Published : Mar-2017
No. of Pages : 40
EXECUTIVE SUMMARY 2
1.1. Wealth growth is slowing but will still outstrip the West 2
1.2. Key findings 2
1.3. Critical success factors 2
2. SIZING AND FORECASTING THE CHINESE WEALTH MARKET 8
2.1. 2.5% of China's affluent individuals can be considered HNW 8
2.1.1. Affluent individuals in China account for 3.8% of the total adult population 8
2.1. Affluent individuals account for 3.8% of the population but hold 81.3% of liquid assets in China 9
2.1.1. Chinese HNW individuals held $3,666bn in liquid assets in 2016 9
3. DRIVERS OF GROWTH IN THE CHINESE WEALTH MARKET 11
3.1. China's retail savings and investments have impressed with remarkable growth in recent years 11
3.1.1. China's retail investment market is forecast to perform strongly despite weaker economic conditions 11
3.1.2. As can be expected in developing markets, deposits dominate China's retail investment market 12
3.1.3. Mutual fund holdings are forecast to grow fastest 13
3.2. Retail deposit growth picked up in 2016, but will be less pronounced than in the past 14
3.2.1. Competition from online money market fund providers will have a negative effect on deposit growth 15
3.3. Despite strong growth rates, China's retail bond market will remain insignificant 16
3.4. Strong stock market volatility will limit growth of direct equities, while money market funds expand 17
3.4.1. The Chinese stock market had a good start into 2017 17
3.4.2. Money market funds are growing in popularity, shielding funds from the vagaries of the stock market 18
4. HNW INVESTMENT PREFERENCES 21
4.1. Chinese HNW individuals allocate 38% of their portfolios outside traditional liquid assets 21
4.1.1. Chinese HNW investors allocate an above-average proportion of their wealth into property 21
4.1.2. Alternatives and commodities have become an integral part of the typical HNW portfolio in China 21
4.2. A significant proportion of HNW wealth is invested offshore 23
4.2.1. Despite maintaining a closed capital account, a significant amount is leaving the country every year 23
4.2.2. Access to a better range of investment options prompts Chinese individuals to invest offshore 24
4.2.3. Tax is a limited driver for offshore investments 25
4.2.4. The US is the single most important booking center for Chinese HNW wealth 26
5. APPENDIX 0
5.1. Abbreviations and acronyms 0
5.2. Supplementary data 1
5.3. Definitions 4
5.3.1. Affluent 4
5.3.2. Domicile 4
5.3.3. DTC 5
5.3.4. Exchange of information 5
5.3.5. FATCA 5
5.3.6. HNW 6
5.3.7. Liquid assets 6
5.3.8. Mass affluent 6
5.3.9. Mass market 6
5.3.10. Onshore 7
5.3.11. Residency 7
5.3.12. TIEAs 7
5.4. Methodology 7
5.4.1. GlobalData's 2016 Global Wealth Managers Survey 7
5.4.2. Global Wealth Model methodology 7
5.4.3. Global Retail Investments Analytics methodology 8
5.4.4. Exchange rates 8
5.5. Bibliography 9
5.6. Further reading 9
List of Tables
Table 1: Progressive tax rates levied on employment income in China, 2016 25
Table 2: Progressive tax rates levied on business income in China, 2016 26
Table 3: China: adult population segmented by affluent category and asset band (000s), 2010-15 1
Table 4: China: adult population segmented by affluent category and asset band (000s), 2016e-20f 2
Table 5: China: total liquid wealth segmented by affluent category and asset band ($bn), 2010-15 3
Table 6: China: total liquid wealth segmented by affluent category and asset band ($bn), 2016e-20f 4
Table 7: Chinese Yuan-US dollar exchange rate, December 31, 2015 and December 31, 2016 8
List of Figures
Figure 1: Affluent individuals represented 3.81% of the population in 2016 9
Figure 2: The affluent population holds 81.3% of retail liquid assets in China 10
Figure 3: While lower than in the past, retail savings and investment growth is forecast to remain strong 12
Figure 4: Deposits account for 76.4% of the Chinese retail and investment market 13
Figure 5: Mutual funds are forecast to grow at impressive rates 14
Figure 6: Deposit growth is inextricably linked to wage growth 15
Figure 7: Retail bond holdings are negatively correlated to the Shanghai Composite Index 17
Figure 8: Stock market performance was weak throughout 2016 18
Figure 9: There is a strong correlation between stock market performance and retail equity holdings 19
Figure 10: China's total fund industry is dominated by money market funds 20
Figure 11: A good chunk of Chinese HNW wealth is held in non-traditional investments 22
Figure 12: Chinese HNW individuals hold 35% of their assets offshore 24
Figure 13: Asset diversification and investment options remain the biggest motivations for offshore investment 25
Figure 14: The largest proportion of Chinese HNW offshore wealth is booked in the US 27
Figure 15: The largest proportion of Chinese HNW offshore wealth is booked in the US 28
