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> the wealthy in China need a place to park wealth (in a diversified way). Best option is foreign land purchases. Why is this the best option? Are wealthy Chi

> the wealthy in China need a place to park wealth (in a diversified way). Best option is foreign land purchases. Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks?

baybal2 6y ago
> Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks? Yes, does it sounds surprising to you?
- bradleyjg 6y ago
  Well. In one sense no, but in another—-if you are going to do capital controls why leave giant loopholes like foreign land?
  - baybal2 6y ago
    Not so giant, the $50,000 limit works for it as well. The property is specially attractive because unlike socks, you can do one big effort to move money out in one go, and then forget about it for a few years. Plus, the customary blindness of Western law enforcement institutions to dirty money in property transactions.
    - robjan 6y ago
      The 50k limit is easy to circumvent. Anyone who's anyone in China has a Hong Kong bank account. They then hire a tour bus and a bunch of poor elderly people and each takes 50k across the border and deposits it into the HK account. This money can then be invested however they see fit. Before the pandemic this was not an uncommon sight.
      - baybal2 6y ago
        Yes, it is, but having a string of correspondence in between you, and broker, and a stream of legal records pouring from sock transactions is much more bothersome, unlike pouring money into a stone cold piece of concrete in Ontario which will assuredly not go anywhere, and would not bother you with requests to prove your place of residence 4 times a year.
rainingmonkey 6y ago
The idea of a diversified portfolio is that you buy stocks and other assets too. Stock market gains over the last 10 years may be impressive, but they're nothing compared to housing in certain key cities.
- bradleyjg 6y ago
  I disagree with your point (I’ll explain why below) but it shouldn’t have been dead so I vouched for it. —- There’s diversification across asset classes and within asset classes. If you add a large non-diversified asset even in a different class, to a diversified portfolio your average diversification goes down, not up. Or in other words—REIT sure, but a significant fraction of your wealth in a single, idiosyncratic, illiquid, high carrying and transfer cost asset is not diversification.
  - lotsofpulp 6y ago
    An REIT (and other traded equities) have agency risk that you can avoid with something you directly own and control, but also, you can diversify your places of shelter by having somewhere to physically escape to if need be. So it’s less diverse in the financial return aspect, but might solve other diversification needs.
DeBraid 6y ago
Clean money can buy financial assets like foreign stocks. Dirty money cannot. > Canada is a great place to launder money because of our lack of ownership transparency ... criminals can park large amounts of illicit cash in real estate and hide the purchases behind numbered corporations or shell companies located in offshore tax havens. > Canadian real estate has been “extensively exploited” by the problem of money laundering and all financial sectors need to fight against it. ~Half of all transaction fail basic AML/KYC compliance. https://globalnews.ca/news/6608644/canadian-real-estate-abysmal-anti-money-laundering-grades/ https://globalnews.ca/news/6608644/canadian-real-estate-abys...

baybal2 6y ago

> Why is this the best option? Are wealthy Chinese forbidden from buying foreign stocks? Yes, does it sounds surprising to you?

bradleyjg 6y ago
Well. In one sense no, but in another—-if you are going to do capital controls why leave giant loopholes like foreign land?
- baybal2 6y ago
  Not so giant, the $50,000 limit works for it as well. The property is specially attractive because unlike socks, you can do one big effort to move money out in one go, and then forget about it for a few years. Plus, the customary blindness of Western law enforcement institutions to dirty money in property transactions.
  - robjan 6y ago
    The 50k limit is easy to circumvent. Anyone who's anyone in China has a Hong Kong bank account. They then hire a tour bus and a bunch of poor elderly people and each takes 50k across the border and deposits it into the HK account. This money can then be invested however they see fit. Before the pandemic this was not an uncommon sight.
    - baybal2 6y ago
      Yes, it is, but having a string of correspondence in between you, and broker, and a stream of legal records pouring from sock transactions is much more bothersome, unlike pouring money into a stone cold piece of concrete in Ontario which will assuredly not go anywhere, and would not bother you with requests to prove your place of residence 4 times a year.

rainingmonkey 6y ago

The idea of a diversified portfolio is that you buy stocks and other assets too. Stock market gains over the last 10 years may be impressive, but they're nothing compared to housing in certain key cities.

bradleyjg 6y ago
I disagree with your point (I’ll explain why below) but it shouldn’t have been dead so I vouched for it. —- There’s diversification across asset classes and within asset classes. If you add a large non-diversified asset even in a different class, to a diversified portfolio your average diversification goes down, not up. Or in other words—REIT sure, but a significant fraction of your wealth in a single, idiosyncratic, illiquid, high carrying and transfer cost asset is not diversification.
- lotsofpulp 6y ago
  An REIT (and other traded equities) have agency risk that you can avoid with something you directly own and control, but also, you can diversify your places of shelter by having somewhere to physically escape to if need be. So it’s less diverse in the financial return aspect, but might solve other diversification needs.

DeBraid 6y ago

Clean money can buy financial assets like foreign stocks. Dirty money cannot. > Canada is a great place to launder money because of our lack of ownership transparency ... criminals can park large amounts of illicit cash in real estate and hide the purchases behind numbered corporations or shell companies located in offshore tax havens. > Canadian real estate has been “extensively exploited” by the problem of money laundering and all financial sectors need to fight against it. ~Half of all transaction fail basic AML/KYC compliance. https://globalnews.ca/news/6608644/canadian-real-estate-abysmal-anti-money-laundering-grades/ https://globalnews.ca/news/6608644/canadian-real-estate-abys...