ASX Queries Chinese Companies on Capital Flows

Nearly 50 Chinese companies listed in Australia have been written to by the Australian Securities Exchange querying whether they have had any issues with China’s crackdown on capital outflows.

Prompted by the suspension of a Chinese company on 29 August, the ASX said its measure was a precaution to ensure the market is kept informed.

There have been concerns with what the changes on outbound investment by the Chinese government might mean for property investment in Australia.

In August, Beijing placed outbound property investment under the restricted category of its "new guidance" rules which placed further regulations on Chinese investment overseas.

Buoyan Holdings, the first Chinese real estate company to list on the ASX, responded to the letter and confirmed the company has had no difficulties repatriating money or converting money into foreign currencies.

Beijing has tightened capital controls and overseas direct investment in an effort to support its currency and ease pressure on their foreign currency reserves.

It appears that the response to the ASX shows that there isn’t a broad issue in transferring funds and funding concerns were limited to one company which had already been suspended from trading on the bourse.

[Related reading: Chinese Interest In Australian CRE Falls Following Regulations On Outbound Investment]Cushman & Wakefield head of capital markets James Quigley told the Australian Financial Review, "Whilst new capital guidelines for mainland Chinese investors will mean more controlled investment, overall volumes are expected to remain firm and demand for Australian CRE remain robust supported by enquiry from a variety of global sources including Singapore and Hong Kong.

"It is important to note that the Chinese government is not banning outright overseas real estate and hotel investments and some sectors. For example, logistics could receive increased interest following its inclusion in the 'encouraged' investment category. Additionally, R&D centres in business park type facilities may receive additional capital allocations.”