Hot Money Returns to China

From Economic Observer Online:

Short-term speculative funds, also known as , have started flowing into China at an unprecedented rate as the country’s economy appears to slowly emerge from the global downturn.

Academics estimate that the total amount of hot money in mainland China is in the vicinity of 200 billion to 300 billion US dollars, accounting for some where between 10 and 15% of the country’s foreign exchange reserves.

In the wake of the US financial crisis, hot money rapidly exited China’s markets last September, but as property market began to heat up, speculative funds have returned.

Although these funds at first entered the real estate market, they are now moving towards the stock market. Analysts predict that the speculative funds will later switch to the commodity markets.

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