Noah Sees 20% Jump in Rich Chinese Demand for Foreign Assets

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  • Firm plans to start insurance agent business in Singapore
  • Noah aims to expand Hong Kong and U.S. teams in 3-5 years

Noah Holdings Ltd. a Shanghai-based fund manager boasting branches in 68 Chinese cities, said wealthy domestic investors’ demand for overseas assets may grow as much as 20 percent next year as they diversify from a weakening yuan.

The firm, whose overseas assets grew 75 percent to 14.8 billion yuan ($2.2 billion) in the year to June 30, plans to start an insurance agent business in Singapore by early next year and expand its teams in Hong Kong and the U.S. in the coming three to five years, said Kenny Lam, the Shanghai-based group president of Noah, whose main clients have net assets of more than 300 million yuan on average.

The yuan’s 2.7 percent depreciation this year and an economic slowdown have prompted Chinese investors to look overseas. The amount of foreign assets managed by Chinese funds through the qualified domestic institutional investor scheme increased 22 percent in the second quarter to 79.5 billion yuan on June 30, according to data compiled by Shanghai-based research firm Z-Ben Advisors.

“Our clients are concerned about depreciation pressure on the yuan’s exchange rate,” said Shanghai-based Lam in an interview. “China may loosen its restrictions on capital outflows step by step because the yuan will become an international currency sooner or later.”

U.S. Potential

Lam said Noah mainly invests in private equity assets and funds for credit, stock, bonds and real estate. The U.S. has great potential for private equity investment and the firm is also looking for restructuring and credit investment opportunities in Europe, said Lam.

The yuan traded at 6.6743 per dollar as of 9:37 a.m. in Shanghai, compared with 6.4936 per dollar at the end of last year. The currency may weaken to 6.80 per dollar at the end of the first quarter, according the median estimate in a Bloomberg survey of analysts.

“Our Hong Kong branch needs more staff because we want to expand the investment and insurance businesses,” said Lam. “The U.S. branch may recruit investment and sales staff.”

The company, which calls itself the biggest independent wealth manager in China and oversees a total of 332 billion yuan of assets, has 175 branches in 68 Chinese cities. Its Hong Kong team expanded to 120 people from 20 in 2014.

Lam said if China restructures the economy in the right direction, growth may recover and depreciation pressure on the currency may fade away.