Asia-Pacific set to outpace as super rich hub

Wealth owned by high-net-worth individuals in the region expected to reach US$15.9 trillion by 2015, surpassing top market North America

PUBLISHED : Thursday, 26 September, 2013, 12:00am
UPDATED : Friday, 27 September, 2013, 5:30pm

The Asia-Pacific region is on track to snatch the crown from North America as the world's largest wealth market next year, underscoring a resilient economic growth despite a slight slowdown of late, a survey shows.

The region lost to North America as the No 1 wealth hub last year as investors there benefited from the equity market rally in the United States as it swung to the highest level since the global financial crisis, according to a report by Capgemini and RBC Wealth Management.

 

Wealth owned by high-net-worth individuals in Asia reached US$12 trillion by the end of last year, compared with US$12.7 trillion in North America. High-net-worth individuals are those with liquid assets of more than US$1 million.

At the end of last year, Asia had 3.68 million high-net-worth individuals while North America had 3.73 million. However, this relative weakness would be "temporary" as Asia remained the best place for rapid wealth accumulation until 2015, the report said.

It expects the wealth of these individuals in the Asia-Pacific to grow at 9.8 per cent annually to reach US$15.9 trillion by 2015, surpassing North America's US$15 trillion then.

Asia's gross domestic product is expected to grow 6.6 per cent this year and 6.8 per cent next, according to the report. That compares with 2.5 per cent and 3.2 per cent annual global growth for the same years.

"The Asia-Pacific market is clearly one to watch." said George Lewis, the group head at RBC Wealth Management & RBC Insurance. "The region's high net worth population has increased 31 per cent and their wealth 27 per cent since 2007, far outpacing growth in the rest of the world."

Asia-Pacific has seen rapid wealth accumulation over the past five years. The wealth of high-net-worth individuals in Asia-Pacific underwent a similarly striking increase during this period - US$2.5 trillion - compared with less than US$1 trillion for North America, according to the report.

Interestingly, rich Asians show different investment traits from their American or European peers, posing global private banks and asset managers a greater challenge to meet local preferences, the report said.

Real estate was the most favourite asset type for investors in the Asia-Pacific excluding Japan. On average, the rich would allocate 24.6 per cent of total investable assets in property in the region, while a North America investor would put just 13.5 per cent.

In Japan, cash and deposits are the most favoured asset type, accounting for nearly half of the portfolio, the highest among the world. In North America, equity is the most popular asset type, accounting for 37 per cent.

Investors in the Asia-Pacific excluding Japan are becoming more conservative than before as more turn to focus on wealth preservation than seeking growth.

The report found they invested 22.7 per cent of their wealth into cash and deposits last year. The figure is still smaller than the global average of 30 per cent.

 
 
 

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