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US$800b China capital outflow ‘may boost overseas property investment’
Financial experts believe that US$800billion in capital has flowed out of China in the last year – and as foreign investment increases, so does property investment, say market experts.

China is looking to engineer a credit stimulus after a stock market boom failed, but Charles Dumas, of Lombard Street Research, says capital outflows have reached the “frightening large sum of $800billion” in the last year,  according to a report in the Telegraph.

As overseas investment rises, so will the spend on foreign property and wealthy investors usually invest up to 15% of their wealth in real estate, says Andrew Taylor, Co-Chief Executive Officer of leading Chinese overseas property website.

“In the long run, if overseas investment increases, then so too will overseas investment in property, to which high net worth individuals generally allocate 10 per cent to 15 per cent of their wealth.

“The long-term picture is of a country with increasing wealth playing a greater role in international property markets. Whatever happens in the course in the short term won’t change that.”

Robin Brooks, of Goldman Sachs believe capital outflows hit a record $224billion in the second quarter as the Chinese central bank is forced to run down the country’s foreign reserves to defend the yuan.

The Chinese authorities have tried to generate a stock market boom in the state-controlled media, which has had no noticeable effect on GDP growth, and preceded a $4trillion market crash as half the shares traded in Shanghai and Shenzhen were suspended.

The early signs are that President Xi Jinping will revert to stimulus again and the scare of early 2015 appears to be over, says the Telegraph.

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