According to the compound growth rate of residentswealth scale from 2016 to 2018, the residents wealth in China may reach 500 trillion yuan in 2019.
Although real estate still dominates the wealth composition of Chinese residents, the gap between real estate and financial assets is narrowing in general. Even so, compared with the wealth allocation of residents in the United States, Japan and South Korea, the wealth of residents in China is still too concentrated in real estate, while the allocation of stocks, funds and insurance is low.
Jiang Chao, an analyst at Haitong Securities, believes that it is not difficult to find that the income performance of different assets has a great impact on the allocation of residentswealth. Therefore, the structural change of residents wealth allocation in the future depends directly on the return performance of assets, while in the final analysis, it depends on the direction of policy and the mode of economic growth.
Allocation structure: the proportion of real estate is large
Of the 465 trillion assets, real estate accounts for about 70% and financial assets account for about 30%. As for the composition of financial assets, deposits account for more than 50%, followed by insurance, bank agent financing, stocks, securities investment funds, trust plan equity and bonds, accounting for 13.8%, 13.1%, 6.3%, 5.2%, 4.6% and 0.6%, respectively.
Longitudinal observation shows that the proportion of real estate in resident assets in China has always been higher than that of financial assets in terms of stock. Since the mid-1990s, with the development of financial markets and the improvement of residentsawareness of asset allocation, the proportion of financial assets in total resident assets in China has increased as a whole, from 19% in 1993 to 32% in 2014. The gap between the two is narrowing. However, after 2015, due to the strong real estate stimulus policy and housing price expectations, while the high stock index fell in the same period, the proportion of real estate in residential assets rose slightly, and the proportion of financial assets decreased slightly.
From the perspective of growth and growth, after 2010, compared with the previous growth of residential financial assets and real estate, the growth rate of residential financial assets and real estate is rising and falling at the same time, showing more characteristics of growth and decline. It is worth noting that not every year, the majority of new assets are real estate. In 2014, the proportion of new financial assets in total assets of residents reached 55%, exceeding the proportion of real estate for the first time.
Compared with the wealth allocation of residents in the United States, Japan and South Korea, the wealth of residents in China is too concentrated in real estate, while the allocation of stocks, funds and insurance is low.
In 2018, the total assets of American residents amounted to 120 trillion US dollars, of which over 70% allocated financial assets, while real estate accounted for only 24.3%. Among the financial assets, stock and investment funds accounted for 32.2%, followed by insurance, pension and other 23.8%. In 2017, the total assets of Japanese residents reached 2977 trillion yen, of which 63.9% were financial assets. Specifically, Japanese residents prefer low-risk assets, holding 32.5% of cash and 17.5% of insurance assets, while stocks and other financial assets account for 11.1% and 2.7% respectively. Korean residentsasset allocation is comparatively similar to Chinas, with 62.3% of Korean residents non-financial assets allocation in 2017, of which land and housing account for 44.2%. Among financial assets, Korean residents prefer low-risk assets, with 16.2% of cash and 11.9% of deposits and insurance assets held, respectively.
Haitong Securities Analysis finds that the resident asset allocation structure of the United States, Japan and South Korea has undergone great changes in history. For example, the resident asset allocation structure of the United States has undergone a transformation from real estate to financial assets, which changed around the 1980s, mainly due to a long-term bull market in the United States since the 1980s; Japan has made the resident asset allocation biased due to the decline of the housing market and stock market in the 1990s. Good from real estate to financial assets, and favor low-risk assets; Korean real estate allocation is still high, which is related to the continued rise in house prices in Korea.
The Change of Investment Market
From the above analysis, we can find that there are two main factors affecting the wealth allocation of Chinese residents. One is the trend of real estate prices and policies; the other is the current situation and changing trend of major financial investment markets.
Although housing allocation is the ballast stone of wealth allocation for residents, since 2018, real estate regulation has been increasing, and peoples mood of investing in real estate has gradually cooled down, and funds have begun to flow to the financial products such as stock market and fund.
According to the survey of China Urban Family Wealth Health Report 2018 issued by Southwest University of Finance and Economics and Guangzhou Development Bank, households with higher asset levels tend to have stronger awareness of asset management and prefer high-income and high-risk assets. Chinas per capita GDP has risen from 80,000 yuan in 2000 to 65,000 yuan in 2018. With the further increase of residentsdisposable income and the accumulation of family wealth, more and more residents will choose to allocate securities financial assets.
Ping An Securities believes that under the anticipated cooling of housing prices, more residential funds will flow into the allocation of financial products, and standard financial products such as stocks and bonds will benefit from the inflow of residential funds in the medium and long term, especially core assets.
So what about the major financial investment markets in the short and medium term?
Focusing on the third quarter, Ping An Securities said that the global asset allocation in the third quarter was still dominated by hedging assets, gold > US dollar index > bond market > stock market > crude oil; the domestic market was dominated by equity market, stock market > bond market > bulk commodities.
On October 10, the Shanghai Composite Index reached 2947.71, the Shenzhen Component Index reached 9638.1, the GEM Index reached 1666.97, the Wandequan A Index reached 4120.1, the Shanghai Stock Exchanges average P/E ratio was 13.82, the Shenzhen Stock Exchanges average P/E ratio was 23.94, and the Wandequan A dynamic P/E ratio was 17.16; as of October 9, 2009, the financing balance of Shanghai and Shenzhen Stock Stock Exchanges in China reached 94.415 billion yuan. The balance of securities trading reached 12.748 billion yuan, the net active purchases of main board funds amounted to 5.261 billion yuan, and the net active purchases of GEM funds amounted to 1.088 billion yuan. At present, the financing balance of Shanghai and Shenzhen stock markets is at a low level since October 2014, while the margin trading balance is at a high level.
This year, the GEM index of A-share market increased by more than 30%, the annual growth rate of food and beverage, electronics, agriculture, forestry, animal husbandry, fishery and computer was more than 40%, and more funds flooded into emerging industries in the third quarter.
Specifically for individual stocks, according to Wind data, from the beginning of this year to October 10, 2899 of the 3688 stocks in the two cities had a positive average return, while 4 stocks had the same return as at the beginning of the year. Among the stocks with positive returns, the returns of five stocks exceed 30%, and the average returns of each stock are 44.03%. Most of the returns of each stock are concentrated in the range of 0-1%. Among the 785 stocks with negative average returns, the lowest is -14.52%.
In the bond market, interest rate volatility increased in the third quarter and showed negative quarterly changes.
The data of China Securities Index Company on October 10, 2019 show that the 1-year maturity yield of treasury bonds is 2.57%, the 10-year maturity yield is 3.13%; the 1-year maturity yield of state-owned bonds is 2.72%, the 10-year maturity yield is 3.54%; the 1-year maturity yield of local government bonds (AAA) is 2.69%, the 10-year maturity rate is 3.52%; the 1-year maturity yield of city-invested bonds (AA+) is 3.22%, and the 10-year maturity rate is 4.61%.
As for funds, as of August 31, 2019, the net value of public funds in China reached 138,375.49 billion yuan, and the number of public funds reached 6,118. As of June 30, 2019, the total scale of assets management business of public funds in fund companies reached 13.46 trillion yuan, which was 0.48 trillion yuan less than that in the previous quarter, and the specialized account business of fund companies reached 8.93 trillion yuan, which was 2.09 trillion yuan less than that in the previous quarter. The assets management business of securities companies reached 12.53 trillion yuan, 0.74 trillion yuan less than the previous quarter, and 13.33 trillion yuan for private equity funds, 0.09 trillion yuan more than the previous quarter.
For the future, Jiang Chao believes that it is still possible for residents to improve the allocation of financial assets, especially stocks, funds and other assets. This year, a series of capital market system reforms brought about by scientific innovation board are constantly optimizing the financial market environment of our country. The vigorous development of emerging industries will also bring a lot of investment opportunities to Chinas capital market and lay a foundation for the long-term improvement of the stock market. As we say goodbye to the era of housing speculation by the whole people, it will be a general trend for residents to increase their wealth and allocate financial assets.
Source: Responsible Editor of Economic Observation Network: Chen Hequn_NB12679