China's Ultra Rich Lost $100 Billion in Just One Month - Visual Capitalist
Connect with us

Markets

China’s Ultra Rich Lost $100 Billion in Just One Month

Published

on

What Goes Up, Must Come Down

There’s no doubt that China’s market has been a roller coaster as of late. A year ago, the Shanghai Stock Exchange Composite Index was at close to 2,000 points. However, by June 12, 2015, it skyrocketed to a peak of 5166.35, creating trillions of dollars of paper wealth.

From there, participants in the market have had their will tested, as the market suddenly corrected by dropping 30% in the course of one month.

The Bloomberg Billionaires Index tracks the world’s 400 richest people in the world, including 26 from mainland China. Taking a look at the value of their portfolios can provide some insight as to the ride they are on. Here’s the change in wealth of billionaires in China versus those in Germany for this year:

Change in Wealth of Billionaires, China vs Germany

China’s ultra wealthy were up 35% from the start of the year in late May and early June. Then the market crash hit, reeling in their gains to just 10%.

Since then, the stock market has had a bit of a bounce, bringing gains year-to-date to 16% as of last week:

Change in Wealth of Billionaires in 2015

The portfolios of billionaires in the United States and Western Europe are boring in comparison. The wealthiest people in the United States have lost 1% so far in 2015, and those in Western Europe fared better with a 4% increase.

Here’s the whipsaw stories of two Chinese billionaires:

Zhou Qunfei

Zhou Qunfei is China’s richest woman and serves as the chairman of consumer electronics supplier Lens Technology Co Ltd.

Zhou’s fortune soared when Lens Technology IPO’d earlier in the year, as the stock jumped 500% in early trading. Her fortune went up to $10 billion in a matter of months. Then, with the June crash, 40% of her fortune was erased as it decreased by $5 billion.

Zhou Qunfei's wealth

Pan Sutong

Pan Sutong is the Chinese-born chairman of the Goldin Group, a conglomerate based in Hong Kong. In January, Pan Sutong had $3.7 billion in wealth. Stock in Goldin’s subsidiaries soared, and Mr. Sutong had increased his fortune to peak at an impressive $25 billion.

Since then, the stocks have gotten crushed, bringing him back to where he started: $4 billion.

The Implications of the See-Saw

Most investors in the Chinese markets are “mom and pop” investors – Credit Suisse thinks that 80% of urban Chinese have money in stocks, and many of them don’t even have a high school education. Because of this, there is likely to still be strong volatility as this new group of investors collectively learns how to trade in the market.

China’s ultra rich, meanwhile, are trying to lock in their gains by diversifying elsewhere. This is because the wealthiest people in the country have an unusual amount of wealth tied to public markets compared to the rest of the world: 66% of the wealth of billionaires in China and Hong Kong is “paper wealth” in the public markets.

In the United States and Western Europe, it is less than 50%.

To even out their portfolios, the ultra wealthy have sought out real estate both in China and in foreign markets. This is something we covered out in a recent Chart of the Week as Chinese investors left the volatile stock market in search for a better store of wealth.

See below:

Chinese flee stocks for foreign property in June

Original graphics from: Bloomberg

Subscribe to Visual Capitalist
1 Comment

Markets

The Top Google Searches Related to Investing in 2022

What was on investors’ minds in 2022? Discover the top Google searches and how the dominant trends played out in portfolios.

Published

on

Trend lines showing when the top Google searches related to investing reached peak popularity over the course of 2022.
The following content is sponsored by New York Life Investments

The Top Google Searches Related to Investing in 2022

It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most? 

This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.

Top Google Searches: Year in Review

We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.

Month of Peak InterestSearch Term
JanuaryGreat Resignation
FebruaryRussian Stock Market
MarchOil Price
April Housing Bubble
MayValue Investing
JuneBitcoin
JulyRecession
AugustInflation
SeptemberUS Dollar
OctoberOPEC
NovemberLayoffs
DecemberInterest Rate Forecast

Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.

Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.

Q1 2022

The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak of $125 per barrel was a 13-year high.

DateClosing Price of WTI Crude Oil
(USD/Barrel)
January 2, 2022$76
March 3, 2022$125
December 29, 2022$80

While crude oil lost nearly all its gains by year-end, the energy sector in general performed well. In fact, the S&P 500 Energy Index gained 57% over the year compared to the S&P 500’s 19% loss.

Q2 2022

The second quarter of 2022 saw abnormal house price growth, renewed interest in value investing, and a bitcoin crash. In particular, value investing performed much better than growth investing over the course of the year.

IndexPrice Return in 2022
S&P 500 Value Index-7.4%
S&P 500 Growth Index-30.1%

Value stocks have typically outperformed during periods of rising rates, and 2022 was no exception.

Q3 2022

The third quarter was defined by worries about a recession and inflation, along with interest in the rising U.S. dollar. In fact, the U.S. dollar gained against nearly every major currency.

Currency USD Appreciation Against Currency
(Dec 31 2020-Sep 30 2022)
Japanese Yen40.1%
Chinese Yuan9.2%
Euro25.1%
Canadian Dollar7.2%
British Pound22.0%
Australian Dollar18.1%

Higher interest rates made the U.S. dollar more attractive to investors, since it meant they would get a higher return on their fixed income investments.

Q4 2022

The end of the year was dominated by OPEC cutting oil production, high layoffs in the tech sector, and curiosity about the future of interest rates. The Federal Reserve’s December 2022 economic projections offer clues about the trajectory of the policy rate.

 202320242025Longer Run
Minimum Projection4.9%3.1%2.4%2.3%
Median Projection5.1%4.1%3.1%2.5%
Maximum Projection5.6%5.6%5.6%3.3%

The Federal Reserve expects interest rates to peak in 2023, with rates to remain elevated above pre-pandemic levels for the foreseeable future.

The Top Google Searches to Come

After a year of volatility across asset classes, economic uncertainty remains. Which themes will become investors’ top Google searches in 2023?

Find out how New York Life Investments can help you make sense of market trends.

Subscribe to Visual Capitalist
Click for Comments

You may also like

Subscribe

Continue Reading

Subscribe

Popular