What are my RMB investment options?Posted on October 19, 2012
1. Bank Deposits – You can put your money on despoit. It’s easy, low risk and tiny return.
2. Structured Deposits – More complicated than the “guaranteed return” your banker tells you it is. It is worth understanding that there is often some hidden risk in these products. More like Structured Products and often mis-sold on many occasions, in our experience as low risk investments. Be cautious here. And yes, we do find it odd that normal investments are out of bounds, but the truly bleeding edge ones from overseas are just fine.
3. RMB Funds – Only to Chinese nationals, so as long as you have a Chinese husband or wife AND like the Chinese stock market, then you are all set. You can buy through the bank.
4. RMB Unit Linked Insurance – Fine for foreigners to buy and cheaper than what the cold callers sell, but it does have downsides. The two big ones are transparency, you only get a choice of risk “High, Medium or Low” is the only decision you will make. The second is that your investment is largely tied to the Chinese stock market, so you have very little choice.
5. RMB Trusts – Nothing like overseas trusts, these little structures can do almost anything, if you have 1 million RMB and happy to wait for 2-3 years. You can buy direct state owned enterprise corporate bonds, local government debt, private equity and venture capital, property and even hire a private manager to gamble away on the Chinese stock market. Almost anything you want. You will need to do your due diligence and read Chinese because this is “caveat emptor” territory. Buy these from brokers like us, trust companies or banks.
6. Property – Buy one property to live in, as long as you have been here a year (or whatever the rule is today). We don’t expect restrictions on multiple properties to be eased any time soon – foreigners are a nice little punching bag for easy political points. We also believe that the Chinese government trying to cool the property market. Standing in their way is not often a good decision. Case in point the government is rolling out a new property tax with a database to check, across 40 cities, that you don’t have a second property.
For our money overseas options are still better given their ready portability. RMB convertibility has been “coming” for a long while now. Chances are it will be a while yet. However if you must invest in RMB, then Trusts and Unit Linked Insurance are the more interesting options and we will go through these more in future posts.
About Caterer Goodman Partners
Caterer Goodman Partners is a Shanghai based wealth management firm established with a clear vision to provide a new level of personalized financial planning services for expatriates in Asia. Our financial advisors provide guidance for our clients in all areas of investment, specialising in managed accounts, money-market funds, retirement planning and alternative investments. At Caterer Goodman Partners, we offer our advice and experience to provide low cost, tax-effective and simple solutions to match our clients’ interests.
About Owen Caterer
Since graduation Mr Owen Caterer has worked with the Queensland Premier's Department in Trade Facilitation and then as a financial adviser in Shanghai from 2005 until 2010. He then rose to Senior Adviser, then Business Development manager and then to Chief Investment Officer responsible for portfolios to a value of US$280 million across Asia. Following that Mr Caterer left to found his own firm with a partner in the financial advisory and wealth management area. This focused on developing China and Asia's first fee-based financial advisory (rather than commission-based). This has grown to now have 8 staff and and managing almost US$35 million for clients throughout Asia. This business success was recognized as a finalist in the 2013 ACBA in the Start Up Enterprises category and are one of a small number of foreign managed firms to have a full asset management license in China. Owen has also been active in the community volunteering for the Australian Chamber of Commerce in Shanghai and acting as the Vice-Chair of the Small Business Working Group (2012-2014) and as the Co-Deputy Chair of the Financial Services since 2013 until the present. They have continued to grow their business and have now been selected as a small group of companies who are platinum members of the Australian chamber of commerce. The achievement they are most proud of is their efforts to reform the financial planning industry in China and push it away from a hard-sales commission driven model to a more ethical management fee and long term customer service model. Owen has a Graduate Diploma of Applied Finance from the Securities Institute of Australia of which he was a member as a Fellow of Finance for many years and also has an undergraduate degree from Griffith University in International Business. Owen's interests are tennis, running and his wife and two children. He speaks fluent Chinese, first arriving in China in 1997.
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