320,000 people set to have assets of at least $2m by end of year
Beijing: The local bourses may have lost their lustre and property prices have nosedived, but not everyone in China has been dragged down by the economic crisis.
The ranks of the very rich are swelling, with the number of individuals worth at least 10 million yuan (S$2.2 million) expected to hit 320,000 by year-end - up by about 6 per cent from last year, according to a study on private wealth in the country.
Together, their assets - including cash and deposits, tradeable stocks, investment properties and other investments such as private equity and hedge funds - are expected to exceed 9 trillion yuan, an increase of 7 per cent from the end of last year, said the report by global consultancy firm Bain & Company and China Merchants Bank.
An expanding ultra-rich club in China shows that 'there is a lot of liquidity on the sidelines', said Mr Johnson Chng, Bain's head of Greater China Financial Services Practice.
'There are individuals in the country who have a lot of funds in hand. They are waiting for the right time and opportunity to act,' he told The Sunday Times.
What this means is that 'wealth management in China is a very promising market, sizeable and expected to grow very fast', said Mr Richard Leung, head of wealth management at UBS Securities.
According to a separate private wealth study, China ranked fifth in the world last year for the greatest number of US-dollar millionaires.
It had about 415,000 people worth at least US$1 million (S$1.5 million) in liquid assets, more than France's 394,000, the survey by Merrill Lynch and France-based consulting firm Capgemini showed.
What the studies also point to, however, is the widening income gap in China.
At the bottom end of the earnings spectrum, the annual per capita income of China's 700 million rural residents is just 4,761 yuan.
Asked how the wealthy were able to hang on to their vast fortunes despite the downturn, Mr Chng said it could be a combination of good information, accurate reading of the markets and wise investment decisions.
'China's rich, given their contacts and the information they have, many of them got out of the market earlier than the rest of us, before the market collapsed.
'Many of them cashed out at the height of the stock market, so even when the overall trend was downwards, they emerged unscathed,' he said.
There were those who 'of course got burnt very badly', but it is just the case of 'the very, very, very rich in China becoming very, very rich', he quipped.
Many made their fortunes in the capital markets, which soared in 2006 and 2007, said Mr Joseph Chang, vice-president of Asia-Pacific investment banking at Houlihan Lokey.
The Shanghai stock exchange hit the 6,000-point mark in November 2007 but ended last year as the second worst-performing bourse worldwide after Iceland's.
Mr Chang added that entrepreneurs who got rich were likely to be in sectors such as property, metals, alternative energy and retail.
The Bain report did not say which industries were money spinners or name any wealthy individuals. But at the high end were individuals worth more than 100 million yuan.
According to separate 'rich lists' compiled by Forbes magazine and the Shanghai-based Hurun Report, China's wealthiest include Mr Liu Yongxing, a feed and aluminium magnate (net worth estimated at 20.4 billion yuan), Mr Robin Li Yanhong, CEO of Chinese search engine Baidu (13 billion yuan) and Mr William Ding Lei of Internet company NetEast.com (US$1.25 billion).
But being named by 'rich lists' has not always been good for their fortunes. Some have run foul of the law because of tax and financial irregularities.
For example, Mr Huang Guangyu, former chairman of Gome Electrical Appliance Holdings with an estimated net worth of US$6.3 billion and named as China's richest man last year by the Hurun Rich List, is now under investigation for alleged financial irregularities.