China Wealth Management – High Net Worth (HNW) Investors 2022

China wealth management market report analyzes the investing preferences and portfolio allocation of China’s HNW individuals. It profiles HNW investors in terms of their demographics, examines the allocation of HNW investors’ portfolios, analyzes their propensity to invest offshore, and explores their product and service demand.

What are the market dynamics in China wealth management market?

China’s HNW population is dominated by men, who account for significant percentage of HNW individuals. As is reflected in the demographic makeup of the local HNW community, the Chinese wealth market is maturing, with almost half of the country’s male HNW investors between the age of 51 and 60 and hence approaching the retirement age. Faced with a population that is shrinking and ageing, Chinese policymakers are attempting to reverse the trend by amending the Population and Family Planning Law in 2021, which legalized the three-child policy, and introducing cash subsidies, real-estate subsidies and extension of maternity leave for parents to encourage more births. As the number of retirees is set to rise and as baby boomers look to structure transfers of accumulated wealth, advisors need to be prepared to ensure the transition is as smooth and as efficient as possible.

To foster female participation in the field of entrepreneurship, several programs have been established that educate and support women in establishing their businesses. In 2020, Chinese e-commerce company Alibaba Group and its affiliate Ant Group launched Cyber Mulan, a five-year initiative that aims to provide support and solutions for millions of women in the technology and SME sectors to boost women entrepreneurship. The plan includes providing digital skills training programs and interest-free loans for female entrepreneurs in SMEs.

What are the key investment preferences for HNW investors in China wealth management market?

The key investment preferences in China wealth management market are advisory asset management, automated investment services, discretionary asset management, and execution-only asset management.

While discretionary mandates dominate in terms of HNW AUM allocated, current demand is distributed relatively equally across different types of mandates with execution-only mandate having a slight edge, reiterating the importance of a multi-asset management strategy. Advisory mandates are expected to attain the highest increase in demand over the next one year, reflecting clients want control amidst rising volatility, but the expert advice of wealth managers will still be valuable to them. An increase in demand for advisory and discretionary services offers opportunities for traditional wealth managers to grow. Therefore, to avoid losing their clients to competitors when markets turn sour, wealth managers must make relationship-building a priority ensuring that clients are aware of risks and that expectations are met will be crucial.

China wealth management market, by key investment preferences

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What are the key reasons for expatriation for HNW investors in China wealth management market?

The key reasons for expatriation in China wealth management market include job transfer, retirement, business start-up, tax efficiencies, better opportunities for children, better lifestyle conditions, and political/economic instability.

While a significant proportion of HNW expats are seeking better lifestyle conditions, a reasonable percent of expatriation is primarily driven by business startups. Consequently, supporting expats with their entrepreneurial endeavors is key. Over the years, China has managed to transform itself from a manufacturing hub to a top base for highly valued technology companies and unicorns thanks to its startup ecosystem. According to the 2020 data of World Bank, China ranks 31st among 190 countries in the Ease of Doing Business category, a major improvement from 2019, when it was ranked 46th.

China wealth management market, by reasons for expatriation

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What are the major asset classes of wealth allocation for HNW investors in China wealth management market?

Equity, cash and near cash, bonds, property, alternatives and commodities are the major asset classes of wealth allocation in China wealth management market.

HNW investors in China allocate the largest proportion of their onshore wealth to equities, which shows investors’ willingness to take on investment risk in order to enhance yield in a low interest rate environment. The SSE Composite Index witnessed a moderate gain in 2021 and was characterized by rampant volatility. This can be attributed to multiple resurgence in the outbreak of the COVID-19 pandemic, increasing intervention of the Chinese regulators on the corporate sector, and wider geopolitical tensions with the US.

China wealth management market, by major asset classes of wealth allocation

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What are the major asset classes of offshore investment for HNW investors in China wealth management market?

The major asset classes of offshore investment in China wealth management market include equity, cash and near-cash products, bonds, property, alternatives, and commodities.

The average Chinese HNW offshore portfolio is heavily exposed to commodity and property investments. However, investment drivers differ notably, with hedging and diversification benefits being crucial drivers in the commodity space and easier access than other asset classes in the property space. China stands out in terms of the latter driver; access to overseas property is traditionally regarded as more challenging than access to other classes. However, given Chinese HNW international connect, many are likely to have connections or citizenships in foreign countries and thus can gain access to foreign property markets more easily.

China wealth management market, by major asset classes of offshore investment

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Who are the key players in China wealth management market?

The key players in China wealth management market include Alibaba, Ant Group, and Morgan Stanley Securities China.

Market report scope

Scope

• Expats represent an attractive target market thanks to their more complex service requirements.
• The market for robo-advisory services is growing rapidly in the HNW space in China.
• Equities, property and alternatives dominate the Chinese HNW asset portfolio.

Reasons to Buy

• Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
• Enhance your marketing strategies and capture new clients using insights from our data on HNW investors’ asset management style preferences.
• Tailor your investment product portfolio to match the current and future demand for different asset classes among HNW individuals.
• Develop your service proposition to match the demand expressed by Chinese HNW investors and react proactively to forecast changes in demand.