China now has over one million high net worth individuals (HNWIs); new billionaires are being created in China every week; and these people tend to be very confident when it comes to investing. These are the findings of a number of surveys which have been carried out in Asia in recent weeks.
Bain & Co and China Merchants Bank asked almost 3,000 Chinese HNWIs – based on those holding at least RMB 10m (approximately $1.6m US or £1m) – about their investment trends. This revealed that they are less likely than in the past to invest in traditional industries, and 50% of them will increase their investment in the financial sector. This would appear to be because the majority of them have come from innovative industries such as IT, biotechnology and alternative energy. And Chinese HNWIs tend to be younger than their counterparts in the USA or Europe: about 80% of them are aged 50 or younger.
There is a clear geographical divide, the report reveals, over where China’s new rich live. More than 100,000 are from Guangdong Province; while Shanghai, Beijing, Jiangsu, Zhejiang, Shandong and Sichuan each have more than 50,000 HNWIs.
Another survey, conducted by UBS and Pricewaterhouse Coopers, revealed that in the first three months of 2015, there was a new billionaire created in China virtually every week, helped by the country’s strong stock market. Furthermore, many of these super-rich are self-made business people who have succeeded despite being born into poverty. In Asia as a whole, it is estimated that 25% of billionaires grew up in poverty, compared to only 8% in the U.S. and 6% in Europe.
And according to US asset manager Legg Mason and Citibank, who recently conducted yet another survey of the Chinese business community, those who live on the Chinese mainland are not only more confident about managing their wealth than HNWIs in Europe or the USA, but are bolder even than their compatriots from Hong Kong. A massive 93% of respondents from the mainland said they could manage their own investments and 89 per cent were confident that they could meet their financial goals. In Hong Kong, however, just 65% of wealthy investors said they could manage their own equity investments, with 61 per cent saying they would work with a financial advisor to allocate their assets.
There are warning signs, though, against investors becoming over-confident. The stock market has been strong since November; indeed, in April, the combined turnover on the Shanghai and Shenzhen stock exchanges hit an all-time high of RMB 1.5 trillion. But there is no guarantee that this will last, and some analysts are warning that there could yet be a sharp fall ahead.
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