AAA: Chinese Investment In Canadian Forestry Is Soaring
AAA analyst forecasts significant growth in Canadian forestry investment from China.
- (1888PressRelease) April 09, 2011 - Boston, Mass - After several miserable years of mill closures and staff layoffs, totaling as many as 1,000 in a single month, Canada is now looking forward to a brighter future for its forestry industry, according to an alternative investment expert.
The major surge in the desire for Canadian timber from China has marked a turn-around for Canada, whose forestry industry suffered greatly as a result of the US property slump and the global recession as a whole.
Anthony Johnson, an analyst partner at Alternative Asset Analysis (AAA), says that there are several factors that have prompted major investment from China in the Canadian forestry industry.
China traditionally sourced its timber from Russia, but the introduction of Vladimir Putin's decision in 2008 to apply a 25 per cent log wood tax on exports resulted in inevitable changes. Although this was intended to increase investment in Russia's domestic forestry industry, its main effect was to drive Chinese buyers elsewhere. Johnson claims that it was Canada's timely move to launch major trade delegation in late 2008 that won it the business.
It is not just this decision that has had such an impact on Canadian forestry. China had the misfortune of suffering a major earthquake in Sichuan Province in May 2008, which saw many of the area's buildings razed to the ground, and they obviously needed rebuilding. Mike Richmond, an analyst from Canada's Salman Partners Inc, explained, "The wooden homes held up a lot better [than structures built with other materials] during the earthquake, so I think Chinese officials took a look at this and gained a more favourable view of lumber."
As a result of this new-found respect for timber, the building codes in Shanghai were altered and the demand for timber soared.
Anthony Johnson has many years experience as an investor in the alternative asset classes. He agrees that Canadian forestry is sitting on the edge of a resurgence with investment in lumber increasing from all over the wider Asian continent, prompted by the initial interest from China. "These are exciting time for forestry investors," stated Johnson. He added, "Canada has seen exports to Chinese double in the past year, while its reliance on the US market has reduced considerably."
Another forestry market that is worth talking about, according to Johnson, is Brazil, which has seen plantation managers, such as Greenwood Management, reap the benefits of legislation primarily intended to protect indigenous forests.
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