The Monday note - 21 August 2017

• The FTSE 100 booked a net gain of 14 points last week, closing at 7,324.0 on Friday; after a rollercoaster week where upbeat economic data was offset by news of the terror attacks. The ten year Gilt yield stood at 1.09%. 
• The Chinese government announced several restrictions on overseas investment by companies, with real estate one of the asset classes targeted. 
• GDP in Japan increased by an impressive 4.0% on an annualised basis in Q2, thanks to stronger consumer spending and business investment. The figure was well ahead of expectations. 
• Inflation in the UK remained steady at 2.6% in July, while the rate of unemployment fell to 4.4% in June. 

Chief Economist comments: 

Chinese companies have so far this year invested more money in the ‘Belt and Road’ countries than they did in the whole of 2016. Beijing wants to rein back, but importantly not end the outflow of capital. While some commentators are calling an end to the recent wave of Chinese money, the government’s plan is to restrict not end investment in overseas real estate. Moreover, the world is a big place and note the signs of strengthening economic growth elsewhere, such as in Japan. New sources of capital are waiting in the wings.