Affected by the economic downturn, the number of High Net Worth Individuals (HNWIs) in China and the value of their investable assets grew at a slower rate than in previous years, according to a new survey. The number of HNWIs in China – those with individual investable assets in excess of CNY10 million – reached 3.16 million last year, an increase of about 540,000 compared with 2020, according to the China Private Wealth Report, jointly published by Bain & Company and China Merchants Bank (CMB). That amounts to a compound annual growth rate (CAGR) of 10% in 2020-2022, down from 15% in 2018-2020, according to the report, which surveyed around 4,000 Chinese HNWIs. They held a total of CNY101 trillion in investable assets in 2022, with a CAGR of 9% in 2018-2020, down from 17% in 2018-2020. The group’s per capita holdings of investable assets stood at around CNY31.83 million.
The report predicted that the number of wealthy Chinese and their investable assets would grow at a CAGR of around 11% and 12%, respectively, over the next two years. Wealth protection was the top financial goal for affluent Chinese, with 27% of respondents saying it was their top objective, while 17% cited “wealth creation” as their top goal, compared with 18% in 2021. Affluent Chinese took a more cautious investment approach compared with previous years. A total of 88% of respondents said they had a moderate or low appetite for risk, with 52% saying they sought a moderate rate of return and 36% saying they would be fine with a rate of return that was higher than the domestic deposit rate. More than half of the domestic investable assets of Chinese HNWIs were allocated to lower-risk assets, including 28% in cash and 27% in fixed-income products. According to the survey, the proportion of rich Chinese under 40 years old increased to 49% from 42% in 2021. Looking forward to the next two years, Chinese HNWIs plan to increase investments in insurance and private equity, and in alternative investments such as gold, while reducing their real estate investments, according to the report.
The survey found that more than 70% of Chinese HNWIs were preparing to transfer wealth to heirs, mainly in the form of insurance and real estate, and then gradually expand to family trusts. More than 20% of respondents indicated they had already set up a family trust, and nearly 50% said they were considering it, while more than 20% of respondents said they did not know how to choose providers for such services, the South China Morning Post reports.
