The number of multimillionaires in Hong Kong fell last year as a challenging local investment environment undermined their wealth, according to the results of a survey released by Citibank on Tuesday. The city’s affluent will adopt a more conservative and diversified approach to investment going forward, the study indicated. About 434,000 people in Hong Kong were estimated to have at least HK$10 million (US$1.27 million) each in total assets last year, a 15 per cent drop from 515,000 in 2020, according to Citibank’s “Hong Kong Affluent Study 2021”, which was conducted between October last year and January this year. A multimillionaire is defined by the bank as someone who has more than HK$10 million in total net assets and at least HK$1 million in liquid assets. The drop in the number of multimillionaires in the city could be a result of the disappointing performances of the Hong Kong and Chinese stock markets over the past year, said Josephine Lee, head of retail banking at Citibank Hong Kong. She was speaking at a media briefing at the launch of the survey. She pointed to the 14 per cent fall in the Hang Seng Index in 2021, and the 23 per cent plunge in the Hang Seng China Enterprises Index. However in the US, the S&P 500 rose 27 per cent last year. The multimillionaires’ median wealth stood at HK$15.7 million, according to the poll of 3,786 Hong Kong residents aged between 21 and 79. This represented a 1.3 per cent increase from the HK$15.5 million in the 2020 report. “While the estimated population of Hong Kong’s multimillionaires has decreased slightly, their total net assets have continued to increase despite being two years into the pandemic,” said Lee. “This shows that the affluent in Hong Kong continue to allocate their wealth with diversified and global investment strategies , pulling themselves out of adversity while gradually shaking loose the shadow cast by the pandemic.” While most multimillionaires managed to maintain or grow their wealth during the Covid-19 pandemic, around a third of those surveyed suffered an average HK$1.1 million loss from their stock investments at their worst point. “Over one-third of the multimillionaires surveyed said that the pandemic had made their investment stance more conservative than the previous year, and this has manifested itself in ways such as holding more cash, lowering holdings of stocks, reducing new investments, and shifting to invest in low-risk products,” said Lee. Bonds and mutual funds saw the biggest gain in popularity among the city’s affluent, the survey showed. About 34 per cent said they held bonds in the past three months, compared with 26 per cent in the previous survey. Some 52 per cent said they had parked money in mutual funds, compared to 48 per cent a year ago. “Under the low-interest-rate environment, multimillionaires were more likely to use mutual funds or bonds for passive income,” said Lee. “We expect multimillionaires to continue to diversify their portfolios and invest globally, as they seek to increase their wealth while maintaining stability.” A study last year by Wealth-X found that more than 60,000 Hongkongers, or one in every 125 residents, had a net worth of at least US$5 million, making the city one of the most affluent in the world.