A lot of buzz is going around the news that Chinese investors have sort of hit a pause button with regards to their overseas investments. Particularly, it is estimated that the Chinese investment in foreign property globally has dropped to $1.7 billion this year against $10.6 billion in 2016. This has come at the back of the impact from Chinese Government’s initiative to prevent cash flow on any seemingly frivolous foreign investment, in an attempt to stabilise the Yuan. Chinese developers who were seen to otherwise pay a lot for properties in Australia, are now reluctant to provide finances to close the deals. This trend might continue for some time as Chinese political leadership and the top decision-making body, are due for some changes in the coming months.
Primarily, restrictions on deployment of funds in overseas investments have come into picture considering the recent comments emanating from Beijing on “irrational” acquisitions in entertainment and sport and transactions in countries that do not have any diplomatic relations with China. On one front, the position has been defined as drying up of the well of capital from China.
While clarity is being sought on the capital restrictions with regards to offshore investment out of China into Australia, opportunities in sectors such as retirement and aged care might still be evaluated once the political scenario gets woven-up. Particularly, Beijing’s $1 trillion initiative relating to healthcare, food security and education can still pave the future path for any foreign investments.
It is being anticipated that the lower investment in Australia by Chinese investors can provide leeway for investors from other parts of the globe to leverage the opportunity and grab an exposure in interesting sectors within Australia.Only time will tell whether further tightening of capital control after the party congress in China, materializes; and what would be the impact on countries like Australia.
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