On June 25th, 2014, Unirule Oil Industry Seminar was held at Unirule Institute of Economics. Professor Eugene Beaulieu from University of Calgary, Canada, presented “The Impact of Foreign Investment Policy on Stock Returns of Oil Sands Companies”. Present at the event were Professor SHENG Hong, Director of Unirule; Dr. Christer Ljungwall, Swedish Embassy; Dr. QIAN Pu, Deputy Director of Unirule China Center for Public-Private Partnership; and Dr. WANG Jun, Director of Unirule International Cooperation Center. This seminar was hosted by Dr. WANG Jun and interpreted by Mr. MA Junjie, Assistant to the Director of Unirule International Cooperation Center.
Professor Beaulieu first introduced his research. A policy change in Canada that tightened restriction on foreign direct investment by state-owned enterprises in the oil sands companies was introduced after a successful acquisition of Nexen, a Canadian oil sands company, by Chinese state-owned enterprise CNOOC. The policy change had great impact on investments in the oil sands industry. Canada as a small and open economy relied heavily on foreign direct investment. This dependence was more serious in the natural resources industry, especially the oil sands industry. This policy change resulted in sharp decrease of investment in the oil sands, and its impact was bigger on smaller players. Professor Beaulieu adopted panel digression and case studies to analyze the impact of this policy change. Share value Data of 17 oil sands companies were also used to illustrate the impact of this policy change.
Professor SHENG Hong thought Professor Beaulieu’s presentation was very informative. The restriction on foreign direct investment from state-owned enterprises would also restrict the development of foreign state-owned enterprises. He argued such restrictions were beyond economics, but rather due to political consideration, especially in regard to natural resources industries, such as oil industry. As for state-owned enterprises, Professor SHENG mentioned Unirule research on state-owned enterprises, arguing that Chinese oil companies’ profligate investment in foreign countries showcased a lack of consideration to operation costs paid by tax payers. Professor SHENG Hong thought Professor Beaulieu’s research was a successful implementation of classic economics with clear logics.
Dr. QIAN Pu stated that the policy change showed Canadian government’s mixed feelings towards investment from Chinese state-owned enterprises. Professor Beaulieu’s research pointed out a wider definition of state-owned enterprises, which showed that the Canadian government held a more discreet and careful attitude towards foreign direct investment from state-owned enterprises. Besides, Chinese state-owned enterprises should also carry out reforms to offset the negative impact of such policy changes. Dr. QIAN also thought this policy change could be an opportunity for private-owned enterprises to invest in oil sands industry in Canada as state-owned enterprises were dominant in this industry. Dr. QIAN also questioned the data analysis in Professor Beaulieu’s research.
