China Withdraws Investment In Europe As Sinopec Hong Kong Purchases Russian SIBUR Equity From Its Own Cyprus Subsidiary

Sinopec’s Soihl Hong Kong Holdings have purchased 217,847,910 (8.5% of the total equity) shares in SIBUR from Soihl Cyprus Investment Limited, also a subsidiary of Sinopec, the Chinese state-owned Petrochem giant, moving the SIBUR equity holding away from the EU to Hong Kong. The transfer was made following a decree issued by Russian President Vladimir Putin, in conjunction with authorisation from Beijing as Sinopec are a Chinese state-owned company. Soihl are an investment company, and hold investment equity in SIBUR, which is Russian. SIBUR is the largest integrated petrochemicals company in Russia and one of the fastest-growing companies in the global petrochemicals industry.

The move is a new example of major corporations moving assets away from Europe due to sanctions, the threat of asset confiscation and overall unpleasantness. Cyprus, an EU member, had built an impressive offshore portfolio of Russian investment due to language similarities and the traditional friendliness between Greeks and Russians, but this has largely been destroyed by Brussels. Other examples of Russian businesses exiting Cyprus can be seen here, here, here and here.

The example of China also relocating its investment assets away from Cyprus to Hong Kong is indicative of corporate wealth distribution flowing away from the EU and towards Asia. Specifically, this move demonstrates a merging of perceived wealth creation in holding Russian investment grade assets and a lack of Chinese confidence in European Union credibility.