2015-02-12

China FX Reserves Ready To Run

The capital floodgates are opening as expectations of yuan depreciation set in. Chinese insurers have considered making large overseas investments before, but the rising yuan was a stumbling block since it would weigh on returns. This is still the very early stages of what could be a massive investment trend and outflow of Chinese capital. All of the residential property buying by wealthy Chinese in recent years will be a small blip compared to what could follow in the years ahead as insurers and other corporate investors pour into commercial real estate and other outbound investments.

Recently, some media reports, Sunshine Insurance will be more than the total price of insurance of $ 230 million acquisition of US Baccarat Manhattan hotel. It has been since 2015, at least a third of domestic insurance firms to invest overseas property news, and also the sun property insurance overseas acquisitions second quarter. Previously, Taikang Life and China Ping An are called, respectively, the London office and the office of investment.

It seems that real estate has become the most favored overseas investment insurance firms assets, why not? Under the supervision of a clear policy and exchange rate environment with conditions, industry sources said, the real estate with large-scale, long duration, stable earnings, investment management simple and easy to copy and other characteristics, in line with the investment needs of the insurance funds.

....China Insurance Regulatory Commission Vice Chairman Chen Wenhui late last year on overseas investment related forums has said that overseas investment insurance agency, as the insurance industry "going out" one of several forms, is only just beginning. Which also includes investments in overseas real estate. Since 2013 China Ping An acquisition of British Lloyd's of London building only started after another insurance company investing in overseas property news newspapers.

China Ping An Group's chief investment officer Tong Kai also said that, in fact, the insurance company itself has a huge demand for overseas investment. On the one hand, the long duration of the insurance company liabilities, some up to 20 years or even 30 years, but on the other hand, the short duration of domestic assets, the financial markets is not enough variety, therefore, domestic investment tend to have a maturity mismatch situation.

As for the last two years until the insurance company began intensive investment overseas real estate, Tong Kai think it depends on other regulatory policies and exchange rate factors.

...RMB exchange rate changes is a major risk factor affecting enterprises overseas investment decisions. Previously, the RMB appreciation rate is relatively high, from the perspective of insurance firms, will involve a huge amount of funds were single real estate investment there is a certain risk; that is, if the yuan appreciation of 5%, it means that overseas investment assets depreciate 5%, not consistent with the pursuit of prudent risk capital investment style. In recent years, expectations for rapid appreciation of the renminbi continued to weaken, insurance firms was gradually begin buying overseas assets.


iFeng: 人民币升值预期减弱 险企才敢买外国房子

1 comment:

  1. Can't the PBOC put capital controls in place to prevent money from leaving China? The PBOC needs a stable yuan or else all those Chinese companies that borrowed in USD will get obliterated.

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