Investment
2 Summary: Bonds and money market instruments, cash and bank dunning and non-standard bond assets are the main configurations of China's personal investment wealth management products. Different families have similar Internet investment and financial preferences, and Bao products (balanced wealth management products linked to money funds) are the first choice for all families, followed by P2P products. In terms of mobile Internet-based finance, the largest proportion of investment with total money of more than 100 thousand, reached 32%; followed by 50-100 thousand, accounting for 25%. MI Finance occupied the first place in the market for investment and wealth management applications, mainly due to the large number of users of Xiaomi's mobile phones, 99% of which are pre-installed customers. In terms of the number of daily active users, the app Straight Flush, a stock investment wealth management, ranked first.
3 Summary: In 2011-2016, the scale of high-net-worth people with an asset of 10 million in Mainland China has grown rapidly, reaching 1.34 million in 2016, an increase of 10.7% over the previous year. For overseas investment allocation, overseas real estate is the most popular. In addition, fixed income products, overseas stocks, industry, insurance and funds are also favored. When high-net-worth individuals in China make overseas financial investments, the main product they choose is foreign exchange deposits, which accounts for more than half of the total, followed by insurance and stocks. The most preferred trading and cooperative institutions for high-net-worth individuals in China when investing in overseas financial institutions are banks, accounting for 77% of the total. Among bank products, foreign exchange deposits, standard wealth management products and gold are the most preferred products. In terms of the source of information channels, banks and recommendations from friends and relatives are the most important channels, as well as the most trusted channels for high-net-worth individuals to obtain overseas financial investment information.
Potential Benefits High Mid 4 Main Products in China s Personal Investment Wealth Management Market Universal Life Insurance Crowd Funding Gold Investment Trust Real Estate Fund Asset Management Equity Fund P2P Private Equity Unit-linked Insurance Exchange Futures Stock Bank Finance Low General Insurance Dividend Insurance Monetary Fund Low Mid High Risk Source:China s Personal Financial Market Research Report, 2016
5 Bonds and money market instruments, cash and bank dunning and non-standard bond assets are the main configurations of China's personal investment wealth management products, accounting for 89.1% of the total. Asset Allocation of Bank-Financing Products Others, 3.1% Equity Investment, 7.8% Bonds and Currency Markets Instruments, 51.0% Non-standardized Bond Asset, 15.7% Cash and Bank Payment, 22.4% Source:China s Personal Financial Market Research Report, 2016
6 Industrial and commercial enterprises, securities markets and financial institutions are the main configurations for investment in trust funds. It is noteworthy that the securities market has grown faster. Allocation of Trust Fund Investment Others, 12.6% Commercial and Industrial Enterprise, 22.5% Real Estate Industry, 8.8% Securities Market, 20.4% Basic Industry, 17.9% Financial Institution, 17.9% Source:China s Personal Financial Market Research Report, 2016
7 In respect of the net value of public funds, the proportion of monetary funds exceeds 50%, indicating that cash management products with high liquidity and low risk are most favored by Chinese investment managers. Distribution of Public Funds Monetary Fund, 52.93% Closed-end Fund, 2.32% Others, 97.68% QDII Fund, 0.79% Equity Fund, 9.12% Mixture Fund, 26.54% Bond Fund, 8.30% Source:China s Personal Financial Market Research Report, 2016
8 Different families have similar Internet investment and financial preferences, and Bao products (balanced wealth management products linked to money funds), such as YuEBao, are the first choice for all families, followed by P2P products. Number of Families ( 000) Internet-based Investment and Financing by Households in China Internet-based Insurance Products such as YuEbao Crowd-Funding P2P Lending 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 < 50,000 50,000-100,000 100,000-200,000 200,000-500,000 > 500,000 Source:China s Personal Financial Market Research Report, 2016 Annual Household Income
9 Among the major wealth management products, the proportion of Internet users in the money funds is the highest, reaching 26.17% with 370 million Internet users. 各理财产品互联网用户比例 (%) Monetary Fund 26.17% Stock 6.85% P2P Fund Consumption by Installments Small Loan Company Nobel Metal Integrated Financing Platform Foreign Exchange Financial Loan for Consumption 3.08% 2.83% 2.78% 2.32% 1.15% 0.24% 0.17% 0.07% Source:Big Data Analysis of China s Internet based Financing Products, 2017
10 There are slightly more women than men in China's Internet-based financing market, among which young people aged 25-30 account for the majority of users. Gender Ratio of China s Internet-based Financing Investors Distribution of China s Internet-based Financing Investors by Age Male, 49.5% 36-40 years old, 6.4% 41 years old, 15.6% 31-35 years old, 14.5% 24 years old, 19.2% Female, 50.5% 25-30 years old, 44.3% Source:China s Internet-based Financial Market Research Report
11 China's Internet-based wealth management market investors are mainly highly educated people concentrated in prefecture-level cities. Distribution of China s Internet-based Financing Investors by Education Distribution of China s Internet-based Financing Investors by Region Bachelor, 35.8% Master and Above, 4.5% Primary and Below, 1.1% Counties, 4.2% Villages, 9.7% Others, 5.6% Middle School, 11.9% Prefecturelevel Cities, 29.5% Beijing/Shang hai/guangzho u/shenzhen, 19.3% High School, 15.8% College, 30.9% Other Capital Cities, 31.7% Source:China s Internet-based Financial Market Research Report
12 Most of China's Internet-based financing investors had lower-middle income. Distribution of China s Internet-based Financing Investors by Occupation Distribution of China s Internet-based Financing Investors by Monthly Income Civil Servant, 13.0% Student, 12.4% Worker/Servic e Industry, 8.9% Unemployed, 2.5% Others, 4.0% Freelance, 32.9% 4,000-7,999, 25.3% 8,000-11,999, 6.2% 12,000, 8.8% < 2,000, 20.0% Staff, 26.3% 2,000-3,999, 39.7% Source:China s Internet-based Financial Market Research Report
13 In terms of geographical distribution, developed regions, especially the eastern coastal regions, have a strong preference for investment and financial management, with Shanghai ranking first. Ranking Province/Province-level Municipality 1 Shanghai 2 Fujian 3 Jiangsu 4 Beijing 5 Zhejiang 6 Guangdong 7 Shandong 8 Anhui 9 Tianjin 10 Hebei Source:Big Data Analysis of China s Internet based Financing Products, 2017
14 In terms of mobile Internet-based finance, the largest proportion of investment with total money of more than 100 thousand, reached 32%; followed by 50-100 thousand, accounting for 25%. China s Mobile Internet-based Financing Investors Investment Amounts (thousand yuan) 0-1 2% 1-5 3% 5-10 6% 10-30 14% 30-50 18% 50-100 25% 100 Source:Annual Analysis of China s Internet-based Financing Investors, 2017 32%
15 In 2016, China s mobile Internet-based financing users preference for short-term financial products slacked down. The overall investment period has been extended, with an investment period of over 90 days accounting for more than 60%. China s Mobile Internet-based Financing Users Investment Period 1-30 days, 9% 31-90 days, 27% 181-365 days, 32% 91-180 days, 32% Source:Annual Analysis of China s Internet-based Financing Investors, 2017
16 MI Finance occupied the first place in the market for investment and wealth management applications, mainly due to the large number of users of Xiaomi's mobile phones, 99% of which are pre-installed customers. Penetration of Investment and Financing App Market MI Finance 4.02% Pingan Straight Flush 2.37% 2.49% Jingdong Finance 1.48% Ant Fortune Eastmoney 0.79% 1.00% Lufax HTSC Pingan Securities Eastmoney Fund 0.55% 0.53% 0.38% 0.37% Source:Research Report of Investment and Financing app,2016.12
17 Straight flush, a stock investment and financing app, gathers 4,606,000 daily active user (DAU), ranking the first in the investment and financing app market. Next came Ant fortune, with a DAU at 1,215,000. Daily Active User (DAU) in Investment and Financing App Market (thousand) Straight Flush 4,606 Ant Fortune Eastmoney 1,215 1,206 Lufax 959 Jingdong Finance 726 HTSC 370 Eastmoney Fund Pingan Securities Pingan Xiaomi Finance 173 206 140 94 Source:Research Report of Investment and Financing app,2016.12
18 Average using time of Stock apps, such as Eastmoney, Straight Flush and Pingan Securities, was much longer than other types of investment and financing apps. Usage Habits of Investment and Financing App Average Time Daily(min) Average Using Times 50 47.0 46.3 40 34.6 30 20 10 0 2.80 2.87 Eastmoney Straight Flush Pingan Securities Source:Research Report of Investment and Financing app,2016.12 6.2 5.3 5.1 3.1 1.81 2.8 2.8 1.53 1.51 1.39 1.18 1.20 1.43 0.21.03 Pingan HTSC lufax Ant Fortune Jiongdong Finance Eastmoney Fund Xiaomi Finance
19 China s high-net-worth individuals investable assets have increased by 15% for recent years. It was estimated that China s high-net-worth individuals total investable assets would exceed the general families in 2020. Structure of Individual Investable Assets in China High-Net-Worth Families General Families 100% 80% 41% 44% 46% 47% 49% 50% 49% 61% 60% 40% 20% 39% 59% 56% 54% 53% 51% 50% 51% 0% 2013 2014 2015 2016E 2017E 2018E 2019E 2020E Source:China Private Bank 2016
20 From 2011 to 2016, the scale of the high-net-worth people with assets of 10 million in the Chinese mainland grew rapidly. By 2016, it had reached 1.34 million, an increase of 10.7% over the previous year. Among these groups, business owners and gold leaders accounted for the largest proportion, while the proportion of real estate speculators rose from the previous year, which was mainly affected by the skyrocketing housing prices in first-tier cities. 1,600 1,400 1,200 1,000 800 600 400 200 0 The Number & Growth Rate of High-networth Individuals in China (thousand) 9.7% 960 130 Number('000) 1,020 6.3% 1,050 1,090 2.5% 3.8% Growth Rate 11.0% 1,210 10.7% 1,340 2011 2012 2013 2014 2015 2016 12% 10% 8% 6% 4% 2% 0% Occupation Distribution of China s Highnet-worth Individuals in 2016 Stock Investor, 10% Real Estate Investor, 15% Gold Collar, 20% Entrepreneur, 55% Source:Hurun Institute Note:High-net-worth individuals assets include fixed asset and current assets
21 Among the people who have already invested overseas, the main purpose is maintaining or increasing the value of their assets. Among the people considering overseas investment in the next three years, appreciation and hedging are still the main purposes, but the demand for hedging increases significantly. The Purpose of China s High Net Worth Individuals to Invest Overseas Had Overseas Investment Once Ready to Invest Abroad in the Next Three Years Reduce the Impact of RMB Fluctuation 43% 44% High Returns 30% 40% Asset Security & Secret 26% 21% Reasonable Tax Planning &Avoidance 22% 23% Migration 19% 6% Business Management 15% 7% Inheritance of Property 7% 9% Source:China Private Bank 2016
22 For overseas investment allocation, overseas real estate is the most popular. In addition, fixed income products, overseas stocks, industry, insurance and funds are also favored. Overseas Investment Products that Would See a Overweight in the Next Year 40% 38% 30% 20% 26% 23% 22% 22% 20% 12% 10% 9% 9% 7% 6% 6% 3% 0% Overseas Real Estate Fixed-Income Products Overseas Stock Overseas Industries Insurance Overseas Fund Overseas Family Trust Cash And Savings Gold Private And Venture Capital Physical Investment Hedge Fund Financial Derivatives Source:China Private Bank 2016
23 When high-net-worth individuals in China make overseas financial investments, the main product they choose is foreign exchange deposits, which accounts for more than half of the total, followed by insurance and stocks. Overseas Investment Products Chosen by China s High-net-worth Individuals Foreign Currency Saving Insurance Stock Fund Bond Standard Financial Products Trust VC/PE Gold Estabilishing Overseas Company Futures Artwork 2.9% 4.3% 12.9% 12.1% 10.7% 17.1% 24.3% 35.0% 33.6% 41.4% 45.0% 62.9% Source:Going Global: Trends of the Chinese HNWI 2016
24 When choosing an investment product, the most important thing for China s high-net-worth individuals is the security risk control method, followed by the actual income. Factors that Influenced China s High-net-worth Individuals Choices on Overseas Investment Products Methods of Safe Risk Control 70.3% Actual Income 64.9% Reliable Investment Institutions 51.4% Risk Assessment 48.3% Prospect of Investments 28.2% Timliness of Service and Processing Demand 25.8% Source:Going Global: Trends of the Chinese HNWI 2016
25 The most preferred trading and cooperative institutions for high-net-worth individuals in China when investing in overseas financial institutions are banks, accounting for 77% of the total. Among bank products, foreign exchange deposits, standard wealth management products and gold are the most preferred products. Channels of Overseas Financial Investment for China s High-net-worth Individuals Bank 77.0% Securities / Funds / Futures Company 47.0% Insurance Company Trust Company Professional Wealth Management Agency Internet-based Financial Institution 33.3% 31.2% 31.2% 27.0% Personal Investment Team Family Office 17.0% 21.2% Others 3.9% Source:Going Global: Trends of the Chinese HNWI 2016
26 In terms of the source of information channels, banks and recommendations from friends and relatives are the most important channels, as well as the most trusted channels for high-net-worth individuals to obtain overseas financial investment information. Channel to Obtain Information of Overseas Financial Investment for China s High-networth Individuals Bank Recommendation from Relatives and Friends Professional Investment Websites Private Investment Company/Consultant Investment Management Company New Media(WeChat,Weibo, etc) Immigration Agency Newspaper, Magazine Offline Activities(Investment Fairs/Forums) Portal Websites TV News/Broadcast Overseas Government 7.6% 19.8% 16.8% 16.0% 14.5% 13.7% 13.0% 36.6% 36.6% 35.9% 64.1% 67.2% Source:Going Global: Trends of the Chinese HNWI 2016
27 As China s high-net-worth people gradually increase their awareness of risk control, for future overseas financial investments, they expect to get investment consulting services mostly. Most Expected Services for Overseas Financial Investment among China s High-networth Individuals 70% 60% 63.0% 50% 40% 30% 43.5% 31.2% 27.5% 20% 15.9% 10% 8.7% 0% Investment Advisory Providing Financial Products Lecture/Training Activities Loan Financing No Need Source:Going Global: Trends of the Chinese HNWI 2016
28 The United States, with the advantages of investment, immigration and education, has become the first choice for China s high-net-worth individuals to make overseas financial investment in, accounting for 73.7% of the total. Popular Overseas Countries for Financial Investment among China s High-net-worth Individuals US 73.7% Singapore UK Australia Japan Canada 16.5% 14.1% 14.1% 12.0% 10.8% Germany Switzerland France 7.2% 7.2% 6.9% New Zealand South Korea 2.1% 2.1% Source:Going Global: Trends of the Chinese HNWI 2016
29 For China s high-net-worth individuals, they bought house abroad mainly for the purpose of better investment and children's education. China s High-net-worth Individuals Purpose to Buy House Abroad Use of China s High-net-worth Individual s Houses Bought Overseas Investment Children's Education 56.1% 74.9% Asset Allocation Children's Education and Residence Daily Residence 34.9% 47.8% 52.8% Immigration 42.2% Vacation Rent 22.3% 26.9% Residence 37.6% Live out One's Life in Retirement 14.3% Immigration 13.0% Health Care 7.6% Health Care 9.0% Source:Going Global: Trends of the Chinese HNWI 2016
30 Most China s high-net-worth individuals had less than 3 overseas houses, mainly being apartments and villas. The Number of China s High-net-worth Individuals Overseas House Property Type of China s High-net-worth Individuals Overseas House Property 1 40.3% Apartment 57.4% Villa 47.0% 2-3 45.1% Business Office Building 7.8% Shop 7.0% 4-5 9.2% Hotel 3.5% 6 5.4% Chateau / Castle Farm / Ranch 3.5% 2.6% Source:Going Global: Trends of the Chinese HNWI 2016
31 In the coming few years, 56.6% of China's high-net-worth individuals will maintain the number of current overseas house property, 30.5% will continue to buy more and 12.9% will sell some of them. Maintain the Current Situation Continue to Buy Sell 30.5% 12.9% 56.6% Source:Going Global: Trends of the Chinese HNWI 2016
32 In the third quarter of 2017, China's Internet-based venture capital investment reached 73.17 billion yuan, slightly higher than the second quarter, and the capital investment was more concentrated. Amount of China s Internet-based Venture Capital Investment(billion yuan) 80 70 60 62.1 77.2 77.3 70.1 73.2 50 50.0 42.8 40 30 20 10 0 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 Source:Analysis of China s Internet-based Venture Capital Investment,2017Q3
33 In the third quarter of 2017, the most popular channels for entrepreneurs were business service, e- commerce, and local life. 2017Q3 China s Internet-based Venture Capital Distribution Transportation Others, 18%, 4% Game, 4% Handware, 5% Culture & Entertainment, 8% Enterprise Service, 16% Finance, 8% Education, 10% Local Life, 13% E-commerce, 14% Source:Analysis of China s Internet-based Venture Capital Investment,2017Q3
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