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The Asia Pacific region will overtake North America to become the world’s wealthiest region by 2017, according to a new report.
The Global Wealth Report 2013 from the Credit Suisse Research Institute logged total global household wealth at US$241 trillion in the middle of this year, a year-on-year increase of 4.9% in dollar terms. The survey ranked the US first, with $78.9 trillion of wealth, after an 11% climb fuelled by a recovery in US house prices and an improvement in equities, but predicted Asia Pacific would overtake it four years from now. The survey forecasts 8.4% annual wealth growth in Asia between now and 2018, by which time Asia Pacific household wealth will be US$110 trillion.
The survey also made some initially surprising findings, none more so than a 20.5% year on year decline in Japanese household wealth to $22.6 trillion. However, this is chiefly a function of the 22% depreciation of the yen against the dollar over that period.
“In Japanese yen terms, household wealth actually grew 1.8% in the year to mid-2013,” Fan Cheuk Wan, chief investment officer Asia Pacific for private banking and wealth management at Credit Suisse, told Emerging Markets. “Abenomics is expected to bring the Japanese economy out of its 15-year deflation, revive economic growth and support inflation expectations.” She said she expected a further easing of the yen against the dollar in the year ahead, but also an improvement in property prices and corporate earnings, and hence an increase in Japanese individual wealth.
Despite China’s challenges over the last 12 months, wealth there grew by 6.7% to $22.19 trillion in the 12 months to mid-2013, Credit Suisse said, putting China and Japan close to a tie for second place after the US.
So where are Asian investors putting their money in order to meet the bank’s forecast of 8.4% annual wealth growth? “As the global economy is entering a more normalized cycle and gaining growth momentum going into 2014, Asian investors are expected to allocate their capital into growth-sensitive asset classes to capture opportunities from the economic recovery in the years ahead,” Wan said. With the Federal Reserve expected to begin tapering in 2014, “the times of high returns in fixed income are probably over,” she said. “For Asian investors, equities are a more attractive asset class to generate returns and achieve wealth growth in the medium to long term.”
The report also predicts the number of millionaires in Asia to rise 75% in the next five years, to 11.5 million individuals by 2018, out of a global total of 47 million. China alone is expected to have 2.1 million millionaires by 2018. China also ranks particularly highly among countries with ultra high net worth individuals – those with net assets above US$50 million: it has 5,830 already, ranking second only to the USA.
