From Sydney Morning Domain:
Australians might think Chinese investors have pushed up property prices, but “we ain’t seen nothing yet”, according to Colonial First State Global Asset Management chief economist Stephen Halmarick who is tipping the liberalisation of China’s capital markets will inflate asset prices acrosss the globe.
In recent weeks there has been a lot of focus on the challenges facing China as it opens up its financial markets to foreign investors, and what the associated volatility means for other economies like Australia.
“But what will really matter for the world is how China opens up to allow its people to send money offshore. Australians might think they’ve seen a lot of Chinese investment in the Sydney and Melbourne property market, but we ain’t seen nothing yet,” Mr Halmarick said at a panel hosted by the Australian Institute of Superannuation Trustees in Sydney.
My answer to this is and?
If Chinese money flows into Australia chasing assets including property then that’s good if it boosts supply. If it chases existing assets then Chinese money doesn’t change the business or asset price cycle, it only adds greater volatility to it with higher highs and lower lows as the flood ebbs and flows on conditions here and in China. Such flows also impact monetary and fiscal settings meaning that if the flow is great enough Australians will be forced to “make room” for illegal Chinese money. A further tightening in the foreign investment regime will therefore also transpire. It may not be perfect but it will certainly have an impact. It is no longer socially, politically or economically sustainable to do otherwise.
I’m losing count of the number of gleeful Chinese property purchasing spruik pieces coming out of Fairfax. The publishing house seems to have forgotten such activity is illegal in many circumstances.
