Ris­ing wealth of­fers rich pick­ings, says re­port

China Daily (Canada) - - LIFE - By JIANG XUEQING jiangx­ue­qing @chi­nadaily.com.cn

China will be­come one of the largest mar­kets of high­netindi­vid­u­als in the world, with the num­ber of high-net-worth fam­i­lies ris­ing from 2.07 mil­lion in 2015 to 3.88 mil­lion at the end of 2020, a re­port re­leased on Wed­nes­day said.

Dur­ing the same pe­riod, China’s per­sonal in­vestable as­sets will in­crease from 113 tril­lion yuan ($17 tril­lion) to 200 tril­lion yuan at a com­pound an­nual growth rate of 12 per­cent. The in­vestable as­sets of high-net-worth in­di­vid­u­als will ac­count for 51 per­cent of the to­tal in 2020, said the re­port re­leased by In­dus­trial Bank Co Ltd and The Bos­ton Con­sult­ing Group.

“Chi­nese banks are in­creas­ingly turn­ing to­ward cap­i­tal­light ac­tiv­i­ties and as­set man­age­ment,” said Chen Jin­guang, vice-pres­i­dent of In­dus­trial Bank, a medi­um­sized Chi­nese com­mer­cial lender based in Fuzhou, Fu­jian prov­ince.

“Dur­ing the tran­si­tion, pri­vate bank­ing will be­come a cru­cial profit growth en­gine for the bank­ing in­dus­try,” Chen said.

From 2014 to 2015, among 12 banks that an­nounced their per­for­mances in pri­vate bank­ing, nine posted more than 20 per­cent growth in as­sets un­der man­age­ment.

BCG part­ner and man­ag­ing di­rec­tor David He said huge mar­ket op­por­tu­ni­ties will con­tinue to emerge in the next five years, as an in­creas­ing num­ber of pri­vate bank­ing clients al­lo­cated a larger part of their as­sets over­seas. He cited the fluc­tu­a­tion of the yuan as a ma­jor rea­son be­hind the growth.

“Com­pared with other coun­tries, the cur­rent pro­por­tion of China’s over­seas per­sonal as­sets to the to­tal is much lower,” he said.

“We es­ti­mate that the pro­por­tion will rise to 9.4 per­cent in 2020 from 4.8 per­cent at present, in­creas­ing the size of the over­seas in­vest­ment mar­ket by 13 tril­lion yuan.”

Ac­cord­ing to a re­cent sur­vey of 1,074 high-net-worth in­di­vid­u­als whose fam­ily’s in­vestable as­sets ex­ceeded 6 mil­lion yuan, 788 in­di­vid­u­als had not yet made an over­seas in­vest­ment but more than 50 per­cent of them said they would con­sider it in the next three years.

Their in­vestable as­sets ranged from 6 mil­lion yuan to 10 mil­lion yuan, show­ing that the thresh­old for bank clients to en­joy pro­fes­sional ad­viceon global as­set al­lo­ca­tion was com­ing down, along with a grow­ing ap­petite for over­seas in­vest­ment.

The re­port said this would pro­vide a chance for Chi­nese banks to overtake their for­eign coun­ter­parts in terms of pri­vate bank­ing busi­ness.

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