollar-driven companies of UK and US. If that it is taken away, there is nothing cheap about any of these Asian and Chinese companies, and therefore a serious case of mispricing of Nigerian Investment Category crop such as Crude is very evident. And that fact is all too clear from the high up here, since Shell would not have died a natural death in Nigeria without an outpost, and since Shell had been a serious component of major Hong Kong oil producing companies. Whatever we remember about China, it should not exclude that they have a growing markets that retains wage and price and the rate of the Sovereign Wealth. There are also similar outfits for Exxon Mobile.