Rich Chinese investing abroad to protect wealth, some expect children to emigrate
REPORT: The China Merchants Bank and the consulting firm Bain & Co. say that China's richest people are stepping up investment in U.S. real estate and other foreign assets as they try to preserve their fortunes in the face of a fast-changing economy.
ACTION-REACTION: Communist leaders have pledged to use taxes and social spending to narrow the huge and politically sensitive gulf between China's small elite and its poor majority. Beijing is trying to shift the basis of growth to domestic consumption and services, reducing reliance on exports and construction that made fortunes for earlier entrepreneurs.
WRITING ON THE YUAN: Almost 60 percent of people surveyed with investments abroad plan to increase them, the report said. Real estate makes up the bulk of investment and top destinations include the United States, Canada, Hong Kong and Singapore. Half of those who haven't invested abroad plan to start, the report said.
Just wondering, am Long XIN, but what does this interesting analysis of Chinese investing abroad have to do with making XIN a stronger buy? Are you inferring that this somehow relates to XIN buying US real estate, such as Williamsburg as a significant precedent for the company to buy more US real estate? Given that US real estate must be enormously more expensive than China's real estate, isn't there a trade off here for the higher rents but much higher cost up front? In part, the company's venture here assumes they cannot fill their rental or purchase properties there in the targeted Tier levels? Is this the assumption of most Longs on the board that US purchases are crucial for the company's growth? Or is this just a good hedge for potential cooling off of Chinese economy?
investment in terms of relative worth and value. usa properties are relatively more expensive in some areas but it has certain allure and value that china properties do not have. those with resources want choices.
Personally I feel that international expansion gives Xinyuan much needed credibility. With such high demand by Chinese buyers for US properties, I'm anticipating many more US developments in the future which will eventually lead to a much higher P/E ratio and pps as Xinyuan becomes vetted. Also check out my post titled 'From the horse's mouth...' for statements from Xin's US head.