Chinese crash bringing money to Canada

Chinese investors could be looking to put more capital into the Canadian real estate market with the Chinese stock market on the verge of collapse, according to an industry vet.

“The Chinese people who may put more money in Vancouver market likely those already immigrated to here or in the process of immigrating,” Layla Yang, a real estate agent with ReMax in the Greater Vancouver area.

“Toward Chinese people in China, Vancouver (and other places in Canada) is not only the place they can invest also other countries such as Australia, United State and some European countries etc.  Of course, Canada has become always their top choice.”

Her comments come as the Shanghai Composite Index fell 32 per cent and the more volatile, tech-oriented Shenzhen Composite Index has dropped 40 per cent after peaking on June 12. When stock prices collapse, they prompt margin calls that require investors to either put up more money against the loans or sell the stocks, which only accelerates the selloff.

On Wednesday, China’s central bank vowed to provide liquidity to help a state-backed margin finance company try to stabilize the market, as a new $40 billion (250 billion yuan) plan was announced to foster growth in areas of the economy that need it most.

However, some are calling for investors to reassess their portfolios in the wake of a potential financial crash.

“With the Chinese stock market losing a third of its value since mid-June, which is about equivalent to the UK’s entire economic output last year, or in other terms the GDP of Greece every two days for the last 10 days, this has all the makings of morphing into a major financial crisis,” Nigel Green, the founder and CEO of deVere Group, said in a release to CREW.

“Investors with the most diversified portfolios stand to lose the least. Geopolitical events like this highlight once again the need for multi asset investing, across regions and asset classes, as a way of reducing the adverse consequences of such events.”
 

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