Chinese investors find their cash is losing its cachet

• For years, cash-rich Chinese investors have been highly sought after the world over. Now, their cash is losing its cachet.

China’s increasing efforts to prevent capital from leaving the country are eroding the confidence of domestic and foreign investors about getting deals done inside and outside of the world’s secondbiggest economy.

Chinese bidders had become ubiquitous in deals in the past two years and were welcomed, said Severin Bri- zay, head of Europe, the Middle East and Africa mergers and acquisitions for the investment bank UBS.

“Clients were asking if it would be possible to make sure they are involved. Now, we are seeing the reverse: some clients are asking if we can do it without Chinese bidders because of the domestic challenges they face,” he said.

Dealmakers said many Chinese firms are unable to close deals because they can not secure official permission to transfer yuan into foreign exchange.

This follows a series of measures by authorities since late last year to tighten restrictions on capital outflows and rein in what officials have called “irrational” outbound investment. The Institute of International Finance estimated capital outflows surged to a record US$725 billion last year and it expects even higher outflows this year.

The yuan fell more than 6.5 per cent last year against the dollar, its steepest decline since 1994, prompting the central bank to spend hundreds of billions of dollars in reserves to prevent the slide from turning into a slump.

China’s foreign exchange regulator, the State Administration of Foreign Exchange, did not respond to requests for comment.

Measures by authorities have had a big impact. Overseas direct investment (ODI) by Chinese in December fell almost 40 per cent from a year earlier to US$8.41 billion, the lowest monthly level in 2016. In January, overseas property purchases by Chinese corporations plunged.