Total BP Equities Exploring: Common Action Sets Up Chinese Acquisition Obstacles

Following April 4th, Total announced that Chinese foreign exchange investment institutions have spent USD 3.14 billion to acquire 1.6% of the company’s shares. BP also revealed similar information on April 15, with an investment of USD 2 billion for approximately 1% of its shares. These moves have sparked questions about the connection between the two transactions, the methods Chinese investors might use, and how these acquisitions could impact China’s broader energy strategy. To gain insight, this reporter consulted two professionals in the international investment sector. One key question is whether these purchases are related to "resources" or simply a financial move. A former analyst from a major foreign investment bank explained that, based on current understanding, the actions of Chinese foreign exchange institutions appear to be more of a straightforward investment strategy aimed at finding a return on capital. The choice of Total and BP was likely driven by their relatively low stock prices and perceived value. The question of how to invest over $2 billion without causing market volatility was also raised. The analyst noted that with daily trading volumes exceeding hundreds of millions, it's feasible to accumulate such stakes over a few weeks without significantly affecting stock prices. Another concern is whether these stakes will influence the companies' operations. According to the analyst, it's unlikely. Major global firms like BP, HSBC, and others typically have widely dispersed ownership. The largest single shareholder usually holds less than 1%, and their boards remain stable regardless of minor shifts in shareholding. Therefore, the acquisition of shares in international oil companies is fundamentally different from acquiring actual energy resources. A second British investment analyst offered a slightly different perspective. While agreeing that the purchase of Total and BP shares is primarily a business investment, he pointed out that the public announcements by Total and BP may not be entirely positive. He suggested that such disclosures could signal to the market that Chinese capital is already active, potentially limiting further buying activity and affecting stock performance. He also mentioned that BP’s announcement coincided with a visit by the UK’s Chancellor of the Exchequer to China, which some interpreted as a sign of British openness to Chinese investments. However, the analyst disagreed, stating that while China is encouraged to invest in financial systems, it's not necessarily welcomed to acquire key energy companies. Looking ahead, he warned that Chinese institutions may face increasing challenges in acquiring large international firms, especially those in the energy sector—whether for strategic or investment purposes. From publicly available equity data, our reporter examined the largest institutional and mutual fund shareholders of Total and BP. It was found that State Street Corp, through its subsidiary State Street Global Advisors, is the largest institutional investor in BP. Its shareholders also appear on Total’s list, suggesting a potential overlap in investment strategies. Interestingly, many of the largest institutional and mutual fund shareholders of both companies seem to overlap, indicating the presence of a common actor with aligned interests. For instance, ten of the top mutual fund shareholders of Total are also among BP’s top holders. Recently, Total’s CEO confirmed that a Chinese-funded public fund acquired around 1.3% of Total’s shares, though the name of the fund remains undisclosed. Some speculated it could be the China Investment Corporation (CIC), but CIC’s spokesperson denied any involvement. When asked whether these acquisitions could lead to greater access to energy resources, both professionals interviewed by this reporter were clear: don’t even think about it. As one put it, “Forget about it.”

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