China capital outflows to top $500 bln in 2015-IIF

LONDON China will post record capital outflows in 2015 of much more than $ 500 billion, according to a report by the Institute of International Finance (IIF).

The IIF, an authoritative tracker of emerging industry capital flows, mentioned the world’s second largest economy is most likely to see $ 150 billion in capital outflow in the fourth quarter of the year, following the third quarter’s record $ 225 billion.

The estimate is based on trade information, Chinese banks’ transactions on the behalf of clients, and adjustments in central bank reserves, the IIF stated in the report.

“The most recent higher-frequency indicators show that Chinese exports continued to decline for a fifth consecutive month in November, with the trade surplus narrowing to $ 54 billion from $ 62 billion in October,” the report said.

Forex reserves had fallen about $ 87 billion to $ 3.44 trillion in the course of the month to the lowest since February 2013.

The yuan has been weakening against the dollar in recent months, primarily pressured by jitters about slowing development in China and an expected interest price rise in the United States.

China mentioned on Friday it had begun issuing a yuan exchange rate against a basket of currencies to discourage investors from exclusively tracking the yuan’s fluctuations against the U.S. dollar, a move some think signals intention to gradually shift toward a basket technique.

China’s woes have had a significant influence on the rest of the developing planet, with the IIF predicting that emerging markets would post net capital outflows in 2015 for the initial time given that 1988.

(Reporting by Sujata Rao)