MARKETS & INVESTING | Staff Reporter, Hong Kong

Hong Kong is biggest market of Asian outbound investment

It got that distinction in 1H16.

It has been noted that Hong Kong is the biggest market in Asia for Asian outbound capital in the first half of 2016 in terms of investment turnover, accounting for 39% of outbound investment in the region.

According to a release from CBRE, majority of the investment turnover was contributed by two en-bloc property transactions, namely Dah Sing Financial Centre and NWS Kwai Chung Logistics Centre.

Both deals were completed by Chinese companies. In terms of investment turnover, Hong Kong’s office sector is the most preferred market in Asia and the third-most preferred market globally in H1 2016, following London and New York. 

There was strong intra-regional activity within Asia by Asian capital, as investors sought to diversify domestic market risks and achieve higher returns. Chinese conglomerates were active in in the first half of the year, completing signature deals in Hong Kong and Japan, while Singaporean investors remained active in Southeast Asian markets.

Figures also show that Chinese investors dominated Asian outbound investment in H1 2016, accounting for 60%, or US$16.1 billion, of total investment—more than double the US$7.3 billion of H1 2015. Insurance firms were the most active source of Chinese outbound capital, accounting for 50%, followed by conglomerates (23%), developers (10%) and sovereign wealth funds (9%).

Here's more from CBRE:

The US remained the favored target region for Asian outbound investment, with 52% of the overall total. Subsequently, New York overtook London as the top destination for investment among Asian capital in the first half of the year.

“Asian capital, particularly Chinese, continues to display strong investment appetite in overseas markets, especially in global gateway cities, with the US remaining the stand-out target market.

With the recovery of the US economy and its solid real estate fundamentals, Asian investors are focused on capitalizing on US assets. Concerns over the market slowdown in their home market have led Chinese investors to seek a safer investment environment which offer higher potential returns,” commented Ada Choi, Senior Director of Research, CBRE Asia Pacific.

“Chinese insurance investors led outbound investment among the different investor types as they increasingly seek to diversify their overseas portfolios. Conglomerates and sovereign wealth funds also remain active and play a significant role in outbound investment since there is a huge supply of investible capital in China.

Asian outbound investment momentum will continue to be strong in the latter half of 2016 as there are still some pipeline deals expected to be completed by Asian investors. Chinese capital in particular will remain active, however, the growth will be at a more sustainable rate rather than a quick acceleration,” said Choi.

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