Some family offices eyeing Chinese investments as US-China tensions ease: report

A recent survey by Citigroup reveals that family offices in Europe, the Middle East, and Africa are increasingly considering China as their preferred investment market as tensions between Beijing and Washington ease, according to the Global Family Office Report. Out of 351 family offices surveyed from over 40 countries, 29% of those in EMEA expressed intentions to increase their exposure to the Chinese market, making it their top choice over other regions.

The survey also found that Asia-Pacific and North America were the second and third most popular destinations, with 26% and 25% of respondents, respectively. Gary Ng, a senior economist at Natixis Corporate and Investment Bank, suggests that China's lower political uncertainty compared to other regions makes it an attractive hedge to US dollar-denominated assets, particularly in the tech sector.

However, he warns of valuation and exit strategy challenges due to China's frequent regulatory changes and limited liquidity. Despite underperformance of Chinese stocks this year, China's trade with the European Union and Africa has been growing steadily, with annual increases of 12.4% and 23.3%, respectively. China also ranks as the fourth most favored market globally, with 19% of surveyed family offices planning to deploy new capital there.

Inflation and interest rates have now become the top concerns for family offices, with 63% of respondents expressing worry about inflation and 38% concerned about the global financial system's stability. Asia's ultra-wealthy families, particularly in Asia-Pacific, are especially interested in artificial intelligence (AI), with 80% of respondents planning to invest in the sector, compared to a global average of 51%. Healthcare is also a favored sector in Asia-Pacific, with 43% of respondents.