China's super-rich confident of going it alone in investing: survey
High-net-worth mainlanders are the biggest financial risk-takers in the world, with nearly all of them confident they can manage their investments and reach their financial goals, according to a survey by US asset manager Legg Mason and Citibank.
The finding adds to evidence that buying euphoria by individual investors is the major driving force in the stock market rally, which has come despite regulators warning of a bust.
"Chinese investors perennially appear to take the most active stance towards the markets," Freeman Tsang, head of China and Hong Kong businesses at Legg Mason, said on Tuesday. The survey covered more than 4,200 affluent investors across 20 markets, including 250 mainlanders with an average net worth of US$2.5 million. The mainlanders were the most optimistic investors, with about 60 per cent of them planning to increase their equities this year.
The survey found that 93 per cent of respondents from the mainland said they could manage their own investments and 89 per cent were confident that they could meet their financial goals.
In Hong Kong, just 65 per cent of wealthy investors said they could manage their own equity investments, with 61 per cent saying they would work with a financial advisor to allocate their assets.
The mainland's benchmark Shanghai Composite Index has been on a bull run since November as retail investors have gravitated to the A-share market despite the weak fundamentals.
On April 8, the combined turnover on the Shanghai and Shenzhen stock exchanges hit an all-time high of 1.5 trillion yuan (HK$1.9 trillion) as investors snubbed warnings from the securities regulator.
According to the China Securities Regulatory Commission (CSRC), 90 per cent of the trading value on the A-share market is from individual investors.
"The A-share market could turn out to be extremely buoyant but could be followed by a sharp fall," said Wang Ying, head of wealth management at Citi China. "We expect to see high volatility in the market." By yesterday, the Shanghai Composite Index was up 30.2 per cent from last year's close.
Fund managers said they did not understand the rise because it was not supported by market fundamentals. But the survey found increasing appetite among mainland respondents for domestic investment. About 80 per cent of the respondents said domestic shares offered the best opportunities this year.
But the CSRC thought otherwise. "In the face of an economic slowdown, it is advisable for investors to be cautious against risks," Deng Ge, a CSRC spokesman, said. "Please don't blindly chase returns with irrational follow-up buying."