IT has taken a slump in the property market, a white-knuckle ride on local shares and a currency devaluation, but China’s retail investors are finally taking a serious look at overseas stocks and bonds.

    That is music to the ears of foreign brokers and wealth managers and to local entrepreneurs who can make a profit on their coat tails, for the sums involved could be vast.

    Investment bank CICC says China’s high net-worth individuals control US$4.4 trillion in assets, but allocate only 5 percent of their wealth overseas, compared with a global average of 24 percent, and ordinary middle-class savers hold further trillions on deposit in Chinese banks.

    If both groups reallocate their assets in line with global norms, some fund managers say as much as US$6 trillion in Chinese money could find its way into overseas stock and bonds.

    Money is already leaving China, especially after a summer stock market crash and August’s devaluation of the yuan. In November, China’s foreign exchange reserves drained by their third-sharpest rate ever to their lowest level since early 2013.

    Official figures don’t distinguish between retail and institutional investment, but Chinese purchases of offshore debt and equities rose a hefty 11 percent in the second quarter.

    And they don’t capture reallocations from existing offshore portfolios including real estate, home to many billions of dollars of Chinese money.

    Domestic fund managers say growing interest in a program that lets local mutual funds invest in offshore assets is revealing.

    The Qualified Domestic Institutional Investor (QDII) program had failed for years to attract much interest from Chinese until this year, when institutions started bidding up the price of the program’s investment quotas traded between them.

    “QDII quota suddenly became very expensive this year,” said Shen Weizheng, fund manager at Shanghai-based Ivy Capital, who plans to launch a Hong Kong bond fund to meet rising demand for overseas assets from mainland clients.

    “Domestic capital is rushing out as the yuan is no longer firm,” he added.

    David Friedland, manager of Asia Pacific operations for trading platform Interactive Brokers, which has offices in Hong Kong and on the mainland, said increasingly sophisticated Chinese investors were looking overseas.

    “We’re seeing a good chunk of interest. People can’t just put all their money into apartments,” he said.

    Brian Qian, a 33-year-old risk controller at a domestic bank, fits the profile of this new breed of investors.

    He said he had invested several million yuan, half his investable wealth, into overseas stocks and bonds this year. “Investment returns in China are much lower than previously,” he said, and he no longer trusted the local stock markets after the summer crash, nor China’s risky high-yield wealth management products.

    A middle-class Shanghai investor who gave her surname as Zhang said she, too, was looking at dollar assets.

    This growing distaste for local assets, beset with bubbles, market distortions and shadowy underground banking products, is balanced by steadier returns from overseas markets.

    The S&P 500 index of big U.S. shares is up 35 percent from its peak before the global financial crisis, while the Shanghai Composite Index is still down over 40 percent.

    Chinese businesses are gearing up to help those looking to make the switch in what Dacheng Fund Management Co. calls the “trend of the next decade.”

    It is building a dedicated investment team to help Chinese invest overseas.

    Former Wall Street trader Liu Zhen is now CEO of Clipper Advisors, a software startup whose Blue Sea Wealth cellphone app is specifically tailored to help Chinese investors navigate offshore exchange-traded funds, reallocating according to risk tolerance and goals. (SD-Agencies)