DOWNTOWN LOS ANGELES - The Chinese stock market saw massive growth from June 2014 through June 2015, with a flood of new investors spending borrowed money on stocks. As has been well chronicled, the bubble popped this summer, and stock values have plummeted. The Shanghai Composite is down nearly 40% from its June peak, according to the Wall Street Journal.
Chinese buyers made up 12% of all foreign citizens who bought U.S. homes in 2014, and more than two-thirds of them paid cash, according to the National Association of Realtors. Even more tellingly, more than half of their purchases were in California.
“On top of everything, the government has devalued the exchange rate for the yuan, so that’s a risk as a Chinese investor if the rate moves against you more in the future,” said Rodney Ramcharan, director of research for the USC Lusk Center for Real Estate. “Instead of sitting on that, maybe you quickly put your money into U.S. bonds, equities and properties.”
In the short run, L.A. could see more money from investors spooked by China’s stock volatility, Ramcharan said. Looking beyond the next six months, however, is trickier.