Investors Direct Record Amounts to China

Recent capital flows out of China reversed course dramatically at the start of this year, with a record jump in a key gauge of inflows in January as investor confidence in the Chinese economy revived.

According to China’s central bank, the People’s Bank of China (PBOC), companies and individuals sold renminbi (RMB) 684bn worth of foreign exchange (forex) and bought an equivalent amount of Chinese currency in January, a record figure for any single month.

Renewed demand for renminbi assets followed the smooth handover of power to a new generation of leaders in China and eased assuaged fears of political instability, It was further assisted by a rebound in the country’s stock and property markets as China’s economy rebounded in Q412 from a two-year downturn.

Meanwhile, reports suggest that Chinese firms are assessing the risk that Venezuelan President Hugo Chavez’s death poses to investments worth at least US$50bn, after 14 years of closer ties between the Latin American country and China.

A report by Bloomberg states that China Development Bank Corp (CDB), which has lent Venezuela more than US$40bn since 2008, has contingency plans in place according to Yao Zhongmin, head of the bank’s supervisory board. The state-owned conglomerate Citic Group Corp is also assessing the risks, said its chairman, Chang Zhenming.

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