Is that on RMB???

Think bsnake just wants his money safe in a bank account with a currency that is appreciating and thus I have not gone into any depth in properties. There is volatility in property prices and it can be very illiquid when fundamentals change abruptly. If you needed your money back quickly, you may have to dump it as much as a 25% discount and if you have purchased the property on a mortgage, you are wiped out. As for Monaco, it's a tax haven and less than 2 sq miles in size so this is not really comparable.

I am always a believer in economic cycles and as such purchased properties in Macau in 2003 and China in early 2006. For HK, 2003 would have been a great time to buy also but thought the upside in Macau and China were far greater. My friends used to say to me why you buying in Macau and isn't it a dangerous place (people cannot get the triad violence of 1999 out of their heads). I would say to them that the US casinos would be opening and the place would boom. My friends were also very astute in investing and retorted, that's gonna cost a hundred billon....where's the money gonna come from. No one had faith in Macau but I saw it coming. I eventually gave up and told them it was a dangerous place and whenever I travel there I would have a bodyguard, a former Gurkha soldier escort me. This was what they wanted to hear because they weren't invested in Macau in 2003 or 2004. Besides, I thought the bodyguard line was a good one as it would discourage them in investing and I could find more bargains for myself. The window of opportunity is never opened for long.

I bought HK in 1989, sold in 1995 almost tripling my money but don't think prices can ever triple or even double again in HK. Macau prices have quadrupled since 2003 and China up more than double since 2006, another 23% if you take the appreciating RMB into account. In 2006 I took up a HK$ loan to buy my Chinese properties and thus was hedged against any upside in the RMB. Was very tempted to buy HK again in 1998 when prices fell by nearly 40% in some places but fortunately I did not as interest payments would have killed me with interest rates subsequently soaring to record highs. At the present time, China is at a high and the principal is always to buy low sell high. China could tighten spending any time and more likely to first tighten overseas investments including HK. China properties would be spared in the medium term as any tightening there would see the Mainland banks quality of loans deteriorate so the Central Govt can only do so much to curb property prices. Besides all the talk that property prices in China are too high this is baloney as I am there looking at properties all the time and this is highly exaggerated. Problem in China is one would have to pay all sorts of capital gains tax and the buying process with the change of ownership can be quite cumbersome. You just have to stand in the long queue, not one time but several times like any other mainland Chinese whereas in HK you just spend 10 minutes at a solicitor's office and the property's yours. Advising anyone to buy HK now is not a good idea, would've been three years ago but definitely too risky now at these prices.

[ Last edited by  geoduck at 17-6-2010 15:53 ]

I'm looking to sell 2 Chinese properties 1 in Kunming and 1 in Shanghai if you know anyone who's interested?

Thanks. Yes looking to see what good interest rate and appreciating currency for demand deposit or short time deposit.  If you do the hk rmb deposit program the ratesare lower than the 5.31%.  What are they about in terms of rates.

Think atomic3 was referring to interest rate or what is also know as the best lending rate, not deposit rate. They are very different. The deposit rate is usually haf of the interest rates published by the People's Bank. Should be about 2.5% or thereabouts which is still 240 basis points more than the US$ deposit rate.

Ok that's a pretty good rate.  As you note the US rate is almost zero. And the US fed is expected to keep rate low well into 2010 and not even clear whatvgoijgvto happen in 2011.  Could stay low then too

Yes the interest rates would definitely stay low for the time being but they would move up again slightly in 2011. Nothing can ever remain at zero for too long. This is the same principal with call and put options. The downside is limited to zero and upside is always infinite.

[ Last edited by  geoduck at 18-6-2010 11:47 ]

No Australian dollars which you could exchange from RMB without to much drama.

The main this that you would have to have someone at this end that you trust to go through the process and I think foreigners have to pay 30% tax on the interest generated.

eh?  but he wants exposure to RMB?? AUD doesn't give him that, regardless of the interest rate he gets.  

Even a 5% coupon (which is outstanding for a cash deposit, especially these days) can get wiped out very quickly if AUD goes down ... currencies easily move by 5% in a matter of weeks ... so "locking in" to a 6 month or multi-year deposit term only makes sense if you're already in the target currency.

In which case this would be unsuitable. I'm only answering his question premised on the interest rate being of primary importance.

Have just checked the RMB deposit rates at Hang Seng Bank in HK and for a one year deposit the interest is 2.275%. Also attached a chart of the RMB appreciation against the US$ in the past 5 years, courtesy of Yahoo Finance.

[ Last edited by  geoduck at 18-6-2010 16:25 ]

Ought to read the post about expatriation if you are US and opening foreign bank account. Doesn't sound promising and can even be turned away. Great info thanks.

Just picked this off from the SCMP this morning. Could be easier to get into the RMB starting next month:

".....the People's Bank of China was likely to lift some restrictions on yuan products, a move that could further Hong Kong's development as an offshore centre for the yuan and to help it become an international currency.

Currently, banks can only handle simple yuan transactions for customers, such as deposits, remittances and trade settlements.

But under the proposed relaxation of restrictions, companies could launch initial public offerings in yuan, fund houses could sell yuan funds, brokers could trade yuan shares or yuan bonds for investors and insurance companies could handle yuan settlements."

Geoduck,

I hear there are going to be some changes made to the way capital gains tax on the mainland is calculated.

Have you heard anything on the grapevine as to what this is likely to entail?

The reason I ask is my estate agent is advising me that now is not a good time to sell as buyers are holding off until this is resolved.

If you can hold onto the property for 5 years then there is no capital gains tax. This usually works out to about 8 years if you were buying a brand new property. They start the 5 year countdown when the ownership permit is actually released and the tax on the unit has been paid. In China, most new properties you buy do not come with the permit until about 2-3 years later. This is currently the law and have not heard rumors about any new legislation that would be newly enacted. If there was any new legislation it would likely not be a favorable one to property owners as Beijing wants to curb speculation.

My property in Shanghai is a dual usage property in that it can be used as either an office or residence. Such properties attract a 50% tax on capital gain, this ruling (unbeknownst to myself at the time) was brought in about a year after I bought the place and I'm only now finding this out from my agent, who's now telling me to hold off selling because some changes are rumoured to be coming through the pipeline. An example of how this tax effects me is say I bought the property for 500,000rmb  seven years ago and I sell it now for 1.8 million. That means I have to give up 650,000rmb in tax.

Are you in possession of the ownership permit? this is an 8x10 red booklet with a Chinese emblem on the cover? The details of the usage of this property along with other details should be listed inside. In China, you can buy an apartment and use it as an office in most older residential buildings. Does not seem likely that the capital gains tax would be 50% otherwise, how could they expect to sell these kind of unit to any investor? You should try and make further enquiries with another agent.

Yes, do have the booklet and yes believe me I have made other enquiries. This was apparently put in place by Shanghai local government to dissuade the building of these dual use apartments.