Rich Chinese increasing purchases of overseas equities

Millionaires in mainland cities are more and more buying offshore equities, despite efforts to make home stock markets more attractive

PUBLISHED : Wednesday, 27 March, 2013, 12:00am
UPDATED : Wednesday, 27 March, 2013, 5:02am

Mainland millionaires are showing a growing appetite for offshore equities and stock-related investment products, even as Beijing attempts to retain capital in the onshore market and lure offshore capital, a survey by Nielsen has found.

Stocks are the most popular investment tool among mainland Chinese who have HK$5 million or more in liquid assets when they invest in Hong Kong, followed by Hong Kong dollar deposits, gold and investment funds, according to Nielsen. Offshore stocks account for more than a quarter of such investors' total average portfolio.

Even investors with liquid assets ranging between HK$100,000 and HK$5 million put stocks as the second most favoured investment tool after Hong Kong dollar deposits, the survey found.

The research agency polled nearly 4,000 mainland citizens aged between 18 and 54 last December in Beijing, Shanghai, Guangzhou and Shenzhen. Four out of 10 respondents were millionaires.

Mainlanders are piling up their capital to invest in offshore stock markets, particularly in Hong Kong and the United States, though Guo Shuqing, the former head of the mainland's securities watchdog, rolled out hundreds of reforms to try to revive the onshore market and try to shore up local investors' confidence in mainland stocks over the past year.

The benchmark Shanghai Composite Index plunged to close to a four-year low in December last year even as Guo withheld approval for more than 800 IPOs.

At its close yesterday, the index had risen 1.3 per cent since the beginning of this year.

The number of mainlanders with holdings of overseas stocks is expected to more than double over the next year, the survey found.

Around one in six of those surveyed currently owns overseas securities, a figure expected to grow to more than one in three in the coming 12 months.

Around one in ten of the respondents owned Hong Kong stocks, and a quarter showed interest in owning Hong Kong stocks in the coming 12 months.

The top three products for mainlanders in the coming 12 months are Hong Kong deposits, life insurance and general insurance products.

Investment-linked insurance products, which can gain returns from heavy investments in equities, but come with greater risk, are particularly favoured, according to the survey.

More than half of the respondents said they were willing to accept a principal loss of 15 per cent or more in their investment, according to the survey.