Asia's wealthy surpass North Americans for first time

The number of rich Asians surpassed North Americans for the first time last year, but their fortunes shrank slightly and still trailed total wealth on the other side of the Pacific, Capgemini and RBC Wealth Management said on Wednesday.

The Asia-Pacific region is now home to 3.37 million high net worth individuals (HNWI) - people with $1 million or more to invest - compared with 3.35 million in North America and 3.17 million in Europe, the firms said in a report.

Asia's wealthy - 54 percent of whom are concentrated in Japan, almost 17 percent in China and more than 5 percent in Australia - saw their total fortunes slip to $10.7 trillion last year from $10.8 trillion in 2010, and lag North America's $11.4 trillion.

The Asia-Pacific Wealth Report, compiled by Capgemini and RBC Wealth Management, is closely watched by wealth managers, high-end property agents, luxury goods retailers and other businesses for signs of how and where the ultra-wealthy are investing and how their fortunes are faring.

Many of Asia's rich made their millions and billions through family businesses and property.

"We don't see massive shifting in the allocations of portfolio management," Claire Sauvanaud, vice president of Capgemini Financial Services, told a news conference.

Wealth fell most significantly last year in Hong Kong (20.1 percent) and India (18 percent) and grew most strongly in Thailand (9.3 percent) and Indonesia (5.3 percent). Growth was more modest in Japan (2.3 percent) and in China (1.8 percent).

Weakness in Europe and other global trends played their part in the slight fall in total Asian wealth, the report said, but the "region grappled with its own economic challenges, including inflation, slowing growth and capital outflows."

"Nevertheless, Asia-Pacific is expected to continue showing stronger growth than other regions going forward, and its HNWI population and wealth are likely to keep expanding," it said.

As part of that, Asia's rich are looking more to offshore wealth centres close to home, such as Singapore and Hong Kong, in search of wider access to products and services, tax advantages and financial confidentiality, the report said.

Challenges for the offshore wealth management industry include a scarcity of skilled talent, lower profitability, and the costs of compliance and restrictions on services due to higher regulatory scrutiny, it said.

Diversity of the backgrounds and expectations of rich clients means there is more demand for tailored products and a greater desire to play an active role in managing their portfolios, the report added.- Reuters

Asian wealth to triple by 2015

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By JOHN LOH  johnloh@thestar.com.my

Boom seen coming from property, manufacturing, commodity sectors

KUALA LUMPUR: The wealth in Asia will triple by 2015 to US$15.8 trillion, according to the findings of the recently-published Asia Wealth Report by private Swiss bank Julius Baer.

The report, done in collaboration with brokerage and investment group CLSA, also estimates that the current 1.15 million high net worth individuals (HNWI) across Asia will double to 2.82 million by 2015.

China alone is estimated to hold 55.4% of this wealth in 2015 and will have 49.6% of the total HNWI.
In 2011 and 2012, China and India are forecast to contribute to over 40% of global gross domestic product (GDP).

The report was commissioned with the aim of investigating the key drivers of wealth creation in the Asia Pacific region and the future size of the HNWI market by country.

Speaking to StarBizWeek at the sidelines of the Forbes Global CEO Conference, Julius Baer Asia CEO Dr Thomas Meier said the wealth would come from a diverse spectrum of industries, primarily property, manufacturing (for fast-moving consumer goods and information technology) and commodities (palm oil and coal).



In terms of the investment portfolios of the HNWI in the study, Meier said they noticed a trend of high allocation of equity holdings, which would appear to run counter to the current pessimism in global stock markets.

He said equity investments were recommended, adding that the bank's optionality products capitalised on the volatility of the stock market and allowed investors to enter at attractive prices.

On whether Asia's growth was sustainable, Meier said: “We believe the economic fundamentals of Asia are strong and robust, and this will eventually translate to wealth creation. We are not in a bubble the growth of Asia was a normal evolution process.”

When asked if Asia's boom would eventually sputter out, Meier said the economy was indeed cyclical, but noted that “this is the decade for Asia, and in this current global scenario, we believe Asia has the potential to absorb any shocks to the world economy.”

Julius Baer Singapore CEO David Lim, who was present at the interview, added: “Asia's fundamentals were not developed overnight, and it will not change overnight. It has been an accretive process over the years, and that is why we claim it to be sustainable.”

Malaysia was part of the study as well, and the report found that by 2015, the country's HNWI should increase to 68,000 from 32,000 currently, while the stock of wealth would grow to US$330bil from US$142bil.

Lim said Malaysia could maintain positive GDP growth through to 2015, external factors notwithstanding.
Key for Malaysia's continued growth, he said, was to ensure sustainable GDP growth, keep its focus on the new economic areas set by the Government, and maintain a stable currency.

Competitiveness should be increased by improving productivity, and not by devaluing the currency, he added.

Of note also is the forecast that Indonesia will have the highest growth rate, vis-a-vis its Asian neighbours, in terms of the number of HNWI over the five-year period with 25%, rising to 99,000 with a total wealth of US$487mil.

Switzerland-listed Julius Baer, whose origins dating back to 1890, is a private banking group which focuses on servicing and advising private clients.