Swiss private bank Julius Baer had reassuring news for Asia's wealthy yesterday when it released its second annual Asia Wealth Report. The rich will continue to get richer, but may do so more slowly than forecast last year, or then again more quickly.
Last year it forecast there would be 2.82 million high net worth individuals (HNWI) in Asia by 2015, with wealth of US$15.8 trillion. HNWI are defined as those with investible assets of US$1 million, excluding their primary residence. In the slower scenario, the bank sees a 6 per cent decline in HNWI to 2.65 million and the stock of wealth at US$14.7 trillion. However, should more conducive economic conditions prevail, the bank thinks there could be almost 3 million HNWI in Asia with assets of US$16.7 trillion.
The Julius Baer Lifestyle Index has risen more slowly this year - 9 per cent compared with 11.7 per cent last year. This is an index of 20 luxury goods and services across Hong Kong, Singapore, Shanghai and Mumbai, that better represents the spending of HNWI than conventional consumer price indices. The bank's Asia CEO, Thomas Meier, noted that, in general, branded goods were better able to sustain price increases compared with professional services. So, watches rose 11.7 per cent, lady's handbags 10 per cent, boarding school fees 1.2 per cent and lawyer fees 1.4 per cent. But golf club memberships declined 1 per cent.
Mumbai saw the highest price rises - almost 20 per cent in local currency. The biggest item to increase was business class airfares from Mumbai, which were up 51 per cent. The biggest fall was for root canal procedures, at US$463, also in Mumbai. In Hong Kong you pay US$3,350 for this. But then again the price of a family lawyer - i.e. those that handle divorces - in Hong Kong is US$386 an hour. The tab is 70 per cent higher in Singapore and 105 per cent more in Shanghai. One item that is not on the list is a procedure that Meier said a few of his clients were doing - stem cell injections. You can get these in Singapore at US$60,000 a pop, and the results, we are told, are fantastic.
As good as gold?
We hear of some unhappiness at the AGM of Hong Kong-listed junior gold miner Sino Prosper State Gold Resources on Monday. Shareholders were particularly irritated at the 90 per cent drop in the share price over the past 12 months. Despite this, chairman Leung Ngai-man and CEO Sung Kin-man were awarded discretionary bonuses of HK$5 million. This pushed Leung's total emolument to HK$11.9 million, an increase of 48 per cent, while Sung was paid HK$13.4 million, up 67 per cent.
Shareholders' displeasure with the company's performance was reflected in their successfully voting two directors off the board, one of whom was the chairman. But a board meeting after the AGM decided to reappoint the two directors "to ensure continuity of management". It was precisely this continuity of management that the shareholders were hoping to stop. As one shareholder observed: "Surely this must constitute an abuse of these powers by the incumbent directors? It certainly makes a mockery of the whole process of asking shareholders to re-elect board members at AGMs and undermines the purpose of these rules."
Interestingly, the company was trading at half the price of the cash on its balance sheet before the meeting. But after the vote against the two directors the stock price soared 90 per cent. The stock was up 34 per cent yesterday to 45 HK cents.
Citi gets in shape
It's good to see Citigroup is taking steps to get in shape, at least as far as its employees are concerned. The bank has decided to launch Live Well at Citi - a health and wellness programme.
Citi's regional CEO kicked off proceedings by leading a 4 kilometre run along Bowen Road. There are not many bank CEOs who could sustain that sort of undertaking.
Significantly, this event also featured James Griffiths, Godwin Chellam and Richard Tesvich, the leading lights of the corporate communications team. It is has to be said they are better known for their prowess on the lunchtime circuit than on the athletic circuit.
But that's not to say this can't change.
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