Speculators target property sector
Overseas funds have channelled up to US$300 billion of investments through underground networks into the mainland, particularly the property market, on expectations of a further rise in home prices before the Beijing Olympics next year, according to a researcher who headed a government-commissioned study.
Li Youhuan, a professor with the Guangdong Academy of Social Sciences, said his recently completed one-year survey showed that overseas funds spent US$250 billion to US$300 billion on the mainland through underground networks.
Mr Li admitted that it was just an estimate after a drawn-out research and investigation, but pointed out that massive funds had been thrown into the housing market after May 30, when the stock market slumped following Beijing's decision to triple the tax on stock trading.
This triggered a fund flight from equities to properties, he said. 'The punters are cocksure that mainland housing prices will gain upward momentum before the Beijing Olympics,' he said.
Mr Li was commissioned by the government to set up a research team to study the 'hot money' issue. He has submitted the report to the government.