Asian millionaires favour stocks, cash over property, study finds

People with investible assets of at least US$1 million, the threshold for defining so-called high net worth individuals (HNWIs), are choosing equities and cash over real estate and fixed income investments, according to a recent report.

The region with the highest population of HNWIs, Asia-Pacific, has seen the amount invested in shares by this group rise by 4.4 per cent since the first quarter of 2016, while their assets held in cash climbed 4.3 per cent, according to the World Wealth Report 2017 conducted by consultancy Capegemini.

The survey found 40.4 per cent of the region’s richest residents – apart from those in Japan – said stocks were the biggest driver of their investment performance in 2017. The number was much higher globally, with 90 per cent of this bracket citing equities as an important, or the most important, contributor to their investment returns, the report said.

Whether intentionally or not, the preference for stocks falls in line with the advice of the American billionaire Warren Buffett, arguably the most successful investor on the planet. Buffett has amassed more than US$73 billion, according to Forbes, mostly by making sage investment moves. One of his favourite tactics is the buy-and-hold strategy.

“The money is made in investments by investing,” the 87-year-old said in a 2016 interview with CNBC. “By owning good companies for long periods of time. If they buy good companies, buy them over time, they’re going to do fine 10, 20, 30 years from now.”

Hong Kong’s wealthy investors have also taken a leaf out of Buffett’s book, with 58 per cent of HNWIs citing equities as the most important driver of their returns. This has partly mirrored the performance of the city’s stock market, which saw its daily turnover jump by 28 per cent to HK$60 billion in the first quarter of this year, from HK$47 billion in the last three months of 2016, according to KPMG.

Over all, the richest investors in Asia-Pacific put 28 per cent of their assets in equities in 2017, followed by cash and cash equivalents (24.9 per cent).