Insurance, housing and education fund have

become the three major investment tools for wealthy people in China, while

stocks are losing their gleam, according to a recent survey.

The findings of the survey are in a report jointly produced by consulting

firm Horizon Group and China Merchants Bank (CMB), China Daily reported

Thursday.

The survey investigated the wealth management tools and the thoughts of 921

high-income residents in seven major domestic cities on this issue and analyzes

them with special indices indicate trends.

The respondents are mostly clients of China Merchants Bank's

Sunflower-brand wealth management services, which require a minimum 500,000 yuan

(US$60,386) quarterly balance for membership.

The survey indicated that more high-income households are adopting a

conservative investment style, preferring investments with more guarantees, such

as insurance, treasury bonds and education funds.

Real estate generally remains one of the most popular investment tools, but

the future growth of relevant investment is limited, especially for Beijing and

Shanghai, both facing real estate bubbles.

And stock investment is also losing its previous attraction, as the stock

market tumbles.

CMB has been a pioneer in the industry, adopting such systematic measures

as tracing the spending and investment habits of its rich clients, who are

actually a good profit resource as their demand for personal banking services

increases rapidly.

It is the third time for the bank and Horizon to issue such a report, which

is produced every six months.

CMB's Sunflower clients already account for more than one third of its

personal banking assets.

About two thirds of such clients expressed an interest in individualized

wealth management services, according to the survey.

"The report issued with Horizon aims to serve our high-end customers as it

offers them a clearer picture of investment trends and the macroeconomic

climate," said an official with the personal banking department of CMB.

"But after we issued the first two reports, we received more inquiries

about it and some institutions wanted to buy it," he said.

Some foreign consulting companies, including McKinsey, are also paying

close attention to it.

High-end customers are already a major area of competition among banks in

China.

In developed countries, wealth management has long been the most profitable

business for commercial banks, and the average annual profit growth remains

12-15 per cent.

But domestic banks still have a lot of catching up to do, although big

foreign banks are already muscling in, bringing in foreign exchange wealth

management packages and waiting for renminbi retail banking to open up before

they take more aggressive measures.

An official with HSBC said that the high-income group and professionals are

obviously the major target customers for the bank's retail banking business

since the profits are lucrative.

And the issue is not just about the banking business. With more than 9 per

cent of annual gross domestic product growth and 11 trillion yuan (US$1.3

trillion) of savings, China is witnessing a rapid expansion of the overall

wealth management market, which also brings business opportunities for other

financial institutions, experts said.