China General Interest
Affluent Chinese are the youngest of Asia’s affluent population with an average age of 36, followed by Indonesians at 38 and Indians at 39, according to the latest HSBC Affluent Asian Tracker.
On average, affluent Asians hold average liquid assets of over US$190,000 led by Hong Kong with US$315,116, followed Australia (US$296,297), Singapore (US$293,774), China (US$159,253), Taiwan (US$156,936), Malaysia (US$118,750), Indonesia (US$92,835) and India (US$87,910).
In Australia and China, half of these assets are invested in stocks, unit trusts and other investments such as structured products and bonds. In Hong Kong, 22% of liquid assets are in FX investments and deposits, particularly the renminbi (RMB). Only 16% of average liquid assets are allocated to stocks and other investments in Indonesia.
Bruno Lee, Regional Head of Wealth Management for HSBC in Asia-Pacific says: “They're all in their 30s -- the wealth accumulation phase. You will not be surprised to see this group of people becoming bigger and bigger. At some point, it's possible that the number will surpass that in the mature markets.”
Glen Tonks, Head of Wealth, at HSBC New Zealand says: “While the survey did not specifically cover New Zealand there are lessons New Zealand investors can learn from investors in some of the fastest growing economies. Investing in RMB is becoming an increasingly important part of the affluent investors’ portfolio with 53% currently holding RMB deposits and 51% holding RMB investments. In addition, 45% plan to accumulate more RMB deposits and 31% plan to make RMB investments in 2H11.”
“The move to investing in RMB is being echoed here in New Zealand with the number of HSBC Premier customers opening personal RMB accounts having grown by 23% over the past quarter,” continues Tonks.
Future investment plans
Highlighting their future investment plans, nearly six in 10 affluent individuals in China (59%) and Hong Kong (59%), followed by nearly a quarter in Singapore (24%) plan to invest in Greater China and Southeast Asian funds and equities in the next six months.
On average, over half (53%) of respondents who invest overseas or have plans to do so, want to capture better investment opportunities. 64% of respondents in China and 23% in India currently bank and invest in Hong Kong while over half of Hong Kong affluent (54%) maintain accounts and investments in China.
“As affluent Asians connect with family across the globe and increasingly travel within Asia for work and school, we expect overseas banking and investments to become an integral part of affluent Asians’ financial portfolios. As the potential for growth in Asia remains robust, affluent investors will continue to look to the region for wealth opportunities,” points out Mr Lee.
“Our survey shows that young, cash-rich Asians are willing to take a moderate level of investment risk as they increase and diversify investments in the second half of 2011.
While over half of affluent assets on average are parked in cash, the asset mix is set to expand as first time investors in a range of products especially in China and India are expected to increase,” he continues.
Net worth growth
On average, 61% of affluent in Asia reported a rise in net worth in the last 12 months led by India (81%), Malaysia (66%), Indonesia (63%), Hong Kong (63%) and followed by China (59%), Australia (56%), Taiwan (54%) and Singapore (48%).
Mr Lee said: “In the last year, despite market disruptions caused by events in Japan and the Middle East, inflationary pressures in the region and continued uncertainty in the West, the majority of affluent Asians said they increased their wealth, capturing opportunities in the stock and foreign exchange markets.”
All weather investing
Mr Lee expects Asians to gradually become ‘all weather investors’ amidst continued global market uncertainty. HSBC’s survey shows that affluent Asians have the liquidity, appetite for diversification and a tendency towards a balanced risk mentality to help maintain and grow wealth in both good times and bad.
Mr Lee said: “Cash-rich Asians have the flexibility to capture opportunities swiftly and rebalance portfolios as market conditions change. Today’s affluent investors are also open to new asset classes such as FX which, unlike equity or fixed income products, can offer capital growth potential regardless of economic and market cycles.
“Our survey points to a balanced approach to investing across all markets, particularly the faster-growing markets of Indonesia, India and China which will deliver many of the region’s new investors.”
HSBC’s survey shows that around a fifth of affluent in India and China plan to take up structured products (23% of Indians, 20% of Chinese) and bonds (21% of Indians, 17% of Chinese) for the first time, while 16% of Chinese affluent will become new investors in FX. Around a tenth of affluent in Taiwan (13%) and Hong Kong (10%) plan to invest in the renminbi (RMB) for the first time.
On average, 77% of affluent Asians do not intend to invest in products that they are unfamiliar or uncertain about, driving their HSBC investment risk index* scores to reflect a balanced attitude (100 in a scale of 0-200) towards risk in the next six months: China (97), India (96), Indonesia (96), Malaysia (94), Australia (92), Hong Kong (91), Taiwan (90) and Singapore (87).
Media enquiries to: Dee Crooks, Group Communications Manager, HSBC on 09 368 8752 or 021 190 3616.
Please note, the full survey is available on request.