Falling AUD weighs on Chinese investors

Falling AUD weighs on Chinese investors

Chinese investors in Australia have suffered significant losses due to the weakness of the Australian dollar against the Chinese yuan, says Basis Point.


Chinese investments in Australia, which totalled $40.3 billion in 2012 and 2013, have lost 30 per cent of their value due to current currency exchange rates.

Basis Point managing director David Chin said since 2012 and 2013, the Chinese yuan to Australian dollar rate has fallen 30 per cent.

Mr Chin also indicated that Chinese investors who allocated funds to the Australian resources sector are in a far worse position.

“Based on [Foreign Investment Review Board (FIRB)] approvals, $18.8 billion was invested in the resource sector in the 2012 and 2013 financial years.

“During that two-year period, the All Resources index averaged 4,356. Today, the index is 2,816, equating to a loss of 35 per cent if the index is used as a gauge of investment performance,” he said.

However, Mr Chin said that most investments are long term, so will be held as unrealised losses.

According to Mr Chin, “the three per cent (and short-lived) rise of the AUD against the RMB when China devalued last month, is insignificant when compared to the 30 per cent drop in the past two years”.

Although most investors have suffered losses, Chinese investors who entered the Australian property market in 2013 are recoding substantial returns.

“Chinese investors who purchased approximately $5.9 billion in off-the-plan apartments in the year to June 2013 are looking at combined currency and property price gains of 40 per cent-plus since these apartments are only now being completed where full settlement is required.”

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