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The Chinese HNWI Market in 2012

  • Published:
  • 94 Pages
  • Timetric

Synopsis

The report provides market analysis, information and insights, including:

  • Drawing on both primary and secondary sources, the report provides a bottom up description and analysis of the mainland (HNWI) market
  • It examines changes in the investment approach taken by Chinese HNWI since 2007-8
  • Domestic institutions offering on-shore services are listed, and the regulatory environment is also discussed

Summary

Despite the global financial uncertainty, the number of high net worth individuals (HNWIs) in China has risen sharply by 41% in each the last four years. Although HNWIs make up only 0.4% of China's population, this is equivalent to over 4 million individuals. Furthermore, the number of HNWIs in China is expected to double by 2015, which will change's China's position as the third-largest global wealth market in 2011 to the second-largest global wealth market in 2015. By the end of 2011, there was an estimated US$4.3 trillion of investable assets in China. It is estimated that HNWI wealth will grow at a compound annual growth rate (CAGR) of 14.7% over the forecast period (2011-2015), to reach US$7.5 trillion by 2015. This excludes important contributory factors such as private business assets, real estate investments, art and other luxury investments or offshore funds.

Scope

  • This research report analyses the changing HNWI demographic in mainland China
  • It assesses the impact the capital markets correction in 2008 had on client expectations
  • It considers the private banking services that influence a client's choice in provider
  • It details the best way to move forward and capitalise on this valuable market

Reasons To Buy

  • Establish the distinct demographics of Chinese HNWI's
  • Read how Chinese on-shore HNWI's invest to generate excess returns in a less favourable macro environment
  • Assess the impact of the 2008 global de-rating on client expectations
  • See what the constraints on the domestic wealth market are
  • Find out how the offshore market can gain Chinese investors if the right performance and service can be offered

Table of Contents

Executive Summary

List of Figures

List of Tables

Chapter I: Key facts on HNWIs in China

  • 1.1 Traditional regional distribution of HNWIs is changing as growth is increasing in inland cities
  • 1.2 Lowering property prices will threaten HNWI growth in 2012
  • 1.3 China is in the top three in terms of number of households with a net wealth of US$1 Million
  • 1.4 Volumes of both HNWIs and investable assets will grow quickly in the next three years

Chapter 2: The geographical distribution of China's HNWIs

  • 2.1 Beijing, Guangdong and Shanghai are the key 3 regions
  • 2.2 Top three regions account for nearly half the total number of wealthy individuals
  • 2.3 The traditionally less attractive east coast has had a bigger growth of HNWIs than the rest of China

Chapter 3: Segmenting HNWI's

  • 3.1 Business owners - 55% of the total HNWIs
  • 3.2 Real estate investors
  • 3.3 Stock market investors
  • 3.4 Senior management

Chapter 4: Industries monopolise HNWI wealth creation

  • 4.1 The entertainment and retail industries are lagging behind their peers worldwide

Chapter 5: Profiling Chinese HNWIs

  • 5.1 A typical Chinese HNWI
  • 5.2 The US losing its level of billionaires
  • 5.3 Starting from scratch - first-generation wealth accounts for the majority of HNWIs
  • 5.4 The majority of Chinese HNWIs are under 50 years old
  • 5.5 Women represent a higher proportion of HNWIs in China than globally
  • 5.6 The majority of Chinese HNWIs have post-graduate degrees

Chapter 6: HNWI investment behaviour

  • 6.1 Opening up to the idea of professional wealth management services
  • 6.2 Market volatility during 2007-2009
  • 6.3 Most HNWIs are prepared to take medium risks
  • 6.4 More Chinese HNWIs are thinking about inheritance issues
  • 6.5 Current investment tendencies for Chinese HNWIs

Chapter 7: Investment aims of Chinese HNWIs

  • 7.1 Ever-increasing expectations
  • 7.2 Prioritising investment aims - the top three
  • 7.3 The most generous donors
  • 7.4 The majority of donations are event-specific
  • 7.5 Chinese banks are getting involved in charity
  • 7.6 Wealth preservation has an influence on domestic and foreign asset allocation
  • 7.7 Chinese HNWIs pursue investment immigration
  • 7.8 The complexity of managing overseas assets will require professional advice
  • 7.9 Educating children is becoming more important
    • 7.2.1 Dynamics of HNWIs asset allocation
    • 7.2.2 The need for financing and value-added services
    • 7.2.3 Word of mouth is the most important information channel for choosing a private banking service

Chapter 8: The competitive landscape of Chinese private banking

  • 8.1 An overview of the private banking industry
  • 8.2 The five largest state-owned commercial banks are active in private banking
  • 8.3 Local and foreign banks now offer private banking services throughout China
  • 8.4 Chinese private banking networks
  • 8.5 Ranking the domestic banks' private banking businesses
  • 8.6 Leading private wealth managers among Chinese domestic banks

Chapter 9: Overseas banks in China

  • 9.1 Overseas banks less prominent than they would like to be
  • 9.2 How overseas banks are organised in China
  • 9.3 Foreign reputations took a knock following the banking crisis
  • 9.4 Differences between domestic and foreign banks

Chapter 10: The advantages of a state-controlled banking system

  • 10.1 Domestic private banks are the first choice of wealth management customers
  • 10.2 Expectations of a new banking model to emerge
  • 10.3 The future for private banking services

Chapter 11: The policy environment for QDIIs and QFIIs

  • 11.1 Qualified Domestic Institutional Investors (QDII)
  • 11.2 QDII Scope Widened in 2007
  • 11.3 QDII Regulations are Rigid
  • 11.4 QDII's scope expanded
  • 11.5 Investing on the Hong Kong stock exchange
  • 11.6 New private banking regulations
  • 11.7 Qualified Foreign Institutional Investors (QFII)
  • 11.8 Cross-border Co-operation

Chapter 12: Xintuo Chinese Trusts

  • 12.1 Investment Trusts gaining in popularity
  • 12.2 A uniquely Chinese proposition
  • 12.3 Lightly regulated
  • 12.4 History of the Chinese trust sector
  • 12.5 Enacting the Trust Law
  • 12.6 Recent updates from the trust sector
  • 12.7 Structures and product composition
  • 12.8 Real estate investment trust (REIT)
  • 12.9 QDII quotas to trust companies

Chapter 13: Other types of trusts

  • 13.1 Alternative investments
  • 13.2 Private equity investment trusts
  • 13.3 Securities ITs
  • 13.4 Infrastructure ITs
  • 13.5 Bank-trust co-operation Products
  • 13.6 Trust companies
  • 13.7 Strategic overseas investors

Chapter 14:

  • 14.1 Noah Private Wealth Management
  • 14.2 The ease of starting up a wealth management business
  • 14.3 Unregulated lending?
  • 14.4 Private lending - Total market size
  • 14.5 The problem with negative real interest rates
  • 14.6 Informal borrowing channels

Chapter 15: The Chinese economy - boom and bust?

  • 15.1 A slowing economy
  • 15.2 An overheating real estate market
  • 15.3 Real estate accounts for 40% of investible assets
  • 15.4 An overheating real estate market

Chapter 16: High-end consumption

  • 16.1 The art market
  • 16.2 Fine wine
  • 16.3 Luxury goods
  • 16.4 Yachts and Planes

About the authors

List of Tables

  • Table 1: The geographical distribution of China's HNWIs by region
  • Table 2: The sources of HNWI wealth in China and the world
  • Table 3: Competitive advantages of different financial institutions
  • Table 4: Number of branches and centres that are owned by banks providing private banking services
  • Table 5: Quota and Approval Time of QDII
  • Table 6: Where will HNWIs invest their money? (by region)
  • Table 7: Shares of foreign investors in Chinese trust companies
  • Table 8: Regulations in real estate market

List of Figures

  • Figure 1: HNWIs - Regional distribution, 2011
  • Figure 2: HNWIs - Sources of wealth, 2011
  • Figure 3: UHNWIs - Distribution by primary source of wealth
  • Figure 4: General scale of China national individual investable assets, 2006-2011
  • Figure 5: HNWIs wealth market attractiveness, 2007-2015
  • Figure 6: The value of investable assets owned by HNWIs in major cities and provinces
  • Figure 7: HNWIs - Growth in minority and inland regions
  • Figure 8: Distribution of China HNWIs by profession
  • Figure 9: HNWIs - Age distribution, 2011
  • Figure 10: Education background of Chinese HNWIs
  • Figure 11: Self-evaluations on personal investment experience among HNWIs
  • Figure 12: Changes in HNWIs risk preference
  • Figure 13: HNWIs - Changing trends in total liquid assets (% of total assets), 2007-2015
  • Figure 14: Chinese HNWIs favorite charity channels
  • Figure 15: Top investment immigration destinations for HNWIs in China
  • Figure 16: Diversification of objectives for Chinese HNWI wealth management
  • Figure 17: Allocation of HNWI assets
  • Figure 18: Demands for financing
  • Figure 19: Value-added services demanded by HNWIs
  • Figure 20: Main criteria for selecting a private bank and wealth management institutions
  • Figure 21: The information channels for acquiring information on the private banking Industry
  • Figure 22: Number of private banking centres operated by main market players
  • Figure 23: The number of private banking clients and the scale of investable assets owned by these clients in 2010
  • Figure 24: Chinese HNWIs' selection of private banks and high-end wealth management institutions
  • Figure 25: Chinese HNWIs' private bank and wealth management institution selection trends
  • Figure 26: Trust Asset Scale (CNY bn) in 2005-2011
  • Figure 27: Trust industry assets as a percentage of GDP
  • Figure 28: Scale of trust products on real estate industry
  • Figure 29: Percentage of usage of fund raised by trust products
  • Figure 30: PE partnership financing structure
  • Figure 31: Commission charges for third-party consultancy
  • Figure 32: A pawnshop in Ordos
  • Figure 33: Chinese GDP growth from 2007
  • Figure 34: The scale of the capital markets in China
  • Figure 35: Art category transaction volumes - spring 2011
  • Figure 36: Global luxury goods market sales, 2003-2010(Euro bn)
  • Figure 37: Mainland China luxury goods market sales, 2007-2010(Euro bn)
  • Figure 38: Global luxury goods market sales, 2003-2010 (Euro bn)
  • Figure 39: Preferred location for buying luxury goods
  • Figure 40: Brand ranking among customers in Beijing and Shanghai
  • Figure 41: Luxury goods bought by Chinese HNWIs in 2011
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