Chinese foreign exchange reserves dropped below $3 trillion in January for the first time almost 6 years. That’s down from $4 trillion in 2014. The drop is largely caused by the Chinese central bank intervening in the FX market as they buy yuan to prop-up the currency against the US dollar.
Overseas direct investment from China fell by 35% in January, compared to a year ago & Chinese investment in overseas property dropped by 84%.
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Over-inflated Chinese property prices and the risk of their property bubble bursting, is a concern. We’re tracking resale data in the major cities and there’s evidence of price declines emerging since November of last year.
These are trends we’re watching closely as they form the basis of our “risk” scenario for global equities, especially given the gap between forward PE valuations and probable 2017 earnings growth.
