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 10 million yuan (US$1.38 million) – reached 3.16 million last year, an increase of about 540,000 compared with 2020, according to China Private Wealth Report, jointly published by Bain & Company and China Merchants Bank on Friday.
That amounts to a compound annual growth rate (CAGR) of 10 percent in 2020-2022, down from 15 percent in 2018-2020, said the report, which surveyed around 4,000 Chinese HNWIs.
Chinese HNWIs held a total of 101 trillion yuan in investable assets in 2022, with a CAGR of 9 percent in 2018-2020, down from 17 percent in 2018-2020. The group’s per capita holdings of investable assets stood at around 31.83 million yuan.
The report predicted that the number of wealthy Chinese and their investable assets would grow at a CAGR of around 11 and 12 percent, respectively, over the next two years.
Wealth protection was the top financial goal for affluent Chinese, with 27 percent of respondents saying it was their top objective, while 17 percent cited “wealth creation” as their top goal, compared with 18 percent in 2021.
Affluent Chinese took a more cautious investment approach compared with previous years. A total of 88 percent of respondents said they had a moderate or low appetite for risk, with 52 percent saying they sought a moderate rate of return and 36 percent 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 percent in cash and 27 percent in fixed-income products.
Corporate financing planning was the top business need for affluent Chinese, selected by 58 percent of respondents, followed by domestic investment planning at 37 percent, planning for overseas equity, debt, and real estate at 27 percent, and IPO planning at 21 percent.
According to the survey, the proportion of rich Chinese under 40 years old increased to 49 percent from 42 percent in 2021.
Looking forward to the next two years, Chinese HNWIs plan to increase their insurance allocation as well as increase private equity investments and alternative investments such as gold while reducing their real estate investments, according to the report.
The survey found that more than 70 percent 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 percent of respondents indicated they had already set up a family trust, and nearly 50 percent said they were considering it, while more than 20 percent of respondents said they did not know how to choose providers for such services.