03/11/17

Asia-Pacific Wealth Hotspot Heats Up: Report

(Spear’s) -- Hong Kong citizens will be richer per head than the Swiss by 2021, thanks to Asia Pacific’s soaring wealth growth a report finds.

The liquid assets held by the global population will exceed $100 trillion in value by the end of the year, according to a new report, with frontier and emerging economies such as China and India leading the way.

The Global Wealth Market in 2017 study, from GlobalData, shows that China is second only to the US in the global wealth rankings, and is forecast to maintain this position up to 2021. Meanwhile India is expected to surpass France by 2021 in privately held wealth, reaching eighth position. Astonishingly, the reports forecasts that an average Hong Kong citizen will hold more assets than a Swiss one by 2021.

Wealth globally is due to grow by 5 per cent from 2017-21, but 8 per cent in AsiaPacific. The rate of growth worldwide has slackened from 7 per cent from the previous period.

This follows from research by Swiss bank Julius Baer, which we reported on recently. It showed that Asia’s pool of investable assets held by HNWs will reach $14.5 trillion by 2020 — a rise of 160 per cent in the current decade. HSBC has also chimed in, estimating that there will be a billion middle class people in China by 2025.

Underscoring the changing nature of global wealth, the number of billionaires in Asia has now overtaken the US for the first time: having surged by almost a quarter in the last year, taking the continent’s tally to 637 – compared to just 563 in US. Driven mainly by growth in China, the combined wealth of Asian billionaires climbed by almost a third from $1.5 trillion to $2 trillion.

Meanwhile in Europe, which had 342 billionaires, wealth growth was largely static in 2016, with assets rising a modest 5 per cent to just over $1.3 trillion. There were 24 new billionaires in Europe, while 21 dropped off, according to the report.

And the burgeoning purchasing power of Asia’s HNW population is already making ripples. In the area of alternative assets, for instance, China has been flexing its muscles as our recent feature shows. Sotheby’s says China has already overtaken the US at auction, last year buying 58 per cent of the value of wines sold at auction globally. Meanwhile according to the first Art Basel and UBS Global Art Market Report, China took the largest share of the auction market in global sales of art and antiques, accounting for 34 per cent of the world total by value last year.

What all these data have in common is to confirm that the rapid economic rise of China and India are driving a wealth surge in Asia. GlobalData analyst Silvana Amparbeng warns, ‘despite being the fastest-growing they [countries in the Asia Pacific] are still small in terms of aggregate assets. Moreover, stark wealth distribution inequalities and other local economic factors reduce wealth managers’ opportunity further.’ Despite all the evidence pointing towards a rise of Asia Pacific, wealth managers should still be cautious when considering whether to expand in these markets.