According to a new report from Credit Suisse, the number of millionaires is on the rise and is expected to increase by 40% worldwide in the next five years.
Credit Suisse Group AG’s 2022 World Wealth Report says that by 2026 we will have millions of millionaires, more than 87.5 million worldwide.
You might think that means the US is about to get that much richer too.
But in fact, the leading country in the production of millionaires today is not the United States, but China.
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The million dollar surprise
Certainly, China lost a lot in productivity and economic momentum during the COVID-19 pandemic as lockdowns swept the country. But emerging markets are likely to see a faster recovery from the economic downturn, the report said.
Private wealth is expected to grow by 36% to $169 trillion by 2026, according to Credit Suisse. That’s quite an increase considering the current decline in Chinese markets. The MSCI China Index is down more than 30% year-to-date.
Still, is the report a bit optimistic? China’s rise has its associated risks, especially given geopolitical tensions with the US and a 2024 deadline for some Chinese stocks to be pulled from Wall Street. Meanwhile, competition between the two countries in technology, energy and telecommunications continues unabated.
There are some Chinese ETFs to consider
If you want to invest in Chinese exchange-traded funds (ETFs), low prices make it a good time. Given the size of the Chinese economy, it is likely to recover at a faster pace than other developing countries, Credit Suisse reported. With that in mind, consider these top ETFs.
WisdomTree China Ex-State Enterprise Fund (CXSE) is an attractive option given the large decline in communications services and cyclical stocks. Furthermore, it has a non-state-owned strategy, which allows the company to invest in emerging markets with less risk than other Chinese ETFs.
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If you are looking for a huge growth opportunity, Emerging Markets Internet and E-Commerce ETF (EMQQ) has its advantages. The internet and e-commerce industries in China have fantastic growth potential.
If the tech industry recovers, this fund could be a leader among tech ETFs at a lower cost than its US counterparts.
Growth is coming
ETFs allow easy access to growth industries and bypass the volatility that comes with betting on a single stock. That said, remember that China’s economy needs time to recover, and the aforementioned tensions will not go away.
As with most investment strategies, patience is key.
China has shown muscle in e-commerce and electric car manufacturing, citing several areas with huge prospects.
And where Credit Suisse sees opportunity, the would-be rich are advised to follow and become millionaires, no matter where they call home.
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This article provides information only and should not be construed as advice. Provided without any kind of warranty.