High-net-worth individuals (HNWI) in China have a positive stance on risky assets and are turning increasingly to structured products offered by private banks to meet their financial service needs, according to a report co-released by Julius Baer Group and Bank of China.
According to the Julius Baer – Bank of China Wealth Report, structured products will be the most popular financial instrument, and the United States will be the investment destination of choice for China’s wealthy in the coming 12 months.
“The findings confirmed that our clients, many of whom are entrepreneurs, are confident about the future of the Chinese economy and investment environment, said Shumin Zhu, executive vice-president of Bank of China Ltd. “As the leading wealth manager in China, sharing expertise with Julius Baer as new opportunities emerge in global private banking is an exciting proposition for Bank of China.”
Internationalisation is a key theme that echoes throughout the report. Be it from the perspective of HNWIs as parents or investors, respondents to the surveys on private banking service and education planning for their next generation expressed clear interest in broadening horizons.
Confident investors
Bank of China private banking clients are confident that their investment objectives will be met next year. In terms of the assets that are selected to reach investors’ goals, structured products, funds and real estate form the three most popular vehicles. Equities outside China rank towards the bottom, alongside commodities, private equity and futures.
At the same time, clients seem to have a penchant for foreign exchange trading and domestic stocks. The most popular structured products, said the report, feature capital protection with a fixed return.
The report also examines pivotal shifts in the world’s second largest economy and how HNWIs in China see private banking as well as the education for their next generation.
In terms of cross-border investing, the top two interests over the next 12 months are to invest overseas financially (44%) and buy properties (40%). In terms of investment destination, the United States and Canada (61%) took the top spot, followed by Hong Kong (34%), Australia (21%), continental Europe (15%) and the United Kingdom (11%) tying with Singapore (11%) in fifth place.
The preferred long-term investment is real estate (53%). In terms of gold, survey respondents see the longer term value of holding gold (35%) in their portfolios, but have limited return expectations in the shorter term. Equities (14%) ranked last as a ‘long-term investment’.
During the research, Bank of China surveyed over 200 of its private banking clients in 30 branches across the country. The face-to-face interviews took place in mid-June 2014, gauging client preferences with regard to private banking products and services and their outlook on financial markets.
Click the link to read the Julius Baer – Bank of China Wealth Report: Asia report.
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