China’s young investors embrace risk. Why are their portfolios so safe?

Young Chinese investors may be just as willing to take risks as their global peers, but their portfolios remain more conservative against a backdrop of years of relative underperformance in China’s stock market, a prolonged property downturn and deflation, according to a senior researcher at the CFA Institute Research and Policy Centre.

The disconnect between their willingness to take risks and their actual investment choices illustrated what the institute called an “aspiration-implementation gap”, said Rhodri Preece, senior head of research at the institute.

“They want to retire early. They’re willing to take risks, but yet their portfolios [show] the most commonly cited investments are more conservative investments like wealth-management products and money-market funds,” Preece said in an interview on Thursday.

The findings were based on the institute’s latest survey of 400 affluent investors in mainland China conducted in December, with its main analysis focusing on 300 Gen Z and millennial respondents.

Some 72 per cent of Chinese respondents held cash or cash equivalents and 62 per cent owned bank or trust wealth-management products, the survey found. By comparison, cryptocurrencies and mutual funds were the two most commonly owned investments among young investors globally, at 67 per cent and 64 per cent, respectively.