About 4 in 5 young, affluent investors in mainland China turn to offshore assets: study
Young Chinese investors are increasingly turning to offshore assets for wealth preservation and diversification, with more than four-fifths of those surveyed reporting some exposure outside mainland China, a recent study by the CFA Institute showed. About 81 per cent of young Chinese investors surveyed had offshore investments, with such assets accounting for an average 43 per cent of their…
A recent study by the CFA Institute reveals that over 80% of young, affluent investors in mainland China are investing in offshore assets, according to a report. Conducted in December, the survey polled 300 individuals aged between 18 and 44. The findings suggest that offshore diversification has become mainstream among China's affluent youth, despite the nation's capital controls. Researchers attribute this shift to the need for asset preservation and international diversification.
Investors with international experience, such as those who have studied, worked, or engaged in business outside mainland China, demonstrated the highest level of offshore exposure, with 93% holding offshore assets and allocating an average of 45% of their portfolios to these investments. In contrast, investors in tier-one cities allocated an average 45% of their portfolios offshore, while those in other cities invested in offshore assets at a rate of 40%.
The primary reason for investing offshore was wealth preservation, cited by 55% of respondents, followed by portfolio diversification (54%) and global economic and industry trends (50%). Other motivations included access to investments unavailable domestically, cited by 44%, and hedging against domestic market or currency risks, cited by 41%. The trend indicates that offshore investing serves both return-seeking and risk management purposes.
The report underscores the need for wealth managers and advisers to develop cross-border capabilities to integrate investors' onshore and offshore assets into a coherent portfolio, considering risk, liquidity, and currency factors.
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