China in­vestors seek­ing refuge in for­eign mar­kets

China Daily (Canada) - - SHANGHAI - By WU YIYAO in Shang­hai


Chi­nese in­vestors are look­ing to re­al­lo­cate as­sets to over­seas mar­kets in a bid to re­tain their value amid stock mar­ket fluc­tu­a­tions and sharp de­val­u­a­tions of the ren­minbi, ac­cord­ing to a re­port re­leased by Forbes China on Au­gust 24.

Mar­ket in­sid­ers also said that US-dol­lar de­nom­i­nated eq­ui­ties and bonds are among the most pop­u­lar in­vest­ment items as the cur­rency has ap­pre­ci­ated against China’s ren­minbi, along­side gold and prop­er­ties, in global gate­way cities.

The Forbes re­port, which polled 1,149 Chi­nese in­vestors with net as­sets of up to 1 mil­lion US dol­lars, in­di­cated a change in in­vestors’ tol­er­ance lev­els for risks and yield pref­er­ences, with more peo­ple now favour­ing low-risk prod­ucts. About 88.4 per­cent of re­spon­dents said they are seek­ing prod­ucts with low to medium risk lev­els as com­pared to only 11.6 per­cent who stated they would tar­get high risk in­vest­ments.

Shang­hai-based Wang Shun­y­ing is one such in­vestor. The 31-year-old had ear­lier this month sold all her stocks in the A-share mar­ket to min­imise her losses. She also sought the ad­vice of three con­sul­tants who spe­cial­ize in over­seas mar­ket in­vest­ments.

“I may come back to the Chi­nese stock mar­ket when it has sta­bi­lized, but right now have I just learned a les­son — do not put all your eggs in the same bas­ket. It is re­ally im­por­tant to di­ver­sify risks by in­vest­ing in var­i­ous kinds of prod­ucts and in dif­fer­ent mar­kets,” said Wang.

About 46.5 per­cent of the Chi­nese in­vestors sur­veyed said they are in­vest­ing in mar­kets out­side China to di­ver­sify their risks. It was a dif­fer­ent story just two years ago, when the ma­jor­ity of lo­cal in­vestors were look­ing at an­nual yields of up to 20 per­cent from in­vest­ments such as trash bonds, said Lin Caiyi, chief economist at Guo­tai Ju­nan Se­cu­ri­ties in Shang­hai.

“The higher the yield, the higher the risk. In­vestors have learned this no­tion and their in­ter­ests have been shift­ing to­wards more sta­ble and safer items, which may help off­set in­fla­tion. Given the cur­rent con­sumer price in­dex and the yuan’s de­val­u­a­tion against the US dol­lar, an­nual yield of some 5 per­cent is al­ready a quite rea­son­able re­turn,” said Lin.

The re­port stated that the prop­erty mar­ket is ex­pe­ri­enc­ing change too, as more peo­ple are now look­ing to in­vest in com­mer­cial projects — such as buy­ing a share in a ho­tel, shop­ping mall or a pen­sioner’s home — in­stead of just fo­cus­ing on residential de­vel­op­ments. Ini­tially, Chi­nese in­vestors were ap­pre­hen­sive about look­ing for over­seas in­vest­ments op­por­tu­ni­ties due to a lack of knowl­edge and lim­ited ac­cess to in­ter­na­tional mar­kets but the sit­u­a­tion is now chang­ing, ac­cord­ing to re­search by Man­ulife-Teda Fund Man­age­ment Co Ltd.

“Wider ex­po­sure to global mar­kets have boosted the ap­petite for global in­vest­ments in Chi­nese in­vestors who are well trav­elled,” added Yuan Yue, pres­i­dent of Hori­zon China, a lead­ing sur­vey and re­search com­pany.

He Mei, Chief Ex­ec­u­tive Of­fi­cer at Over­seas & Con­sul­tancy Co Ltd, which pro­vides ad­vice to in­vestors seek­ing op­por­tu­ni­ties in the global mar­ket, echoed this sen­ti­ment, say­ing that over­seas mar­kets no longer seem in­tim­i­dat­ing to a grow­ing num­ber of Chi­nese in­vestors who have be­come global cit­i­zens.

“This trend will cer­tainly change in­vestors’ pref­er­ences — they now have a much wider range of choices, not only in terms of cat­e­gories but also in ge­o­graph­i­cal span. An in­vestor who made his first prop­erty pur­chase in US as part of prepa­ra­tions for his son’s over­seas ed­u­ca­tion may later de­cide to pur­chase some euro-de­nom­i­nated stocks. Once he takes the first step, he will soon walk far be­yond,” Yuan added.

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