Growth in wealthy inland households to outpace downturn-hit coastal cities
The number of wealthy households in the mainland's inland region are set to grow faster than in the rich cities and coastal provinces where the economic slowdown has hit harder, a study has shown.
Total high-net-worth households, which own no less than six million yuan (HK$7.39 million) in investable assets each, is expected to increase by 30 per cent in inland regions such as Anhui, Gansu and Hunan provinces, said a study jointly conducted by Boston Consulting Group (BCG) and China Construction Bank. Investable assets exclude a person's primary residence, collectibles and goods which can be consumed.
The number of high-net-worth households would reach 1.74 million this year, an increase of 17 per cent from the previous year, but lower than the compound growth of 38 per cent over the past three years, the study said.
Export-dependent coastal provinces such as Guangdong and Zhejiang, as well as affluent cities including Beijing and Shanghai, can expect to see a slower growth in wealthy households of about 10 per cent as they have been more exposed to the economic slowdown, the study said.
The study expects the trend, with the number of high-net-worth households growing faster than other regions, to continue over the next five years as "the inland region would become China's centre of economic growth".
Provinces such as Anhui, Hunan, Hubei, Sichuan, Shangdong and Shaanxi, where the population size is larger, would see higher development potential, it said.
The value of mainland individuals' investable assets would see a 14 per cent increase this year to 73 trillion yuan from last year, which was lower than the compound growth of 24 per cent over the past three years.
Of the investable assets, 46 per cent are held by high-net-worth households.
The study, which surveyed 1,912 high-net-worth individuals, also found that investors had become more conservative amid the economic slowdown.
Some 47 per cent of the respondents said they tended to invest in low-risk products, up from 40 per cent last year. The affluent individuals who prefer capital preservation investment accounted for 36 per cent, up from 30 per cent last year.
The proportion of respondents who were interested in properties fell to 24 per cent from 36 per cent a year ago, and 17 per cent were interested in securities, which dropped from last year's 34 per cent.
"Investors will tend to allocate their assets in higher-risk products next year as the economy is likely to rebound," said Richard Huang, partner and managing director of BCG.
Huang said the rebound in the A-share market would likely restore investors' interest in securities next year.