The share of total funds that Chinese high net worth individuals hold in equities is set to increase strongly, according to the latest research.

Chinese high net worth individuals (HNW) currently hold a lower proportion of fund in equity compared to peers in the Asia-Pacific region.

Datamonitor research* shows that this will change, with strong growth in equity holdings forecasted over the next two years.

“Chinese HNWs have a large proportion of their wealth as cash or near-cash products. This will change over the next two years, with equity holdings becoming the most important component of Chinese HNW portfolios instead. This movement of funds will provide opportunities for the financial services industry,” says Petter Ingemarsson, senior financial services analyst at Datamonitor.

Equities currently constitute a fifth of Chinese HNW portfolios, but will in two years have reached a proportion of 46%. This is a higher percentage than in other countries in the region. The Datamonitor survey was carried out in China, India, Taiwan, Singapore and Hong Kong.

The main driver for the growth in equity holdings is a growing number of Chinese HNW looking for higher risk investments. Chinese HNWs are becoming more polarised in their risk attitudes. Around half of HNWs in China will have a significantly higher appetite for risk in two years, which contrasts strongly with the broader APAC area. However, a fifth of Chinese HNWs are expected to have a significantly lower appetite for risk.