Wealthy residents favor yuan in 2012

HONG KONG - Wealthy people in Hong Kong favor yuan-denominated assets over property or other investments, according to a survey released by Citibank on Tuesday.

The survey said that 40 percent of the city's millionaires, defined as individuals with liquid assets exceeding HK$1 million ($128,955), held a positive view of yuan deposits and yuan-denominated investments for the next 12 months, indicating general optimism about the Chinese currency.

The report said 73 percent of the millionaires held yuan-denominated assets last year, up from 60 percent in 2010.

Only 30 percent favor equities, the survey found.

Affluent Hong Kong residents turned more cautious about the city's property market, and 71 percent said they had little or no intention of buying real estate this year.

The same percentage believe that property prices will fall this year, compared with 19 percent who expected prices to fall last year.

These wealthy individuals were conservative about investing in properties last year. Only 12 percent said they bought a property in 2011.

Home prices surged more than 70 percent from the beginning of 2009 to their post-1997 highs in June last year before slowing in response to government tightening measures.

The slump in financial markets last year took a toll on the city's wealthy, with the number of millionaires falling by 5.5 percent to 527,000, the report noted.

"The decline in the number of millionaires has something to do with the slump in the financial markets last year," said Christine Lam, deputy country business manager and head of retail banking at Citibank Global Consumer Group.

Lam noted that the benchmark Hang Seng stock index fell more than 20 percent during 2011 to end the year at about 18,000 points.

As a result, the average net assets of millionaires fell by HK$500,000 to HK$9.3 million in 2011, of which 24 percent were in liquid assets, the report said.

Investment and property remained the drivers of wealth gains in the city, but to a lesser degree than in the previous year.

Among those who moved into the millionaire category last year, 41 percent cited gains in investment, down from 47 percent in 2010. Another 16 percent cited property transactions, down from 29 percent in 2010.

Despite ups and downs, the wealth of Hong Kong people has kept growing, with the number of millionaires nearly doubling over the past six years and accounting for about 10 percent of the city's total population, the report said.

Ma Wanxin contributed to this story.