Chinese wealth management

I was reading a Bloomberg article in regards to the Chinese wealth management industry - I was really quite surprised. Based on what was reported, the average investor is not conversant with the actual details of their portfolios but that would be reasonably normal with the majority of generalised wealth management products. What I found interesting was the large holdings of bonds, usually seen as a fairly defensive investment. More so, the second largest asset class of cash and bank deposits is very high along with money market investments. Whilst not specified, the non-standard credit assets would include property, possibly venture capital, derivatives and forex.

Not that Australians fare any better, the average default superannuation asset allocation although widely reported remains a mystery to the holders of default superannuation funds. However, what is interesting is that the average Australian default superannuation fund asset allocation varies widely as compared to the average Chinese asset allocation. Most Australian superannuation funds are heavy-weight in equities with just over half of the fund consisting of equities with a slightly higher international share allocation in the 24% to 30% range. Domestic Australian equities tend to sit in the 20% to 25% range with both international and domestic equities comprising of more than half of the fund - that's pretty aggressive. 

Bonds and cash are seen as defensive investments along with property, the other section comprises of venture capital, infrastructure, derivatives such as put and call options, warrants, futures and currency hedges. Whilst Bloomberg appears to be worried about the asset allocation in Chinese wealth management funds, the investments are relatively defensive as compared to Australian wealth management products. The real issue is the sheer size of the Chinese wealth management funds as compared to the capitalisation of the Australian counterparts, if domestic Chinese economic conditions change - that's a real issue for world markets.