Post by jeffolie on Nov 16, 2012 17:32:29 GMT -6
As the Shanghai index DID NOT RALLY ... 2,015 -15 -0.75%
It now lingers near the year lows. www.marketwatch.com/investing/index/000001?countryCode=CN
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“Shall we go inside and look around?” said the real estate agent outside a home in Vancouver listed for $3 million.
The prospect — a man from China — wasn’t interested in looking around. He was ready to buy… after merely glancing at the exterior. We mean really ready to buy. In his car were two suitcases… stuffed with Canadian currency.
“I explained how, here in Canada, we don’t do large cash transactions like that,” the agent later told our Byron King. “There are banking and tax requirements. We need to go through lawyers and record all the transactions properly.”
Remarkably, the buyer was not dissuaded and the deal was done a few weeks later.
That’s a micro story, illustrating a macro trend — and spotlighting an opportunity you can’t afford to overlook.
You think you don’t trust the government or the monetary system? You have nothing on the Chinese.
“There’s massive capital flight out of China,” Byron says. “According to a report by the Washington, D.C.-based Global Financial Integrity (GFI) group, almost $3.8 trillion (yes, trillion!) illegally exited the Chinese economy between 2000 and the end of 2011.
“About $602 billion left China in just 2011, so the trend is accelerating,” he adds. “Indeed, if about $50 billion per month ($602 billion divided by 12 months) left China in 2011, it’s no wonder that, for the past year, we’ve seen market-moving reports that China’s economy is slowing down. Perhaps China’s economy isn’t so much ‘slowing down,’ in many respects, as it’s decapitalizing due to illicit outflows.
“According to GFI, some of the proceeds are outright ill-gotten lucre from bribes to officials, or raw government corruption. Other capital that flees China may be money that was earned initially through legitimate business means. However, these funds then moved out of China in defiance of law, regulation and other capital controls, usually hand in hand with evasion of applicable taxes.”
It comes back to the adage about “capital goes where it’s treated best.” In China, capital is treated at least as shabbily as it is in the United States. “National economic policy keeps interest rates similarly low on savings accounts,” Byron explains. “It’s an overt, albeit indirect, government subsidy to banks. The banks, in turn, make dicey loans, on favorable terms, to favored, often state-controlled entities.”
5minforecast.agorafinancial.com/the-3-8-trillion-great-escape/
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According to the report, which was based on interviews with 700 high net-worth individuals in 29 Chinese cities, roughly 60% of China’s wealthy have assets overseas. This group keeps only about 10% of their investment funds offshore, the survey found, but more than half said they hoped to increase that percentage over the next five years.
Most surprising, though, were the reasons China’s wealthy choose to invest overseas, which were not unlike their counterparts in the rest of the world. While governments around the globe are raffling off residency perks to attract Chinese money, immigration was cited as a reason for investing overseas by only 23% of respondents. And children’s education was a reason for only 16%.
Instead, diversification of risk was a major reason for 86% of respondents, and 76% cited having access to a wider range of investment products. Under no illusions about the relatively dire state of the global economy, only 15% said they were hoping for a higher return overseas than what’s available in China.
blogs.wsj.com/chinarealtime/2012/11/14/why-rich-chinese-are-investing-overseas-its-not-what-you-think/?utm_source=Sinocism+Newsletter&utm_campaign=a66e75ca44-The_Sinocism_China_Newsletter_For_11_15_2012&utm_medium=email
==============================
It now lingers near the year lows. www.marketwatch.com/investing/index/000001?countryCode=CN
===========================
“Shall we go inside and look around?” said the real estate agent outside a home in Vancouver listed for $3 million.
The prospect — a man from China — wasn’t interested in looking around. He was ready to buy… after merely glancing at the exterior. We mean really ready to buy. In his car were two suitcases… stuffed with Canadian currency.
“I explained how, here in Canada, we don’t do large cash transactions like that,” the agent later told our Byron King. “There are banking and tax requirements. We need to go through lawyers and record all the transactions properly.”
Remarkably, the buyer was not dissuaded and the deal was done a few weeks later.
That’s a micro story, illustrating a macro trend — and spotlighting an opportunity you can’t afford to overlook.
You think you don’t trust the government or the monetary system? You have nothing on the Chinese.
“There’s massive capital flight out of China,” Byron says. “According to a report by the Washington, D.C.-based Global Financial Integrity (GFI) group, almost $3.8 trillion (yes, trillion!) illegally exited the Chinese economy between 2000 and the end of 2011.
“About $602 billion left China in just 2011, so the trend is accelerating,” he adds. “Indeed, if about $50 billion per month ($602 billion divided by 12 months) left China in 2011, it’s no wonder that, for the past year, we’ve seen market-moving reports that China’s economy is slowing down. Perhaps China’s economy isn’t so much ‘slowing down,’ in many respects, as it’s decapitalizing due to illicit outflows.
“According to GFI, some of the proceeds are outright ill-gotten lucre from bribes to officials, or raw government corruption. Other capital that flees China may be money that was earned initially through legitimate business means. However, these funds then moved out of China in defiance of law, regulation and other capital controls, usually hand in hand with evasion of applicable taxes.”
It comes back to the adage about “capital goes where it’s treated best.” In China, capital is treated at least as shabbily as it is in the United States. “National economic policy keeps interest rates similarly low on savings accounts,” Byron explains. “It’s an overt, albeit indirect, government subsidy to banks. The banks, in turn, make dicey loans, on favorable terms, to favored, often state-controlled entities.”
5minforecast.agorafinancial.com/the-3-8-trillion-great-escape/
============================
According to the report, which was based on interviews with 700 high net-worth individuals in 29 Chinese cities, roughly 60% of China’s wealthy have assets overseas. This group keeps only about 10% of their investment funds offshore, the survey found, but more than half said they hoped to increase that percentage over the next five years.
Most surprising, though, were the reasons China’s wealthy choose to invest overseas, which were not unlike their counterparts in the rest of the world. While governments around the globe are raffling off residency perks to attract Chinese money, immigration was cited as a reason for investing overseas by only 23% of respondents. And children’s education was a reason for only 16%.
Instead, diversification of risk was a major reason for 86% of respondents, and 76% cited having access to a wider range of investment products. Under no illusions about the relatively dire state of the global economy, only 15% said they were hoping for a higher return overseas than what’s available in China.
blogs.wsj.com/chinarealtime/2012/11/14/why-rich-chinese-are-investing-overseas-its-not-what-you-think/?utm_source=Sinocism+Newsletter&utm_campaign=a66e75ca44-The_Sinocism_China_Newsletter_For_11_15_2012&utm_medium=email
==============================