High-net-worth (HNW) investors in China prioritized safety in 2024, channeling a significant share of their portfolios into cash, near-cash products, and bonds amid escalating geopolitical tensions and market uncertainty. With nearly 27% of wealth parked in low-risk assets to stay ready for future opportunities, this cautious stance opens the door for private wealth managers to guide clients toward undervalued investments, according to GlobalData, a leading data and analytics company.
China is the world’s second largest economy and is home to a large number of wealthy populations. According to GlobalData’s Wealth Market Analytics, the number of HNW individuals recorded an average annual growth rate (AAGR) of 10.7% from 2.3 million in 2020 to 3.0 million in 2024.
Poornima Chinta, Banking and Payments Analyst at GlobalData, comments: “Despite the Chinese economic recovery in 2024, the country faces significant headwinds. The escalation of trade war with the US driven by reciprocal tariffs poses the single most significant threat to the Chinese economy in near-term. This has had a significant impact on the Chinese investor psyche and led to an overallocation to safe-haven products.”
Cash and near-cash products accounted for 26.7% of the Chinese HNW portfolio in 2024, surpassing the Asia-Pacific average of 17.8%. With global and domestic economies reeling under geopolitical uncertainties, it is unsurprising that investors have adopted a risk -off attitude and are delaying investment decisions.
Chinta continues: “This significant allocation to cash and near-cash products does not contribute to the profitability of wealth managers or enhance the performance of investors’ portfolios. Wealth managers must directly address the greater caution in their client base with solutions and strategies that provide individuals with the confidence to invest.”
Equities have traditionally been a staple in HNW portfolios. According to GlobalData’s HNW Asset Allocation Analytics, 83% of HNW clients in China actively sought buying opportunities in volatile markets in 2024. Furthermore, robust performance of the country’s flagship index “The SSE Composite Index” in 2024 and investors’ willingness to take on risk for enhanced yields have driven allocation to this asset class.
However, amidst the current volatility, risk-averse investors are moving out of equities to protect portfolios and are expected to maintain cash allocations until the uncertainties subside and favorable opportunities arise.
Chinta concludes: “With readily available liquidity in terms of cash and near-cash allocations, only wealth managers who can anticipate market shifts and position clients ahead of the curve stand to gain significant market share in one of the world’s most dynamic wealth markets. Advisors must be prepared to support well-capitalized clients in their search for undervalued assets.”
