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Chinese overseas investment tops US$1t over a decade: report

Wednesday, March 2, 2016 - 08:10

[LONDON] Chinese investors invested US$1.03 trillion in foreign property, stocks and bonds in the decade to mid-2015, British property services firm Knight Frank calculates in its annual Wealth Report released on Wednesday.

The threat of a domestic economic slowdown is encouraging Chinese citizens and companies to funnel more wealth abroad, posing a challenge for the authorities in Beijing.

Liam Bailey, global head of research at Knight Frank, said Chinese investors had stepped up their interest in British property in the last three years, in a bid to diversify their portfolios.

"In terms of foreign nationalities active in London's residential market right now, Chinese buyers - in terms of numbers of units that they are buying - are the biggest single nationality," he said.

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The buying spree continues despite moves by some blue chip lenders including HSBC, Standard Chartered and DBS Group Holdings to restrict or cease offering overseas mortgages and other foreign exchange services to some Chinese nationals.

"People think we are seeing a wave of Chinese demand. No, what we have seen so far is the ripple before the wave has even begun to arrive," Stephen Muller of New York-based Kuafu Properties, said in reaction to the findings.

FUTURE INVESTMENT

Mr Bailey said he expected more money to flow from China into British and US property in the next decade than the last one, but volumes would depend on policy decisions in Beijing.

"The big issue the Chinese government faces is balancing the desire to control investment outflows against asset price bubbles within China," Mr Bailey said. "But giving Chinese investors the ability to diversify their wealth to other international markets could help take the pressure off domestic markets," he added.

Just four other countries and territories saw outward investment in excess of US$1 trillion over the same period, the report showed.

The United Kingdom recorded cross-border asset purchases of US$1.88 trillion. Ireland, flush with cash from its debt-fuelled "Celtic Tiger" economic boom, pumped out US$1.32 trillion, and Hong Kong investors splashed out US$1.7 trillion.

US investors, however, sent more wealth overseas than peers in Britain, Ireland, China and Hong Kong put together, clocking up US$7.3 trillion over the same period.

REUTERS

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