Tag Archives: Economy

U.S. economy slows in the fourth-quarter; consumer spending remains bright spot

A man pushes his shopping cart down an aisle at a Home Depot store in New York, July 29, 2010. REUTERS/Shannon Stapleton

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. economic growth slowed in the fourth quarter as previously reported, with robust consumer spending offset by downward revisions to business and government investment.

Gross domestic product rose at a 1.9 percent annual rate in the final three months of 2016, the Commerce Department said on Tuesday in its second estimate for the period. That matched the estimate published last month.

Output increased at a 3.5 percent rate in the third quarter.

The economy grew 1.6 percent for all of 2016, its worst performance since 2011, after expanding 2.6 percent in 2015.

Economic data early in the first quarter has been mixed, with retail sales rising in January but homebuilding and business spending on capital goods easing.

The economy may get a boost from President Donald Trump’s proposed stimulus package of sweeping tax cuts and infrastructure spending as well as less regulations.

Trump, who pledged during last year’s election campaign to deliver 4 percent annual GDP growth, has promised a “phenomenal” tax plan that the White House said would include tax cuts for businesses and individuals.

Details on the proposal remain vague, though Treasury Secretary Steven Mnuchin said on Sunday that Trump would use a policy speech to Congress on Tuesday night to preview some aspects of his tax reform plans.

Economists polled by Reuters had expected fourth-quarter GDP would be revised up to a 2.1 percent rate.

U.S. Treasury prices rose after the data, while the dollar <.DXY> dipped against a basket of currencies. U.S. stock index futures were largely unchanged.

CONSUMER SPENDING JUMPS

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised sharply higher to a 3.0 percent rate of growth in the fourth quarter. It was previously reported to have risen at a 2.5 percent rate.

That meant private domestic demand increased at a 3.0 percent rate, faster than the 2.8 percent pace reported last month.

Some of the rise in demand was met with imports, which increased at a 8.5 percent rate rather than the 8.3 percent pace reported last month. Exports declined, leaving a trade deficit that subtracted 1.70 percentage point from GDP growth as previously reported.

There was a small downward revision to inventory investment. Businesses accumulated inventories at a rate of $46.2 billion in the last quarter, instead of the previously reported $48.7 billion. Inventory investment added 0.94 percentage points to GDP growth, down from the 1.0 percentage point estimated last month.

Business investment was revised lower to reflect a more modest pace of spending on equipment, which increased at a 1.9 percent rate instead of the previously estimated 3.1 percent pace. That was still the first increase in over a year and reflected a surge in gas and oil well drilling in line with rising crude oil prices.

Spending on mining exploration, wells and shafts increased at a 23.6 percent rate instead of the previously reported 24.3 percent pace. It declined at a 30.0 percent pace in the third quarter.

Investment in nonresidential structures was revised to show it falling at a less steep 4.5 percent pace in the fourth quarter. It was previously reported to have declined at a 5.0 percent rate. Overall, business investment contributed 0.17 percentage point to GDP growth, less than the 0.30 percentage reported last month.

Spending on residential construction increased at a 9.6 percent rate, which was downwardly revised from the 10.2 percent pace reported last month. The rebound followed two straight quarterly declines.

Government spending increased at a 0.4 percent rate in the fourth quarter, rather than the previously reported 1.2 percent pace of growth. As a result, government investment made no contribution to growth. It was previously reported to have contributed 0.21 percentage point.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Dow hits 12th record high close; Trump talks up infrastructure spending

Leaf Group CEO Sean Moriarty (4th L) stands amongst Leaf Group management and board members for the opening bell at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S.

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks ended slightly higher on Monday and the Dow closed at a record high for a 12th straight session, as President Donald Trump said he would make a “big” infrastructure statement on Tuesday.

The Dow’s streak of record-high closes matches a 12-day run in 1987, with Boeing and UnitedHealth among the biggest boosts for the Dow on Monday. The S&P 500 also closed at a record high. Energy gave the biggest boost to the S&P 500, with the energy index up 0.9 percent.

Trump, who met with state governors at the White House, also said he is seeking what he called a “historic” increase in military spending of more than 9 percent, while he said his administration would be “moving quickly” on regulatory reforms.

The comments came ahead of Trump’s first address to a joint session of Congress Tuesday evening. Investors are looking for more specifics on Trump’s plans, given the hefty gains in the market since the Nov. 8 election.

“Things are moving along in terms of the Trump agenda, but we’ll get a clearer picture after tomorrow night so that might precipitate some buying or selling,” said Bucky Hellwig, senior vice president at BB&amp;T Wealth Management in Birmingham, Alabama.

Hellwig and others said there’s potentially more upside than downside from the address, given how the market has reacted in recent weeks.

Shares of U.S. defense companies – Boeing, Raytheon, General Dynamics and Lockheed Martin – rose after Trump said he would seek to boost Pentagon spending by $54 billion in his first budget proposal.

Boeing was up 1.1 percent while UnitedHealth was up 1.4 percent.

The Dow Jones Industrial Average was up 15.68 points, or 0.08 percent, to close at 20,837.44, the S&P 500 gained 2.39 points, or 0.10 percent, to 2,369.73 and the Nasdaq Composite added 16.59 points, or 0.28 percent, to 5,861.90.

In its 1987 12-day streak of record-high closes, the Dow rose 9.2 percent compared with just a 3.9 percent gain in the recent record run.

While the S&amp;P 500 is up 10.8 percent since the Nov. 8 election, the pace of the rally has slowed this year.

Trump’s promise a few weeks ago of a “phenomenal” tax announcement helped rekindle the post-election rally, driving the main U.S. markets to record highs.

Time Warner ended up 0.9 percent after news that the head of the U.S. Federal Communications Commission does not expect to review AT&T Inc’s planned $85.4 billion acquisition of Time Warner.

AT&T slipped 1.3 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 1.87-to-1 ratio favored advancers.

The S&P 500 posted 63 new 52-week highs and one new low; the Nasdaq Composite recorded 143 new highs and 45 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila and James Dalgleish)

Mexico warns it will end NAFTA talks if U.S. proposes tariffs

Mexico's Economy Minister Ildefonso Guajardo delivers a speech during a "Made in Mexico" event in Mexico City, Mexico,

(Reuters) – Mexico’s economy minister Ildefonso Guajardo warned that his country will break off negotiations on the North American Free Trade Agreement (NAFTA) if the United States were to propose tariffs on products from Mexico, Bloomberg reported on Monday.

“The moment that they say, ‘We’re going to put a 20 percent tariff on cars,’ I get up from the table,” Guajardo told Bloomberg in an interview.

U.S. President Donald Trump has vowed to scuttle NAFTA, the 1994 trade accord which also includes Canada, if he cannot recast it to benefit U.S. interests, raising the risk of a major economic shock for Mexico.

Mexico, which is preparing to discuss changes to some trade rules under the NAFTA, has however expressed confidence that Trump will not be able to impose harsh barriers on imports anytime soon.

Mexican officials expect talks to start in June, Bloomberg reported.

Trump spoke positively about a border adjustment tax being pushed by Republicans in Congress as a way to boost exports in an interview with Reuters last week.

Trump has sent conflicting signals about his position on the border adjustment tax in separate media interviews last month, saying in one interview that it was “too complicated” and in another that it was still on the table.

The White House and the Mexican government were not immediately available for comment.

(Reporting by Kanishka Singh in Bengaluru; Editing by Sai Sachin Ravikumar)

U.S. new home sales rebound; consumer sentiment dips

A carpenter works on a new home at a residential construction site in the west side of the Las Vegas Valley in Las Vegas, Nevada April 5, 2013. REUTER/Steve Marcus

By Lucia Mutikani

WASHINGTON (Reuters) – New U.S. single-family home sales rose less than expected in January, likely held back by heavy rains and flooding in California, but continued to point to a strengthening housing market despite higher prices and mortgage rates.

Other data on Friday showed a dip in consumer sentiment this month, though it remained at a level consistent with a healthy pace of consumer spending. The economy has gained momentum, supported by a labor market that is near full employment.

“It is clear that the economy is moving forward solidly. Consumers are confident and are buying homes, but builders are not getting their share of that demand,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The Commerce Department said new home sales increased 3.7 percent to a seasonally adjusted annual rate of 555,000 units last month. Economists had forecast single-family home sales, which account for about 9 percent of overall home sales, surging 6.3 percent to a 570,000-unit rate.

New home sales, which are derived from building permits, are volatile on a month-to-month basis and subject to large revisions. Sales were up 5.5 percent compared to January 2016.

Last month, homes sales soared 15.8 percent in the Northeast to their highest level since January 2008. They rose 14.8 percent in the Midwest and advanced 4.3 percent in the South. Sales in the West, which has been hit by extremely rainy weather, fell 4.4 percent.

“The unusually wet winter may have held back sales in January, but sales are still trending higher on a three-month moving average basis,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Data this week showed sales of previously owned homes jumped 3.3 percent to a 10-year high in January. House prices increased 6.2 percent in December from a year ago.

‘SUPPLY-SIDE CHALLENGES’

In a separate report on Friday, the University of Michigan said its consumer sentiment index fell to a reading of 96.3 this month from 98.5 in January. The index had surged in the prior three months after Donald Trump’s presidential election victory.

“With the focus shifting from campaign promises and philosophical goals, consumers may be acknowledging the difficult task ahead for the Trump administration to actually advance his agenda,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

The University of Michigan said February’s consumer sentiment reading suggested a 2.7 percent annualized growth pace in consumer spending this year.

U.S. stocks were trading lower on Friday, with the Dow Jones Industrial Average <.DJI> on track to snap a 10-day record-setting winning streak. The PHLX housing index <.HGX> fell marginally. U.S. government bond prices rose, while the dollar <.DXY> dipped against a basket of currencies.

The housing market has firmed even as the 30-year fixed mortgage rate rose above 4.0 percent, outpacing annual wage growth that has been stuck below 3 percent. The tightening job market is driving the gains in housing.

While the healthy labor market has not unleashed a stronger pace of wage growth, it has improved employment opportunities for young Americans, encouraging them to form their own households. But a shortage of properties available for sale remains an obstacle to a robust housing market.

“Mortgage rates aren’t to blame. A big part of the problem is the supply-side challenges builders are facing, like regulatory burdens, labor shortages and a lack of capital and financing options,” said Jonathan Smoke, an economist at realtor.com in Atlanta.

The inventory of new homes on the market increased 3.5 percent to 265,000 units last month, the highest level since July 2009. New housing stock remains less than half of what it was at its peak during the housing boom in 2006.

At January’s sales pace it would take 5.7 months to clear the supply of houses on the market, which was unchanged from December. A six-month supply is viewed as a healthy balance between supply and demand. The median price for a new home increased 7.5 percent to $312,900 in January from a year ago.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Brazil’s worst-ever recession likely extended into fourth quarter

Shoppers walk in a mall in Refice, northeast Brazil, May 5, 2010. REUTERS/Bruno Domingos

BRASILIA (Reuters) – Brazil’s economy probably contracted for an eighth straight quarter at the end of 2016, offering further proof that Latin America’s largest economy has been in its worst recession ever, a Reuters poll showed on Friday.

Gross domestic product probably shrank 0.4 percent in the fourth quarter from the third after seasonal adjustments, according to the median forecast of 16 economists. Brazil’s GDP contracted 0.8 percent in the third quarter.

Brazil’s economy is expected to have contracted 3.5 percent in 2016, after a decline of 3.8 percent in 2015. Brazil has never experienced such a long and deep period of recession, at least since records began more than a century ago.

The recession has left nearly 13 million people unemployed and caused a record number of bankruptcy filings. It also contributed to the ousting of former President Dilma Rousseff last year and to the low approval ratings of her successor, President Michel Temer.

The fourth-quarter GDP numbers will be released on March 7.

Leading indicators have suggested the economy is finally emerging out of recession in the first quarter of 2017, Finance Minister Henrique Meirelles told Reuters earlier this week. The central bank has been cutting interest rates at a rapid pace as inflation falls, which is expected to help boost growth.

The recovery, however, is expected to be very slow. The median expectation of economists in a weekly central bank survey projected a GDP expansion of 0.5 percent in 2017.

Although this recession has been the deepest in Brazil’s history, it has not been as dramatic as other crises in the country’s turbulent economic past. Previous downturns were often marked by debt crises, capital flights, hyperinflation and mass migration, none of which happened during the current recession.

Brazil’s economy probably shrank 2.2 percent in the fourth quarter from a year before, according to the poll.

(Reporting by Silvio Cascione; Editing by Matthew Lewis)

California governor proposes spending $437 million on aging dams, flood control

California Governor Jerry Brown speaks in Los Angeles, California, United States, April 4, 2016. REUTERS/Lucy Nicholson/File Photo

SACRAMENTO, Calif. (Reuters) – California Governor Jerry Brown on Friday proposed spending $437 million for flood control and emergency response and preparedness, days after damage at the country’s tallest dam, located northeast of the state capital, led to the evacuation of nearly 200,000 people downstream.

Damage to both the regular spillway and its emergency counterpart at the Oroville Dam earlier this month brought issues with aging infrastructure into sharp relief in a state that relies on a complex system of dams and reservoirs to irrigate farms and provide drinking water for nearly 40 million people.

Brown, a Democrat, told reporters at a news conference that he would ask the state legislature to approve spending $387 million from a $7.5 billion water bond passed by voters in 2014. Another $50 million would come from the state’s general fund budget, he said.

Brown also said he requesting financial and regulatory assistance from the federal government in a letter that he said would be sent to President Donald Trump on Friday.

(Reporting by Sharon Bernstein; Editing by Leslie Adler)

Jobless claims up, four-week average lowest since 1973

FILE PHOTO: Job seekers apply for the 300 available positions at a new Target retail store in San Francisco, California August 9, 2012. REUTERS/Robert Galbraith/File Photo

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits rose slightly more than expected last week, but the four-week average of claims fell to its lowest level since 1973, pointing to strengthening labor market conditions.

Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 244,000 for the week ended Feb. 18, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 fewer applications received than previously reported.

It was the 103th straight week that claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller. The labor market is at or close to full employment, with the unemployment rate at 4.8 percent.

Economists polled by Reuters had forecast new claims for unemployment benefits rising to 241,000 in the latest week.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 241,000 last week, the lowest reading since July 1973.

U.S. financial markets were little moved by the data.

Minutes of the Federal Reserve’s Jan. 31-Feb monetary policy meeting published on Wednesday showed that many policymakers believed another interest rate hike might be appropriate “fairly soon” if labor market and inflation data meet or beat expectations.

The U.S. central bank raised its benchmark overnight interest rate last December. It has forecast three rate increases this year.

A Labor Department analyst said there were no special factors influencing last week’s claims data. Claims for Wyoming, Virginia and Hawaii were estimated.

Last week’s claims report covered the survey period for the Labor Department’s nonfarm payrolls data for February. The four-week average of claims fell 6,500 between the January and February payrolls survey weeks. This suggests another month of strong job gains after payrolls increased 227,000 in January.

Thursday’s claims report also showed the number of people still receiving benefits after an initial week of aid fell 17,000 to 2.06 million in the week ended Feb. 11. The four-week average of the so-called continuing claims declined 10,750 to 2.07 million.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

UK economy picks up in late 2016 but signs of Brexit hit appear

Workers walk to work during the morning rush hour in the financial district of Canary Wharf in London, Britain, January 26, 2017. REUTERS/Eddie Keogh

By Andy Bruce and William Schomberg

LONDON (Reuters) – Britain’s economy sped up at the end of 2016, data showed, but over the whole year it was weaker than previously thought and there were signs that the Brexit vote will increasingly act as a brake on growth in 2017.

The pound fell after Wednesday’s Office for National Statistics (ONS) figures, which no longer showed Britain was the fastest-growing major advanced economy last year.

Gross domestic product rose by 0.7 percent in the fourth quarter, faster than the preliminary reading of 0.6 percent thanks to manufacturing and the strongest growth since the fourth quarter of 2015.

The figures are likely to reinforce finance minister Philip Hammond’s view that there is no case right now to borrow more to help the economy when he announces his annual budget on March 8.

But he will keep a close eye on warning signs in Wednesday’s data.

Business investment fell and slowing household spending growth raised questions about the outlook for 2017.

The ONS also trimmed its estimate for 2016 growth to 1.8 percent from 2.0 percent, due to businesses stockpiling fewer goods and materials in early 2016.

That pushed Britain’s economic growth rate slightly below Germany’s 1.9 percent.

Separate ONS data showed Britain’s dominant services sector expanded in December at the slowest pace in seven months.

Angus Armstrong, director of macroeconomics at the National Institute of Economic and Social Research, said the familiar pattern of consumers driving the economy was likely to fade.

“The UK economy needs another driver if it is not to have a significant slowdown in 2017,” he said. “The pattern of strong consumer spending and weaker business investment can only be a limited one.”

Business investment fell 1.0 percent in the fourth quarter compared with the July-September period. Investment by companies was 0.9 percent lower compared with the fourth quarter of 2015.

Firms are expected to rein in their investment plans as Britain negotiates its departure from the EU, a process that Prime Minister Theresa May is due to kick off in coming weeks.

The outlook for wages is key for spending by households who have driven Britain’s economy since the Brexit vote. Wednesday’s data showed compensation of employees edged up by 0.1 percent in the fourth quarter, the weakest rise in more than three years.

BREXIT SQUEEZE

The ONS said household spending increased 0.7 percent on the quarter, slowing from 0.9 percent in the third quarter and marking the weakest growth in a year.

Bank of England deputy governor Minouche Shafik said after the data that the central bank still expected overall economic growth this year of 2.0 percent, much stronger than most economists polled by Reuters expect.

But the bank also predicts a growing squeeze on consumers as inflation rises due to the pound’s fall since June’s vote to leave the European Union.

There are signs this has started. Data last week showed retail sales fell in each of the three months to January.

The BoE this month signaled that it is in no hurry to raise interest rates with so much Brexit-related uncertainty ahead.

The central bank expects the economy to grow at a slower pace in subsequent years than if Britain had voted to stay in the EU.

(Editing by John Stonestreet)

Brazil set to keep aggressive pace of rate cuts to salvage economy

A view of Brazil's Central Bank in Brasilia, Brazil, September 15, 2016. Picture taken September 15, 2016. REUTERS/Adriano Machado

By Alonso Soto

BRASILIA (Reuters) – Brazil’s central bank will likely maintain its aggressive pace of interest rate cuts on Wednesday despite some calls to further step up monetary easing to rescue an economy mired in recession.

The bank’s 9-member monetary policy committee, known as Copom, will likely cut its benchmark Selic rate <BRCBMP=ECI> by 75 basis points to 12.25 percent, according to all but one of the 54 economist surveyed by Reuters last week.

Unions and business groups have demanded a cut of 100 basis points to reduce some of the world’s highest borrowing costs, which they say could undermine a still feeble recovery.

A rapid drop in inflation, which could end the year below the 4.5 percent official target, has strengthened the case for a bolder rate cut after the bank surprised markets by cutting more than expected at its last meeting.

The recent appreciation of the real currency <BRBY> has analysts betting on more aggressive rate cuts ahead.

“We think there is a growing case for a bolder cut of 100 basis points– if not now, then at the next policy meeting,” economists with BNP Paribas wrote in a note to clients.

Central bank chief Ilan Goldfajn has signaled policymakers would maintain the current pace of rate cuts, but that future monetary easing would hinge on the approval of austerity reforms to ease inflationary pressures.

Brazil’s recession, the worst in its history, has left millions unemployed and bankrupted hundreds of companies, raising pressure on Goldfajn to lower rates.

Facing a grueling fiscal crisis President Michel Temer is relying on falling interest rates to exit a recession that threatens to stretch into a third year.

However, the sharp drop in inflation has sparked a debate inside his administration over whether the government’s 2019 inflation target, decided in June, should be set at a lower level. That could slow the pace of monetary easing.

Brazil introduced an inflation rate target in 1999. The current 4.5 percent goal was first adopted for 2005, originally with a tolerance margin of plus or minus 2.5 percentage points. In 2015, the government narrowed the range to plus or minus 1.5 percentage points.

(Reporting by Alonso Soto; Editing by Andrew Hay)

Chinese investors find their cash is losing its cachet

logo of yuan

By John Ruwitch and Dasha Afanasieva

SHANGHAI/LONDON (Reuters) – For years, cash-rich Chinese investors have been highly sought after the world over. Now, their cash is losing its cachet.

China’s increasing efforts to prevent capital from leaving the country are eroding the confidence of domestic and foreign investors about getting deals done inside and outside of the world’s second-biggest economy.

Chinese bidders had become ubiquitous in deals in the past two years and were welcomed, said Severin Brizay, head of Europe, the Middle East and Africa mergers and acquisitions for the investment bank UBS.

“Clients were asking if it would be possible to make sure they are involved. Now, we are seeing the reverse: some clients are asking if we can do it without Chinese bidders because of the domestic challenges they face,” he said.

Dealmakers said many Chinese firms are unable to close deals because they can not secure official permission to transfer yuan into foreign exchange.

This follows a series of measures by authorities since late last year to tighten restrictions on capital outflows and rein in what officials have called “irrational” outbound investment. The Institute of International Finance estimated capital outflows surged to a record $725 billion last year and it expects even higher outflows this year.

The yuan fell more than 6.5 percent last year against the dollar, its steepest decline since 1994, prompting the central bank to spend hundreds of billions of dollars in reserves to prevent the slide from turning into a slump.

China’s foreign exchange regulator, the State Administration of Foreign Exchange, did not respond to requests for comment.

IMPACT

The measures by authorities have had a dramatic impact.

Overseas direct investment (ODI) by Chinese in December fell almost 40 percent from a year earlier to $8.41 billion, the lowest monthly level in 2016. In January, overseas property purchases by Chinese corporations plunged.

Global stock index provider MSCI expressed concern about the capital outflow measures and China shelved plans for a new crude futures contract because potential foreign participants were worried they would not be able to take yuan profits out of the country.

Chinese conglomerate and cinema chain operator Dalian Wanda’s proposed $1 billion purchase of U.S. entertainment group Dick Clark Productions Inc collapsed over problems getting currency out of China and regulatory approval, online website The Wrap said on Monday.

In another case, a Chinese investor was unable to get permission from authorities to exchange yuan into $30 million to close a U.S. deal, a consultant involved in the project said. The planned $100 million investment in a U.S. residential property portfolio fell through.

“Sellers nowadays will request certain proof,” said Jeffrey Sun, a Shanghai-based partner at the legal practice of Orrick, Herrington and Sutcliffe. “From the sellers’ side, the worry is justified.”

Still, while Chinese regulators are putting proposed deals under greater scrutiny, it does not mean they are shutting the door on outbound investment, lawyers said.

Regulators will approve deals if they make economic sense, Sun said. For example, a steel manufacturer buying a soccer club “is unlikely” to be approved, he said.

“FREAKED OUT”

Fund managers that help Chinese invest abroad, such as China Orient Summit Capital, are changing tack. The firm had been raising money in China for funds to target U.S. and European real estate. It is now looking to raise money in offshore markets, an executive at the company said.

China Orient Summit Capital declined a request for a formal interview.

Companies are also looking to avoid the approval process for buying foreign exchange if they have access to funds outside of China, lawyers and bankers said.

“Every deal at this point is looking for some way to identify offshore funds rather than deal with the capital controls,” said an M&A lawyer in Shanghai, who declined to be identified.

Chinese companies raised a record $111 billion in offshore dollar bonds in 2016, according to data from Dealogic, up from $88 billion in 2015. Some of those funds would have been earmarked for overseas investments, said Ivan Chung, associate managing director at Moody’s ratings service.

Chinese conglomerate HNA Group <0521.HK> announced about $20 billion in outbound deals last year. Thomson Reuters data shows it raised at least $17.05 billion in loans abroad in 2016.

Overall, China’s outbound investment hit a record last year but could have been much higher, said the Rhodium Group, a consultancy that tracks direct investment from China. It said a record 30 deals worth $74 billion and involving Chinese companies were canceled in the United States and Europe in 2016.

“Right now everybody is thoroughly freaked out by capital controls,” Daniel Rosen, a Rhodium partner and adjunct professor at Columbia University, said.

Still, on Vancouver’s upscale West Side, a neighborhood popular with foreign buyers where the price of homes runs in the millions of dollars, realtor Tom Gradecak was less worried about Chinese demand.

In the past, Chinese investors have tended to find ways around capital controls, he said.

“It won’t take them long,” he said. “The people that really want to come here, I don’t think it’s going to stop them.”

(Reporting by John Ruwitch and Samuel Shen in SHANGHAI, Matt Miller in BEIJING, Dasha Afanasieva in LONDON, and Nicole Mordant in VANCOUVER; Editing by Neil Fullick)