China saw a big increase in money leaving the country in April. This shows that the yuan, China's currency, is facing challenges because the country's economy is slow, and there's uncertainty about the US Federal Reserve's interest rate policies.

New data released on Friday revealed that local companies bought the most foreign money from banks since 2016.

At the same time, exporters held back from changing their dollars to yuan, and people in China bought more foreign money for travelling overseas.

These things show that people are being careful with the yuan. China's interest rates are lower than those of the US dollar, which makes the US dollar more attractive.

Even though the People’s Bank of China is trying to keep the yuan's value steady, it's hard because no one is sure when or how much the US will cut its interest rates this year.

Economists and strategists from Goldman Sachs, including Xinquan Chen, said in a report that they think policymakers will keep strong control to stop the yuan from losing value, by setting the yuan's value and controlling how much foreign money is available, because there's a lot of pressure for money to leave the country.

In April, Chinese banks sold $36.7 billion more foreign money than they bought for their customers. This is the most since December 2016, according to data from the State Administration of Foreign Exchange.

Investors liked foreign money assets, showing they are more hopeful about things not in yuan.

Also, the amount of money coming into China from other countries didn't help the yuan, because there was more Chinese money spent on buying foreign money, which is rare.

After all, China usually makes more money from selling things to other countries than it spends. Also, the money spent on people from China travelling to other countries increased.

Dan Wang, who is the main economist at Hang Seng Bank China Ltd., noticed that exporters would rather keep foreign money instead of yuan because they think China's economy won't grow much, and because there's a lot of money leaving the country.

Chinese banks also sent a record $29.5 billion to other countries for their customers to use for investing directly.

This includes foreign countries investing in China and China investing in other countries.

Bloomberg analyst Gerard DiPippo said that the reason for less money coming into China might be that US interest rates are higher, not that other countries are less interested in China.

He said that companies from other countries, including Chinese companies with offices in Hong Kong, might have moved their money to other countries to make more money.

(With inputs from Bloomberg)

China saw a big increase in money leaving the country in April. This shows that the yuan, China's currency, is facing challenges because the country's economy is slow, and there's uncertainty about the US Federal Reserve's interest rate policies.

China saw a big increase in money leaving the country in April. This shows that the yuan, China's currency, is facing challenges because the country's economy is slow, and there's uncertainty about the US Federal Reserve's interest rate policies. New data released on Friday revealed that local companies bought the most foreign money from banks since 2016. At the same time, exporters held back from changing their dollars to yuan, and people in China bought more foreign money for travelling overseas. These things show that people are being careful with the yuan. China's interest rates are lower than those of the US dollar, which makes the US dollar more attractive. Even though the People’s Bank of China is trying to keep the yuan's value steady, it's hard because no one is sure when or how much the US will cut its interest rates this year. Economists and strategists from Goldman Sachs, including Xinquan Chen, said in a report that they think policymakers will keep strong control to stop the yuan from losing value, by setting the yuan's value and controlling how much foreign money is available, because there's a lot of pressure for money to leave the country. In April, Chinese banks sold $36.7 billion more foreign money than they bought for their customers. This is the most since December 2016, according to data from the State Administration of Foreign Exchange. Investors liked foreign money assets, showing they are more hopeful about things not in yuan. Also, the amount of money coming into China from other countries didn't help the yuan, because there was more Chinese money spent on buying foreign money, which is rare. After all, China usually makes more money from selling things to other countries than it spends. Also, the money spent on people from China travelling to other countries increased. Dan Wang, who is the main economist at Hang Seng Bank China Ltd., noticed that exporters would rather keep foreign money instead of yuan because they think China's economy won't grow much, and because there's a lot of money leaving the country. Chinese banks also sent a record $29.5 billion to other countries for their customers to use for investing directly. This includes foreign countries investing in China and China investing in other countries. Bloomberg analyst Gerard DiPippo said that the reason for less money coming into China might be that US interest rates are higher, not that other countries are less interested in China. He said that companies from other countries, including Chinese companies with offices in Hong Kong, might have moved their money to other countries to make more money. (With inputs from Bloomberg)

China's capital outflows worsen in April, pressuring the yuan

Standard Chartered, a London-headquartered bank, has announced the suspension of new investments by its clients in China into offshore products via a quota-based channel, citing "commercial reasons."

This decision comes among a surge in demand for overseas investments driven by weaknesses in the local market and currency imbalance.

The bank did not provide detailed explanations for the suspension but acknowledged the move in the middle of Beijing's efforts to stem capital outflows amidst a weakening yuan and a slowing economy.

China's principal overseas investment route is the qualified domestic institutional investor (QDII) programme, which was launched in 2006.

Though, StanChart's recent decision reflects challenges in meeting the demands of Chinese wealth and corporate clients seeking offshore investments. The suspension applies to new subscriptions into offshore-domiciled funds sold via the QDII program, effective from last Thursday, according to a client note issued by StanChart.

The decision follows a trend of growing appetite among domestic investors for overseas assets since late 2022, driven by China's underperforming stock market compared to major offshore markets like the US.

The CSI300 index, China's blue-chip index, has hit five-year lows and experienced an 18 per cent decline over the past year, attributed to various economic challenges including a debt crisis in the property sector. Experts suggest that quota limitations likely influenced StanChart's decision, given the absence of new quotas issued since 2021.

Economic and geopolitical concerns have spurred an exodus of investors from China, redirecting capital into alternative markets such as Japan. The benchmark Nikkei index has experienced significant gains in middle of this trend.

While Beijing has introduced market support measures since August, including reducing trading costs and prioritising equity fund launches, capital outflows continue to pose challenges. StanChart's move align with renewed depreciation pressure on the yuan in 2024, influenced by the dollar's resurgence.

StanChart's CEO Bill Winters has recently highlighted opportunities in China's wealth management sector, emphasising the bank's cross-border services as a competitive advantage over domestic peers.

In fact the concerns about potential tightening measures from Beijing, Winters remains optimistic about the bank's cross-border business. StanChart holds a QDII quota of $2.8 billion, making it the third-largest among foreign banks, behind HSBC and Citigroup.

However, neither the bank nor the regulator has disclosed the extent to which these quotas have been utilised.

(With inputs from Reuters)

Standard Chartered, a London-headquartered bank, has announced the suspension of new investments by its clients in China into offshore products via a quota-based channel, citing "commercial reasons.

Standard Chartered, a London-headquartered bank, has announced the suspension of new investments by its clients in China into offshore products via a quota-based channel, citing "commercial reasons." This decision comes among a surge in demand for overseas investments driven by weaknesses in the local market and currency imbalance. The bank did not provide detailed explanations for the suspension but acknowledged the move in the middle of Beijing's efforts to stem capital outflows amidst a weakening yuan and a slowing economy. China's principal overseas investment route is the qualified domestic institutional investor (QDII) programme, which was launched in 2006. Though, StanChart's recent decision reflects challenges in meeting the demands of Chinese wealth and corporate clients seeking offshore investments. The suspension applies to new subscriptions into offshore-domiciled funds sold via the QDII program, effective from last Thursday, according to a client note issued by StanChart. The decision follows a trend of growing appetite among domestic investors for overseas assets since late 2022, driven by China's underperforming stock market compared to major offshore markets like the US. The CSI300 index, China's blue-chip index, has hit five-year lows and experienced an 18 per cent decline over the past year, attributed to various economic challenges including a debt crisis in the property sector. Experts suggest that quota limitations likely influenced StanChart's decision, given the absence of new quotas issued since 2021. Economic and geopolitical concerns have spurred an exodus of investors from China, redirecting capital into alternative markets such as Japan. The benchmark Nikkei index has experienced significant gains in middle of this trend. While Beijing has introduced market support measures since August, including reducing trading costs and prioritising equity fund launches, capital outflows continue to pose challenges. StanChart's move align with renewed depreciation pressure on the yuan in 2024, influenced by the dollar's resurgence. StanChart's CEO Bill Winters has recently highlighted opportunities in China's wealth management sector, emphasising the bank's cross-border services as a competitive advantage over domestic peers. In fact the concerns about potential tightening measures from Beijing, Winters remains optimistic about the bank's cross-border business. StanChart holds a QDII quota of $2.8 billion, making it the third-largest among foreign banks, behind HSBC and Citigroup. However, neither the bank nor the regulator has disclosed the extent to which these quotas have been utilised. (With inputs from Reuters)

Standard Chartered halts new China offshore investments amid capital outflow worries

The rupee recovered from a near 18-month low by rising 12 paise to 68.30 against the dollar in opening trade today at the forex market on fresh selling of the US currency by exporters and banks.

The minutes from the US Federal Reserve's meeting yesterday appeared to have reassured investors that the central bank will not be too aggressive with raising interest rates, forex dealers said.

Besides selling of the American currency by exporters and banks, weakness in the dollar against some other currencies overseas propped the rupee, they said.

Further, a higher opening in the domestic equity market too influenced the rupee uptrend, they added.

Yesterday, the rupee had lost 38 paise to hit a near 18-month low of 68.42 against the US dollar following relentless capital outflows amid concerns over macro conditions and surging crude oil prices.

Meanwhile, the benchmark BSE Sensex rose 119.56 points, or 0.34 percent, to 34,464.47 in early trade today.

The rupee had lost 38 paise to hit a near 18-month low of 68.42 against the US dollar following relentless capital outflows

The rupee recovered from a near 18-month low by rising 12 paise to 68.30 against the dollar in opening trade today at the forex market on fresh selling of the US currency by exporters and banks. The minutes from the US Federal Reserve's meeting yesterday appeared to have reassured investors that the central bank will not be too aggressive with raising interest rates, forex dealers said. Besides selling of the American currency by exporters and banks, weakness in the dollar against some other currencies overseas propped the rupee, they said. Further, a higher opening in the domestic equity market too influenced the rupee uptrend, they added. Yesterday, the rupee had lost 38 paise to hit a near 18-month low of 68.42 against the US dollar following relentless capital outflows amid concerns over macro conditions and surging crude oil prices. Meanwhile, the benchmark BSE Sensex rose 119.56 points, or 0.34 percent, to 34,464.47 in early trade today.

Rupee rises by 12 paise against dollar

Mergers and acquisitions by Chinese companies in countries that are part of the Belt and Road initiative are soaring, even as Beijing cracks down on China&#39;s acquisitive conglomerates to restrict capital outflows.

Chinese acquisitions in the 68 countries officially linked to President Xi Jinping&#39;s signature foreign policy totalled $33 billion as of Monday, surpassing the $31 billion tally for all of 2016.

Unveiled in 2013, the Belt and Road project is aimed at building a modern-day &quot;Silk Road&quot;, connecting China by land and sea to Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa.

At a summit in May, Xi pledged $124 billion for the plan, but it has faced suspicion in Western capitals that it is intended more to assert Chinese influence than Beijing&#39;s professed desire to spread prosperity.

The surge in Chinese companies&#39; acquisition-linked investments in the Belt and Road corridor comes as the volume of all outbound mergers and acquisitions from China has dropped 42 per cent year-on-year as of Monday.

Beijing&#39;s move to prop up the yuan by restricting the flow of capital outside the country and clamp down on debt-fuelled acquisitions to ensure financial stability has made it tougher for buyers to win approvals for deals abroad.

Regulators have tightened the screws further since June, reviewing deal agreements in minute detail and ordering a group of lenders to assess their exposure to offshore acquisitions by several big companies that have been on overseas buying sprees, including HNA Group, Dalian Wanda Group, and Fosun Group.

The heightened regulatory scrutiny of overseas acquisitions comes after companies spent a record $220 billion in 2016 on assets overseas, buying up everything from movie studios to European football clubs.

The scrutiny, however, has not impacted Chinese companies&#39; pursuit of targets along the Belt and Road corridor, as those investments are considered strategic for the companies as well as the Chinese economy.

&quot;People are thinking in a long-term approach when making investments along Belt and Road countries,&quot; said Hilary Lau, a corporate and commercial lawyer and partner at the law firm Herbert Smith Freehills.

&quot;The acquisitions are also policy-driven. There are funds allocated by Chinese banks and state funds for Belt and Road deals,&quot; he said.

The number of Chinese deals targeting Belt and Road countries totalled 109 this year, compared to 175 in the whole of last year and 134 in 2015.

Companies enjoy a relatively smooth approval process for deals along the Belt and Road project as regulators tend to put them in a different basket when reviewing outbound investments, according to lawyers and dealmakers.

&quot;If you are doing One Belt, One Road, that becomes the first sentence in the document&quot; to the regulators, said a senior investment advisor at a Chinese company that has acquired several overseas businesses.

&quot;It is a wise thing to point out early on,&quot; said the advisor, who requested anonymity because he was not authorised to speak to the media.

The largest deal in a Belt and Road country so far this year was a Chinese consortium&#39;s $11.6 billion buyout of the Singapore-based Global Logistics Properties.

Other top deals include the $1.8 billion purchase of an 8 per cent ownership interest in an Abu Dhabi oil company by the state-owned oil giant China National Petroleum Corp, and HNA Group&#39;s $1 billion acquisition of a logistics company, CWT Ltd, which has not yet closed.

The State Administration of Foreign Exchange, China&#39;s foreign exchange regulator, said this month that domestic companies would still be encouraged to participate in Belt and Road activities.

HNA, which has seen at least two overseas deals hit a hurdle as a result of the crackdown on transferring money, has said it plans to prioritise investments that are in industries and regions mapped out under the Belt and Road initiative.

The belt and road acquisitions are predominantly in energy and infrastructure sectors, said Hilary Lau of Herbert Smith Freehills.

&quot;We&#39;ve seen a lot of activities recently in Indonesia, Malaysia, and Myanmar. The whole Sri Lanka, India, and Bangladesh corridor is also hot as it&#39;s connecting the East and West,&quot; he said.

Unveiled in 2013, the Belt and Road project is aimed at building a modern-day 'Silk Road'

Mergers and acquisitions by Chinese companies in countries that are part of the Belt and Road initiative are soaring, even as Beijing cracks down on China's acquisitive conglomerates to restrict capital outflows. Chinese acquisitions in the 68 countries officially linked to President Xi Jinping's signature foreign policy totalled $33 billion as of Monday, surpassing the $31 billion tally for all of 2016. Unveiled in 2013, the Belt and Road project is aimed at building a modern-day "Silk Road", connecting China by land and sea to Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa. At a summit in May, Xi pledged $124 billion for the plan, but it has faced suspicion in Western capitals that it is intended more to assert Chinese influence than Beijing's professed desire to spread prosperity. The surge in Chinese companies' acquisition-linked investments in the Belt and Road corridor comes as the volume of all outbound mergers and acquisitions from China has dropped 42 per cent year-on-year as of Monday. Beijing's move to prop up the yuan by restricting the flow of capital outside the country and clamp down on debt-fuelled acquisitions to ensure financial stability has made it tougher for buyers to win approvals for deals abroad. Regulators have tightened the screws further since June, reviewing deal agreements in minute detail and ordering a group of lenders to assess their exposure to offshore acquisitions by several big companies that have been on overseas buying sprees, including HNA Group, Dalian Wanda Group, and Fosun Group. The heightened regulatory scrutiny of overseas acquisitions comes after companies spent a record $220 billion in 2016 on assets overseas, buying up everything from movie studios to European football clubs. The scrutiny, however, has not impacted Chinese companies' pursuit of targets along the Belt and Road corridor, as those investments are considered strategic for the companies as well as the Chinese economy. "People are thinking in a long-term approach when making investments along Belt and Road countries," said Hilary Lau, a corporate and commercial lawyer and partner at the law firm Herbert Smith Freehills. "The acquisitions are also policy-driven. There are funds allocated by Chinese banks and state funds for Belt and Road deals," he said. The number of Chinese deals targeting Belt and Road countries totalled 109 this year, compared to 175 in the whole of last year and 134 in 2015. Companies enjoy a relatively smooth approval process for deals along the Belt and Road project as regulators tend to put them in a different basket when reviewing outbound investments, according to lawyers and dealmakers. "If you are doing One Belt, One Road, that becomes the first sentence in the document" to the regulators, said a senior investment advisor at a Chinese company that has acquired several overseas businesses. "It is a wise thing to point out early on," said the advisor, who requested anonymity because he was not authorised to speak to the media. The largest deal in a Belt and Road country so far this year was a Chinese consortium's $11.6 billion buyout of the Singapore-based Global Logistics Properties. Other top deals include the $1.8 billion purchase of an 8 per cent ownership interest in an Abu Dhabi oil company by the state-owned oil giant China National Petroleum Corp, and HNA Group's $1 billion acquisition of a logistics company, CWT Ltd, which has not yet closed. The State Administration of Foreign Exchange, China's foreign exchange regulator, said this month that domestic companies would still be encouraged to participate in Belt and Road activities. HNA, which has seen at least two overseas deals hit a hurdle as a result of the crackdown on transferring money, has said it plans to prioritise investments that are in industries and regions mapped out under the Belt and Road initiative. The belt and road acquisitions are predominantly in energy and infrastructure sectors, said Hilary Lau of Herbert Smith Freehills. "We've seen a lot of activities recently in Indonesia, Malaysia, and Myanmar. The whole Sri Lanka, India, and Bangladesh corridor is also hot as it's connecting the East and West," he said.

China's Belt and Road acquisitions surge despite outbound capital crackdown

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