Rich Chinese take stocks as prime investment

China.org.cn, October 14, 2011

A report?finds that?China's rich people invested 42 percent of their wealth in stocks last year. [CFP]

Rich Chinese invested 42 percent of their wealth in stocks last year, found a report conducted by Merrill Lynch Global Wealth Management, a division of Bank of America.

The report on wealth management in the Asia-Pacific region published Wednesday said the number of rich Chinese, with net assets standing at least US$1 million (excluding assets such as real estate and durable goods) reached 535,000 in 2010, taking the third spot in the region and fourth in the world.

The combined wealth of rich Chinese climbed to US$2.66 trillion last year, up 13.2 percent from 2009, it said.

Regarding their preference for investment, the report found that stocks and real estate properties are their prime investment targets.

It said by the end of 2010, their investment in the real estate sector made up 27 percent of their total assets, with 42 percent in stocks, much higher than the average investment level in such sectors in the region.

The report predicts that in the coming year the investment proportion of wealthy Chinese in the real estate sector will drop to 39 percent due to concerns over the government's tightening control over housing prices; while their investment in stocks will decrease to 21 percent.

It is predicted rich Chinese will reduce their cash holdings next year due to rising inflation, while their investment appetite for products with high risks and higher returns will grow, it said.

A senior official at Merrill Lynch Wealth Management, who is in charge of the Chinese mainland and Taiwan market, said China's strong economic growth is the main reason for the rapid rise of the number of rich Chinese and their increasing wealth.

There will be a large growth potential for wealth management institutions in the country because of the large scale of the Chinese market and its rapid growth, he said.

Merrill Lynch is the wealth management division of Bank of America. By June 30, the total assets of the clients managed by Merrill Lynch exceeded $1.5 trillion.