Wealth Management in China 2007

Wealth Management in China 2007

Introduction

Datamonitor's Wealth Management in China 2007 focuses on the onshore liquid wealth of mass affluent and high net worth customers in China. It provides detailed analytical views of macro-economic background, retail savings and investments, mass affluent and high net worth individuals, competitive dynamics, customer preferences and forecasts.

Scope

Overview 1
Catalyst 1
Summary 1
Executive Summary 2
China's economy is booming, which has resulted in onshore savings and investments balances increasing strongly 2
China's wealthy population represents a very attractive market for onshore wealth managers 2
Table of Contents 3
Table of figures 4
Table of tables 5
Chapter 2 Market overview 6
China's economy has been booming 6
Historic GDP growth levels have been spectacular 6
However, the market still has room for growth 8
As a result, China's onshore liquid asset market has boomed 10
Chinese deposit balances have been growing 11
Direct equity balances declined in 2004 and 2005, however recovered strongly in 2006 11
Despite a slowdown in 2003, mutual fund balances have grown strongly 11
Retail bond balances dropped sharply in 2003, however the market recovered significantly 11
Trends in Chinese products and services 12
In 2006, Chinese equities rose sharply 12
Chinese government looks to slow the property market 14
Regulatory changes are making it easier for foreign banks 15
China has relaxed the rules on foreign banks 15
Local incorporation has begun 15
Despite a slowdown in 2004, the Chinese affluent population and onshore liquid assets has grown strongly 17
There were 8.6 million wealthy individuals in China in 2006 17
Wealthy individuals in China held USD3.2 trillion in onshore liquid assets in 2006 18
2008-9 will be characterized by struggling economies worldwide 18
Rising interest rates, excessive borrowing and negative savings rates have combined in a perfect storm that will upend most of the world's economies 18
The widespread securitization of loans will compound this problem 19
And the US economy is not healthy enough to 'expand' itself out of this market 20
Foreign direct investment may also boost the economy, however foreign investors are pulling money out of the US markets 20
A continued Treasury sell-off may further depress the dollar and force interest rate hikes ... 21
Another major terrorist attack in the US would destabilize the economy further 21
Market capitalization will fall worldwide as US stock markets continue their jitters 21
China's wealthy population represents a very attractive market for onshore wealth managers 22
There will be almost 16 million wealthy individuals living in China by 2011 22
Wealthy individuals in China will hold over USD6 trillion in onshore liquid assets by 2011 23
Data 24
Chapter 3 Competitive Dynamics 30
Introduction 30
Competitive interest is intensifying 30
There have been many entries into China's wealth management space by foreign players in the last 18 months. 30
But the local banking and investment companies are well-established 32
The big four banks of China hold 51% of total assets 32
Bank of China 33
Industrial and Commercial Bank of China 33
China Construction Bank 33
Agricultural Bank of China 34
Securities companies have limited services available to clients 34
Financial planning industry is developing in China 34
Wealth Management operations 35
Bank of China (BOC) 35
Industrial and Construction Bank of China (ICBC) 35
Other State-Owned Banks Bank of China 36
Joint stock banks 36
Citigroup Private Bank 36
HSBC 36
UBS Wealth Management 37
APPENDIX 38
Definitions 38
CAGR 38
HNW 38
Liquid assets 38
Retail 38
Mass affluent 38
Mass market 39
Methodology 39
Global wealth Model 39
The UK sub model 39
Global sub model (for all other countries) 39
Forecasting methodology 39
Continuous refinement to the understanding of liquid wealth distribution 40
Datamonitor's wealth numbers compared with other wealth numbers 40
Further reading 41
Ask the analyst 41
Datamonitor consulting 41
Disclaimer 41
List of Tables
Table 1: Chinese annual GDP growth, 1996-2006 24
Table 2: Industry sector splits as percentage of GDP for China, 1996-2005 24
Table 3: Industry sector splits as percentage of GDP for selected countries, 2005 25
Table 4: Chinese onshore retail savings and investments balances in USDm, 2002-06 25
Table 5: Stock market capitalizations in China, 2002-06 26
Table 6: Number of wealthy individuals segmented by liquid asset band, 2002-6 26
Table 7: Aggregate onshore liquid assets segmented held by wealthy individuals, by liquid asset band, 2002-6 27
Table 8: Number of wealthy individuals segmented by liquid asset band, 2007-11 28
Table 9: Aggregate onshore liquid assets segmented held by wealthy individuals, by liquid asset band, 2007-11 29
List of Figures
Figure 1: Chinese GDP has grown by 10.3% compounded annually between 2002-06 7
Figure 2: China's services sector has evolved over the past 10 years 8
Figure 3: China's services sector is comparatively underdeveloped, 2005 9
Figure 4: Chinese onshore retail savings and investments balances in USDbn, 2002-06 10
Figure 5: Chinese stock exchange market capitalizations in CNYm, 2002-06 13
Figure 6: Wealthy individuals declined slightly in 2004 but recovered by 2006 17
Figure 7: Onshore liquid assets of wealthy individuals in China has grown strongly 18
Figure 8: The number of wealthy individuals in China is expected to grow 9.0% compound annually from 2007 to 2011. 22
Figure 9: Aggregate onshore liquid assets of wealthy Chinese will grow 9.5% compound annually from 2007-2011 23
Figure 10: The four state-owned banks control over half the total banking assets in China 32