The Chinese yuan has strengthened to a point where some economists have indicated as reasonably priced. From a Chinese perspective, the increased buying power of the yuan means cheaper overseas travel for tourism, cheaper overseas goods right down to cheaper takeovers of foreign assets. The outflow of funds includes overseas citizenship applications with personal funds going into the spectrum of safe or cheap havens, spanning Australia to Europe.
EU assets are particularly attractive and as for Australian mining, low commodity prices as well as low valuations of their listed entities means more acquisitions by Chinese investors. We see this taking place through acquisitions of controlling interests in ASX listed entities followed by vending in of Chinese assets (onshore and offshore).
However, market volatility and the recent bull run in China equities suggest caution as herd mentality takes over investing. Institutions are selling while the Chinese public are buying… Time to liquidate?
Our suggestion is to diversify with a strong weighting towards cash (yuan denominated) and continue to invest offshore.
IRIS Centre and its partners in Australia, SE-Asia and the EU can assist in managing the flow of funds, providing advisory, banking, investment as well as professional services eg. legal and accounting.