Asia-Pac wealth set to overtake Europe by 2016

Business Times: Thu, Oct 20
WEALTH in Asia Pacific is expected to overtake that in Europe by 2016, making it the world’s single largest wealth region, says Giles Keating, Credit Suisse global head of research for private banking and asset management. In a briefing yesterday t…
WEALTH in Asia Pacific is expected to overtake that in Europe by 2016, making it the world’s single largest wealth region, says Giles Keating, Credit Suisse global head of research for private banking and asset management.

In a briefing yesterday to launch the Credit Suisse Research Institute’s latest Global Wealth Report, he said the institute’s expectations hold even with market volatility.

‘This volatility feels very bad and dramatic, but in terms of the impact on our figures, the net effect will be very small, particularly given that quite a lot of millionaires’ wealth is focused on real estate and non-market assets.’

Singapore ranked fifth globally in terms of average wealth per adult. Average wealth rose 32 per cent from US$215,000 in January 2010 to US$285,000 in June 2011. By 2016 the number of millionaires in Singapore is expected to more than double from 183,000 in 2011 to 408,000.

In pole position in terms of average wealth is Switzerland with US$540,010, followed by Australia with US$396,745.

Credit Suisse’s wealth report defines wealth as the value of financial assets plus real assets such as property, net of debt.

Aggregate household wealth in Asia Pacific is estimated at US$75 trillion, ahead of North America’s US$65 trillion. Europe remains ahead at US$78 trillion. Asia Pacific wealth grew 23 per cent from US$61 trillion in 2010.

By 2016, Asia Pacific’s household wealth is expected to hit US$118 trillion, beating Europe’s US$113 trillion and North America’s US$91 trillion.

Aggregate global wealth is estimated at US$231 trillion, rising 14 per cent from US$203 trillion in January 2010. Emerging markets remain the main wealth growth engine, with the fastest rise seen in Latin America, Africa and Asia. In the next five years, global wealth is expected to rise 50 per cent to US$345 trillion, and wealth per adult is set to rise 40 per cent to US$70,700.

Market volatility took a bite out of global wealth in 2008 when average wealth fell from US$50,920 in 2007 to US$42,692. But average wealth in mid-2011 at US$51,080 has about recovered to the 2007 level. ‘The current crisis is not of that (2008) scale,’ said Mr Keating.

Not surprisingly, average debt in Europe at US$25,550 per adult is more than twice Asia Pacific’s US$9,227. Europe’s debt as a percentage of gross household wealth, however, is relatively modest at about 15 per cent. The ratio in Asia Pacific is similar at nearly 15 per cent. China and India are excluded from Asia Pacific numbers and are treated separately.

These broad numbers suggest some ways the regions can work together to resolve the crisis, said Mr Keating. One is through cross-border investments – Asian capital being invested in assets in developed markets, and vice versa.

Source: Business Times © Singapore Press Holdings Ltd.

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