China’s investment in Australia plunges 40%

Bloomberg

Chinese investment in Australia plunged 40 percent in 2017 from the year before, according to research released on Monday.
After peaking in 2016 at A$14.9 billion ($10.5 billion), investment from Chinese companies last year slumped to A$8.9 billion, according to the Australian National University database. In 2017, Chinese deals in Australia’s mining sector accounted for just over half of the total value of transactions, with the health-care and social assistance sector at about 15 percent, according to the database. While the report doesn’t offer explanations for last year’s steep decline in investment, business relations between the nations have been under increasing pressure due to a diplomatic spat, sparked by concern in Australia about alleged Chinese meddling in government and media. The figures may also reflect Beijing’s decision to implement controls on the outflow of capital.
Earlier this year, Australian exporters blamed strained ties for delays of shipments into China as the nation in June passed sweeping laws against foreign interference, which then-prime minister Malcolm Turnbull said was aimed in part at reducing Chinese meddling in national affairs.
Collating data between 2014 and 2017 showed state-owned enterprises accounted for about 47 percent of total Chinese investment in Australia, the university said. The research used figures from the Foreign Investment Review Board and the Australian Bureau of Statistics, and includes investment from Hong Kong and other global financial centers.
Several planned high-profile investments into Australia by Chinese state-owned companies and others linked to the government in Beijing have been blocked on national security grounds. FIRB is currently weighing up whether to approve CK Group’s A$13 billion bid for gas pipeline operator APA Group.

China sets tone for emerging markets
China joined an emerging-market rout sparked by the jump in US Treasury yields as mainland markets reopened after a week-long holiday.
The latest move by the People’s Bank of China to reduce reserve requirements for lenders failed to mitigate the blow. The onshore yuan declined as much as 0.5 percent to 6.9069 per dollar on Monday, while stocks on the mainland tumbled. Equities and currencies in other developing-nations slid.
Events in Brazil and Turkey are also likely to keep traders busy this week. The real’s implied volatility was at the highest since May last year as Jair Bolsonaro, the far-right former Army captain, led in the first round of Brazil’s presidential elections held Sunday. Turkey is due to publish current-account data, with many economists forecasting a record surplus, while the next hearing into a detained American pastor — the cause of a diplomatic spat with the US — is scheduled for Friday. Treasury 10-year yields rose the most since February as stronger US data added to the case for reduced stimulus measures from the Federal Reserve. Emerging-market stocks tumbled 4.5 percent in the five days through Friday, their worst performance since February, while currencies and domestic bonds dropped the most since August.
“The dollar’s rally will likely continue,” with the Fed seen extending its policy of gradual interest-rate increases at least through the end of 2019, said Richard Segal, a senior analyst at Manulife Asset Management Ltd. in London.
“That and the U.S. bond-market reaction will weigh on emerging markets, especially the local-currency market. Keep to the higher-quality credits in the dollar markets and keep shorter durations.”