Tycoons keeps exit options open

Asia Briefing: China's richest tycoons are increasing their investment overseas, particularly in the property market, in the face of slowing economic growth and rapid change in the structure of the economy, a new report has shown.

The report by China Merchants Bank and the consulting firm Bain & Co in China reflects uncertainties about abrupt shifts in an economy in which growth slowed last year to 7.8 per cent from the past decade's double-digit rates.

Wealthiest
One in three of China's wealthiest have investments abroad, almost 60 per cent of people surveyed with investments abroad are planning to increase them, while half of those who haven't invested abroad plan to start, the report said.

Growth in the number of Chinese people with at least 10 million yuan (€1.24 million) in investable assets slowed in 2010-12, according to China Merchants Bank and Bain. The total rose 18 per cent over the previous two-year period to 700,000, down from 29 per cent growth in the period 2008-10.

At least 100,000 of those people have more than 50 million yuan (€6.2 million), while 40,000 have more than 100 million yuan (€12.4 million), said the report, the third in a series following editions in 2009 and 2011.

Around 60 per cent plan to increase their foreign holdings.

The tycoons are clearly keeping their exit options open.

The 2009 report caused a stir because it said that 60 per cent of wealthy Chinese had completed or were considering “investment immigration” – temporary or permanent residency given by some countries to attract investors.

This year’s report made similar findings, and also said that more than 10 per cent of people surveyed expect their children to also pursue it.

Curbs on purchases
The report was compiled from questionnaires filled out by 3,300 people and more detailed interviews with about 100 of them and with bank employees.

In the past couple of years the Chinese government has been trying to rein in rampant property price increases by introducing curbs on purchases and financing, and this has prompted China’s richest people to look abroad.

Property makes up most of the investment and top destinations include the United States, Canada, Hong Kong and Singapore.