Management - Honglou Fortune: Wealth for Generations

Contents

Copyright 2009 John Wiley & Sons (Asia) Pte. Ltd.

Published in 2009 by John Wiley & Sons (Asia) Pte. Ltd.

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Library of Congress Cataloging-in-Publication Data

ISBN 978-0-470-82434-4

The HSBC logo is a registered trademark of the HSBC Group. HSBC Jintrust is duly authorized to use the trademark.

Foreword

The worlds attention is currently focused on China. But what is the focus of the Chinese? The answer is wealth management. Wealth management has become an everyday topic, immediately following basic survival. An often-heard sentiment that epitomizes the wealth management attitude of the average Chinese today is: You can fall behind Liu Xiang (Olympic mens 110m hurdles gold medalist), but you definitely cant fall behind the consumer price index! Having gone through the financial crisis, many of the average investors in China have finally discovered the vast difference between managing and not managing their wealth!

However, China does not have a very long history in the financial markets, with its stock market having only just reached maturity (18 years). Trusts, funds, pensionsthe mainland Chinese are only beginning to get acquainted with investment tools that have been popular overseas for many years. Therefore, it is a general phenomenon that everyone talks about wealth management, but few actually know how to achieve it. The majority of people either keep their money in the banks or buy treasury bonds. In 2007, Chinas populations savings deposits totaled a whopping RMB1.7 trillion (US$242.8 billion)! In the same year, the penetration of Chinese bank accounts investing in funds was only 34 percent, with penetration in families at 3 percent, a far cry from 33 percent and 51 percent respectively, in the United States.

Why have the investment modes of the Chinese people remained so conservative? This is largely attributed to the general consensus of average people that investing is too complicated. Financial assets are intangible, unlike consumer goods that can be seen and touched, so they are difficult for investors to comprehend. Investors either become very apprehensive when making decisions, resulting in less than optimal timing, or they do not have a clear understanding of the basic concepts throughout the entire investment process and end up making erroneous judgments by choosing the wrong investment products or exiting the market too early.

If learning about investments were simplified, people could become more financially astute. With precisely this objective in mind, investment specialist HSBC Jintrust has embarked on its educational endeavor. Armed with a better understanding of investment concepts, funds and various investment products, people would realize that investing can be a very straightforward and lighthearted affair.

So how can learning about investments occur almost subconsciously while readers experience the joys of reading? This is where Honglou Meng or Dream of the Red Chamber comes into play. It is one of Chinas four great classical novels that almost every Chinese national has heard. There is no lack of mention of investment and wealth management in the book, either. Who among the thousands of men could manage the country, yet just a lady or two to set the household right? Under the pen of author Cao Xue Qin, the leading figures among the ladies have all become worthy exponents of wealth management. Doesnt Wang Xi Feng already know how to grow dollars from pennies?

Therefore, we send Tan Chun to Harvard to become a wealth management expert; Wang Xi Feng fails in her investments in bonds and securities, causing the splitting of finances in the Jia household; Li Wan is pleased with her son Jia Lan when he displays a good financial quotient; Bao Yus funds are tied up in stocks and he sacrifices for Dai Yus poetry series. Inheriting the original characters and their personalities from Honglou Meng to develop a novel storyline with a twist, the unchanging principles of wealth management and investment are depicted through the overlapping of ancient and modern times.

Upon completing this book, each reader will be one step closer to realizing his or her dreams of true financial freedom.

Steve Lee

CEO

HSBC Jintrust Fund Management

One day, the poetry club of the Grand Garden met to discuss the differences between Western and Eastern mysticism shown in the film Wu Ji. The membersBao Yu, Bao Chai, Dai Yu, Xiang Yun, Ying Chun, Tan Chun, and Xi Chunall gathered at Li Wans Fragrant Paddy Fields, which the eldest daughter-in-law was in charge of. Xiang Yun re-enacted a scene where Princess Qingcheng stood on the city wall and spoke to the soldiers, which made everyone laugh. At the height of their excitement, a servant came in to report the arrival of Matriarch Jia.

Everyone stood up hastily as Xi Feng, the second eldest daughter-in-law, helped the frail matriarch into the room. Upon entering, Sister Feng winked repeatedly at Li Wan, but the eldest daughter-in-law failed to grasp her hint. This prompted Sister Feng to point at Grandmother Jia discreetly, and then wave her hand as though to caution Li Wan about what she should say.

Li Wan observed Grandmother Jia intently, and noticed her eyes were red and puffy and her expression mournful. Surprised yet curious, she asked, How are you, Mother-in-law?

Grandmother Jia sighed and said, All you youngsters know is how to have fun in the Grand Garden. Do you realize that we are being criticized by others? Silence filled the room, and after a pause, she continued, There is a person named Leng Zi Xing (literally meaning wet blanket) who spoke about the younger generation of eminent and well-off families like us going from bad to worse. Both masters and servants live lavish lifestyles, yet none know about wealth planning. He even claimed our wealth would not last beyond three generations!