‘FEAR OF MISSING OUT’ DRIVES YOUNG CHINESE TO INVEST
Nearly two-thirds of Gen Z on mainland started investing before age of 21 and their top financial goal is to have money for travel, survey finds
More than half of China’s Gen Z are investing because of a “fear of missing out”, or Fomo, and having money for travel is their No 1 financial goal, according to a recent study by the CFA Institute.
CFA, a global not-for-profit organisation that provides investment professionals with finance education, conducted the study jointly with the Financial Industry Regulatory Authority (Finra) Investor Education Foundation, a US not-for-profit organisation. They surveyed more than 2,800 Gen Z, millennial and Gen X investors in China, the United States, Britain and Canada.
The study found new entrants to the world of investing were reshaping investment practices, products and platforms, said Paul Andrews, managing director for research at CFA. It underlined the extent to which their investment habits differed from the earlier investor cohorts.
“A range of macroeconomic and social factors such as rising inflation, the growing popularity and accessibility of cryptocurrency and social media ‘finfluencers’ are having a profound impact on how, where and what they invest in,” Andrews said.
Nearly two-thirds of Gen Z investors – described as those aged 18 to 25 by the study – in China started investing before the age of 21 and invest an average of 120,000 yuan (HK$133,000).
And while Chinese investors had the largest median investment balance compared to their counterparts in the US, Britain and Canada, their numbers trailed those in the US, where about 82 per cent said they began investing before they turned 21, as well as those in Canada with 79 per cent and Britain with 81 per cent.
Fomo as a factor in their decision to start investing was highest among Chinese Gen Z investors at 60 per cent, followed by 43 per cent in Britain and 41 per cent in the US and Canada. Money from parents for investment and an interest in finance were also among the top motivations for investing among China’s Gen Z.
Shailene Wei, 23, a business development executive from Shanghai, began investing two years ago and puts 60 per cent of her monthly salary into mutual funds.
“My undergraduate major was in finance and I took that course to educate myself on how to make money from investing,” said Wei, whose father is also a seasoned stock investor.
She currently invests in funds that are “safe and I don’t need to pay too much attention to”.
Ellen Wang, a 23-year-old analyst from Shanghai, started aged 20. She has about 30,000 yuan in investments, of which 10,000 yuan came from her parents.
“I started to invest firstly because my major is finance and I’ve studied related courses at university. The second reason was my father and my boyfriend often trade stocks, and we can discuss investment information,” she said.
Wang said she also got information from research reports on the internet.
The study found most Gen Z investors in China got their information on investing from Chinabased platforms such as Weibo, WeChat and Douyin, the Chinese equivalent of TikTok.
“The Gen Z population is diverse and digitally savvy,” Finra president Gerri Walsh said. “They are using mobile technology to enter the financial markets in unprecedented numbers and [are] consulting a wide range of information sources.”
Most of China’s Gen Z invest in mutual funds, with 41 per cent in wealth management products issued by commercial banks and about a third in individual stocks.
Maggie Wu, a 25-year-old graduate in Beijing, has 20,000 yuan mainly in stock and bond funds. “My dad works at a bank, so all my investment advice comes from him,” she said.
The study found the top goal among China’s Gen Z was to have money for travel, while more than half of Canada’s Gen Z cited being able to pay monthly bills and 48 per cent in Britain said their goal was to buy a home.
While cryptocurrencies were a top investment choice among investors elsewhere, that is not so much the case for China’s Gen Z, given the country’s strict regulatory environment. Beijing started phasing out cryptocurrency trading in 2013 and banned mining for digital tokens in May 2021.
While social media and investment apps made it easier for Gen Z investors to access financial information, they still faced some barriers, CFA’s Andrews said.
“Governments, regulators and investment professionals have a collective role to play in helping Gen Z acquire the necessary knowledge to make well-informed investment decisions,” he said.
They are using mobile technology to enter the financial markets in unprecedented numbers
GERRI WALSH, FINRA PRESIDENT