Broker's View

Hong Kong’s ultra rich sees growth in population, assets

Household wealth in city expected to maintain upward momentum for next five years, says Credit Suisse report

PUBLISHED : Wednesday, 23 November, 2016, 9:20pm
UPDATED : Wednesday, 23 November, 2016, 10:36pm

Hong Kong’s ultra rich are not only getting richer but also growing in number, with the number of ultra high net worth people in the city rising to 1,800 or by 14.7 per cent, from a year ago, a new report said.

According to the latest Global Wealth Report published by Credit Suisse, mainland China was ranked second after the US in the number of ultra high net worth individuals, with their ranks rising by 6.2 per cent to 11,000 individuals so far in 2016. That also represented a 100-fold rise since 2000, said the report.

Household wealth in Hong Kong grew by an estimated 8.1 per cent in the same period to US$1.2 trillion, partially thanks to the strengthening of the Hong Kong dollar which is linked to the US dollar.

The US dollar index, a gauge of the strength of the greenback against a basket of major currencies, hit a 30-year high last week after clocking a steady growth in the last two years. The growth accelerated on higher expectations of a US interest rate rise next month and chances of higher inflation in the US under the Donald Trump presidency.

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Household wealth in the city is expected to increase by 5.9 per cent every year in the next five years to US$ 1.5 trillion by 2021, according to Credit Suisse.

In contrast, due to a strengthening US dollar and accordingly a weaker yuan, household wealth in mainland China fell by 2.8 per cent to US$23 trillion so far this year. However, when the same is calculated in yuan terms, the figure increased by 4.1 per cent, it said.

Currently, China’s total household wealth in US dollar terms is the third in the world, behind the US and Japan.

Despite a slowdown in China’s economic growth, the country’s household wealth is likely maintain aa strong upward trajectory in the next five years with growth rates of 9.2 per cent every year and reach US$36 trillion by 2021. But the growth rate is expected to be lower than the 11 per cent seen from 2000 to 2016, it said.

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In contrast to the relatively optimistic pictures in Hong Kong and the mainland China, the overall growth in global wealth remained limited so far this year, continuing the trend that emerged in 2013, which is in sharp contrast to the double-digit growth rates witnessed before the global financial crisis of 2008, according to the report.

Looking forward, the bank only expects moderate acceleration in the medium term.

Among individual countries, Japan achieved the highest growth in total wealth of US$ 3.9 trillion to US $24 trillion, followed by a US$1.7 trillion rise in America to US$85 trillion. However in yen terms, total wealth in Japan remained flat, representing a slowdown relative to the progress seen in the preceding five years.

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The UK suffered a significant drop in wealth of US$ 1.5 trillion after the Brexit vote which triggered a sharp decline in exchange rates and the stock market, according to the report.

Globally, Switzerland remains the richest nation in the world in terms of wealth per adult with US$562,000 till date this year, according to the report.

The Asia-Pacific region as a whole saw household wealth increase by 4.5 per cent or US$ 3.4 trillion to nearly US$ 80 trillion, largely due to a large expansion in Japan of 19 per cent due to currency appreciation against the US dollar.

Notably, the wealth per adult in the Asia-Pacific increased by 2.9 per cent, the fastest pace among all regions, according to Credit Suisse.

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