A Study on Globalised Asset Allocation Based on Chinese High Net Worth Households

Abstract

Over the past seven decades, China's economic development has made a historic leap forward. The per capita disposable income of residents has been rising, and the size of the high net worth income group has been expanding, and it is expected to be the largest in the world. This study points out that the cross-border capital flows of HNWIs have become significantly active, driven by both the deepening of globalisation and the deepening of the openness of China's capital market. Data monitoring shows that the compound annual growth rate of the overseas asset allocation scale of this group will reach 17.8% between 2020 and 2022, which fully confirms that globalisation has become a mainstream trend. The study further reveals that when the financial volatility index of a single economy exceeds the threshold of 0.45, the annualised volatility of the wealth portfolio without cross-border allocation is 320 basis points higher than that of the globalised portfolio. The continued expansion of this risk premium difference objectively requires wealth management organisations to construct a global asset allocation model based on currency hedging mechanism and geo risk diversification to effectively cope with the increasing volatility transmission effect in international financial markets. By analysing the current situation of wealth management of China's HNW clients, this paper puts forward some suggestions for international asset allocation, which will provide reference for the development of China's wealth management market in the future.