In­vestors see decade of risk ahead for real es­tate

Poll shows con­cern that as­set bub­ble will burst

China Daily (Canada) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

Chi­nese in­vestors see real es­tate, stocks and pre­cious metals as the riski­est as­sets this year and over the next 10 years, ac­cord­ing to a sur­vey re­leased on Thurs­day by Franklin Tem­ple­ton In­vest­ments, a unit of United States-based Franklin Re­sources Inc. The sur­vey was based on 517 Chi­nese in­vestors aged 25 to 65, with aver­age as­sets avail­able for in­vest­ment of 1.1 mil­lion yuan ($176,600).

Among the re­spon­dents, 48 per­cent said real es­tate will be one of the three riski­est in­vest­ments in 2014.

That fig­ure rises to 55 per­cent over the next 10 years. Stocks and pre­cious metals ranked sec­ond and third.

About 37 per­cent of Chi­nese in­vestors think the po­ten­tial of an as­set bub­ble burst­ing is the ma­jor threat to the mar­ket in 2014. An­other 24 per­cent said the same

SUR­VEY OF RISKI­EST AS­SET CLASSES of China’s eco­nomic slow­down.

“Property over­sup­ply, shadow bank­ing and funds be­ing with­drawn from emerg­ing mar­kets may be risks in the Chi­nese real es­tate mar­ket,” said AmyWang, chief rep­re­sen­ta­tive of Franklin Tem­ple­ton In­vest­ments’ Bei­jing of­fice.

Real es­tate is also ex­pected to be the most prof­itable: 24 per­cent said it can be the best per­former of 2014. Stocks and com­modi­ties (ex­clud­ing metal) fol­lowed with 15 per­cent each.

“Ur­ban­iza­tion can be a driv­ing force for the Chi­nese real es­tate mar­ket, which brings big in­vest­ment op­por­tu­ni­ties,” saidWang.

Al­though the A-share mar­ket’s per­for­mance in 2013 fell short of ex­pec­ta­tions, Chi­nese in­vestors are still op­ti­mistic about it this year: 51 per­cent be­lieve the stock mar­ket will rise in 2014, in con­trast with 19 per­cent who ex­pect a slide.

Chi­nese in­vestors ex­pect the aver­age rate of re­turn for their en­tire portfolios this year to be 12 per­cent, lower than the 13.2 per­cent an­tic­i­pated in the sur­vey of 2013.

Look­ing out 10 years, they ex­pect an aver­age rate of re­turn of 16.2 per­cent, down­from 18.3 per­cent last year.

Wang said in­vestors all over the world, and not just in China, have low­ered their ex­pec­ta­tions.

Still, the vast ma­jor­ity of Chi­nese in­vestors re­main op­ti­mistic about reach­ing their fi­nan­cial goals: 82 per­cent of the re­spon­dents ex­pect to meet their tar­gets in 2014, con­sis­tent with 2013.

In­vest­ment sen­ti­ment has cooled markedly to­ward pre­cious metals, with only 8 per­cent of re­spon­dents per­ceiv­ing it as the top per­former in 2014, com­pared with 22 per­cent in 2013.

The sur­vey also found that Chi­nese in­vestors fo­cu­son­the short­andmedi­umterm: 58 per­cent eval­u­ate the suc­cess of an in­vest­ment op­por­tu­nity within a one-year pe­riod, while only 13 per­cent wait three to five years or longer to eval­u­ate their in­vest­ment per­for­mance.

“Chi­nese in­vestors are more re­ac­tive to short-term fluc­tu­a­tions and vul­ner­a­ble to tem­po­rary vo­latil­ity.

“Gen­er­ally speak­ing, in­vestors with a longer in­vest­ment hori­zon are ca­pa­ble of mak­ing bet­ter de­ci­sions, es­pe­cially when the mar­ket out­look is un­clear,” saidWang.

The US and Canada are the most fa­vored over­seas mar­kets for Chi­nese in­vestors.

Al­most two-thirds of re­spon­dents plan to in­vest out­side the Chi­nese main­land. High-yield bonds, US eq­ui­ties and emerg­ing and fron­tier mar­ket eq­ui­ties are their top picks.

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