Posted inChina

Despite slowdown, Chinese HNWI numbers grow

The number of HNWIs in China grew by a double-digit percentage year-on-year and overseas investments already account for 16% of their invest-able assets, according to a recent whitepaper by CITIC Private Bank and Hurun Report released last week.

About 1.34 million of mainland Chinese have total assets over RMB 10m ($1.48m), and 89,000 have at least RMB 100m ($14.8m), May 2016 data from the Hurun Institute shows. These HNWIs grew in number 10.7% and 14.1%, respectively, from the previous 12 months.

The number of HNWIs with more than $30m of total assets surged by 16.3% to 57,000.

Guangdong province houses the most multi-millionaires, followed by Beijing, Shanghai and Zhejiang.

In terms of investable assets only, 683,000 individuals have more than RMB 10m of liquid assets, 52,500 own RMB 100m or above, and 34,700 have over $30m.

Looking offshore 

The report (in Chinese) polled about 779 mainland high net worth individuals between March and July this year. They have an average RMB 68m of total assets. Among them, 337 said they have overseas investments – including an average of 2.3 properties.

About 41.6% said they would seek offshore investments in the near future.

For those who already have offshore asset allocation, nearly half said they plan to increase exposure to overseas markets, while only 6.6% expected a reduction.

About 80% said the main purpose is risk diversification, followed by 67% who seek capital preservation.

Over 70% of HNWI respondents said they value risk control when picking an overseas investment product. Return is ranked the second most important, as selected by 65% of respondents.

A breakdown of asset classes shows that the most common overseas investment is foreign exchange deposits (62.9%), insurance (45%) equity (41.4%) and funds (35%).

The US remains the most popular place to invest, as chosen by 74% of multimillionaires. Singapore is ranked second (16.5%), while the UK and Australia are both third (14.1%).

Most of the HNWIs (77%) prefer banks to manage their overseas investment decisions, while brokers only account for 47% and professional wealth managers at 31.2%.

Boston Consulting Group expects China’s onshore wealthy investors to double asset allocation to overseas markets in five years, to 9.4% in 2020 (or $1.98trn of new assets) from 4.8% in 2015.

In mainland China, HNWI liquid assets are projected to grow at about 10% annually for the five years to 2020, according to London-based wealth management research firm Verdict Financial. 

Part of the Mark Allen Group.