Chinese millennials look beyond property investments to build wealth - The Straits Times

BEIJING – Like millions of other young Chinese, Mr Byron Zhang thinks he has missed out.

For his parents’ generation, investing in real estate was the sure-fire route to prosperity and security. Now, as prices slump, the population shrinks, and unfinished and unsold apartments stack up, the dream of riding that boom has crumbled.

“If you still count on investing in property as a means of growing your fortune, you are not quite right in the head,” said Mr Zhang, 37, who co-founded a pharmaceutical start-up in technology hub Shenzhen.

Mr Zhang and his peers are not giving up on building wealth. They have seen that a well-paid job can take them only so far, while the right investment can be transformative. More than 90 per cent of university-educated Chinese citizens aged 22 to 32 say investing is a key part of their life plan, according to a February survey of 3,000 people by Invesco.

But where to invest their savings? Capital controls and regulations limit purchases of shares on overseas stock exchanges. Cryptocurrencies are banned. Bonds do not yield enough. Returns from bank-issued wealth management products have slumped. Also, the Chinese government has essentially shuttered once-hot alternatives such as peer-to-peer lending that had attracted more than 50 million investors.

Then there is the domestic stock market, which older Chinese dismiss as a form of gambling after two epic boom-and-bust cycles in as many decades.

Mr Hans Fan, head of China financial research at brokerage CLSA, estimates that cumulative flows into financial markets from all Chinese households will exceed US$18 trillion (S$24 trillion) between 2021 and 2030.

“The household balance sheet is a gold mine,” Mr Fan told clients at the company’s flagship investors forum late in 2022. “A huge pie of new money will go towards professionally managed products.”

Money managers become stars

The wariness about stock picking could benefit the global investment industry. Back in 2018, individual traders accounted for 82 per cent of all trades. By 2022, after some extreme market turbulence, this had fallen to around 60 per cent, according to China’s securities regulator.

Instead, interest in professionally managed funds has surged. Since 2015, there has been a fivefold increase in the number of funds in the market. Today, there are 13,000 different mutual funds for sale, well above the investable universe (for most retail investors) of about 5,000 mainland-listed companies.

In this crowded market, individual fund managers sometimes emerge as stars – or villains. In the good times, fan groups on social media site Weibo shower the high-performing managers with pet names, emoji and cheers. In bad times, insults fly.

During the pandemic, investors flocked to live streams by mutual fund managers who would explain their credentials and returns before giving their views on the market. Interest in these live streams has remained high, especially among younger Chinese. In 2022, almost 60 per cent of viewers were under 39, according to Huanju Tech, a platform that provides marketing services for financial institutions.

Ms Wang Jiahui, 29, who goes by the alias Senior Sister Hui, is a major figure in this industry. As a host for China Asset Management, she has run more than 100 live streams, drawing 45 million views and 1.1 million likes over the past year. She said the division between generations is striking. On social media platform Xiaohongshu, which has an older user demographic, property-themed programming is popular. On video-sharing site Bilibili, videos about the downsides of real estate investing draw more viewers.

Young investors also want choice. While the older generation predominantly bought products recommended by banks, the younger set “almost never buys in the traditional way – it is almost entirely through Internet platforms”, Ms Wang said. Tools such as ubiquitous app Alipay allow users to purchase funds with a click.

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