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Oct 27, 2015

China’s middle class turning to online apps to invest abroad

Local volatility bolsters online investing apps such as Micai and Futu Niuniu, Financial Times says

Chinese middle class investors are increasingly looking to invest abroad after sharp losses in the local stock markets and as the country’s economic growth slows. And, amid heavy government regulation, more are using new online apps to do it, according to media reports.

Micai, an online app launched in early October with the backing of local venture capital fund Crystal Stream, allows Chinese investors to invest abroad with commitments starting as low as $5,000 – well below the minimums stipulated by local banks and brokerages catering to wealthy individuals, the Financial Times reports.

‘Offshore [investment] used to be something that was nice to have for wealthy individuals; now due to the [renminbi] devaluation and uncertainty, it is becoming a must-have for them,’ Guy Van den Bergh, CEO of Micai, told the newspaper, adding that top-end retail investors are increasingly sharing this view as well.

The surge in interest in foreign investment by Chinese investors follows sharp swings in stock prices throughout the summer and increasingly heavy government regulation and capital controls meant to stop stock market losses. The US Treasury estimates that $500 bn left China in the first eight months of the year.

Tiger Stocks, an online app launched in July by Tiger Brokers, requires a minimum investment of $3,000 and focuses on Chinese middle class investors seeking to place their money in stocks on the New York Stock Exchange and NASDAQ, the FT reports. It says trading volume in its first month of operation totaled $100 mn.

Futu Niuniu, an app launched by Futu Securities with investments from Tencent and others, has no minimum investment amount and focuses on stocks in Hong Kong, which it trades with its own broker license, and in the US, which it trades through BNP Paribas.