Investors search for new investment channels

Updated: 2012-01-17 17:24


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BEIJING - Although China's economic expansion has made many people rich, soaring inflation and a poor stock market have chipped away at the savings and confidence of the nation's investors.

After booking heavy losses and walking away with less than they started with, some investors have chosen to seek out new ways to keep their money safe and encourage it to grow.

The Chinese stock market was the second-worst performing market in the world last year after falling more than 20 percent. Its relentless decline has shattered the dreams of many investors who wished to cash in on the country's rapid economic growth.

The country's inflation eased to 4.1 percent in December after hitting a 37-month high of 6.5 percent in July. Inflation growth for 2011 was well above the four-percent target limit set by the government.

Meanwhile, China's property-tightening measures have made the once-red-hot market, which used to be an enticing choice for many, less attractive to investors, leaving them with fewer ways to maximize their income.

For the wealthy, art investment has become an increasingly popular channel of investment. Statistics showed that the annual rate of return on art investments has stood at around 26 percent for the last six years, outperforming the rates in the stock market and housing sector.

Turnover for the China Guardian Auction Co and Poly International Auction Co, the country's two largest auction houses, soared to 11.23 billion yuan and 12.1 billion yuan in 2011, representing a year-on-year rise of 49 percent and 20 percent, respectively.

The trade volume for the country's art market will likely exceed 200 billion yuan ($31.75 billion) in 2011, up from 169.4 billion yuan in 2010, analysts said.

Affluent investors have also flocked to other high-end markets, including those for wine, rare coins and diamonds.

"With concerns over rising inflation, investors will be drawn to physical assets such as works of art and wine," said Kou Qin, vice president of the China Guardian Auction Co.

However, investment outlets remain limited for most ordinary people, as they can not afford to purchase expensive items to hedge against inflation.

"For me, figuring out how to save money matters more than knowing how to invest," said Zhang Yong, a 42-year-old taxi driver with a monthly income of 3,000 yuan.

Zhang used to buy funds, but a lack of professional knowledge and a volatile market caused him to lose 5,000 yuan in the first half of last year.

"More investment channels will be good news for me, but what I hope most is that these channels can generate stable returns instead of taking away our hard-earned money," Zhang said.