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Asia Pacific HNWI wealth to grow 8.8 per cent annually despite fall in population
Average Net Worth of Hong Kong HNWIs Remains Highest in the Region
October 14, 2009--Asia Pacific’s population of high net worth individuals (HNWIs[1]) fell 14.2% to 2.4 million in 2008 amid a global economic downturn and market volatility, according to the Asia-Pacific Wealth Report released today by Merrill Lynch Wealth Management and Capgemini. The combined wealth of the region’s HNWIs dropped 22.3% to US$7.4 trillion.
Ultra-HNWIs, or individuals with investable assets of at least US$30 million, witnessed steeper wealth erosion than the HNWI population in the region. The number of ultra-HNWIs in Asia Pacific fell 29.6% to 14,300 and their total wealth shrank 35.1%.
The combined wealth of the region’s high net worth individuals dropped 22.3 per cent to USD7.4trn.
Ultra-high net worths, or individuals with investable assets of at least USD30m, witnessed steeper wealth erosion with the number of ultra-HNWIs in Asia Pacific falling 29.6 per cent to 14,300 and their total wealth shrinking 35.1 per cent.
China and India to Lead Growth in Asia Pacific HNWI Wealth
Growth in Asia Pacific’s HNWI population and wealth is set to pick up as market conditions improve. The region’s economies are showing signs of recovery and are forecast to grow at a faster pace than the global economy by 2010.
China and India are likely to lead HNWI growth in Asia Pacific, underpinned by robust domestic consumption and a growing number of affluent individuals. The combined wealth of Asia Pacific’s HNWIs is estimated to grow at an annual rate of 8.8% until 2018, faster than the global average of 7.1%.
“We expect Asia Pacific to be a significant driver of global HNWI wealth, with China and India at the forefront of growth and Japan remaining an important high net worth market,” said Antony Hung, Head of Asia Pacific Wealth Management at Merrill Lynch Wealth Management. “The region’s diverse economic landscape presents tremendous growth opportunities for wealth management firms.”
Added Bertrand Lavayssière, Managing Director Global Financial Services, Capgemini, “While Asia Pacific saw a decline in HNWI numbers and wealth across the board, diverse economies and a shifting HNWI activity are signs that the region is poised to surpass North America and Europe to have the highest levels of wealth in the world.”
Concentration of Wealth in Japan and China
Japan and China continue to host a large percentage of the Asia Pacific HNWI population and its wealth. Last year, the two markets were home to 71.9% of the region’s HNWIs and 65.8% of total wealth, up from 68.8% and 62.4% respectively in the previous year.
The number of HNWIs in Japan fell 9.9% to 1.37 million and their wealth shrank 16.7% to US$3.2 trillion. The decline was milder than in other markets as Japan already witnessed slower economic growth in 2007, and the country’s HNWIs are typically more conservative in their asset allocations which limited their losses last year.
Despite steep market capitalization losses, China avoided the larger losses in HNWI numbers seen in other markets due to the closed nature of its markets combined with robust macroeconomic growth. The number of HNWIs in China fell 11.8% to 364,000 and their combined wealth dropped 20.7% to US$1.7 trillion. Still, China’s HNWI population surpassed that of the U.K. to become the fourth-largest in the world. India’s HNWI population also took a hit, falling 31.6% to 84,000.
Hong Kong’s HNWI population had the biggest percentage decline in the world, falling 61.3% to 37,000. Nonetheless, despite last year’s decline, the average net worth of Hong Kong HNWIs remained at US$4.9 million, considerably higher than the regional average net worth of Asia Pacific HNWIs which stood at US$3.1 million.
“Unprecedented market conditions last year wiped out two years of gains in Hong Kong’s HNWI numbers,” said Francis Liu, Market Managing Director for Greater China at Merrill Lynch Wealth Management. “Looking ahead, wealth accumulation is set to resume in Hong Kong as the economy recovers and capital continues to flow into the local market.”
HNWIs Retrenched to Cash and Domestic Investments
Asia Pacific HNWIs increased their allocations to safer and simpler investments last year in a move to preserve wealth. The proportion of cash-based holdings rose to 29%, up from 25% a year earlier. Taiwan’s HNWIs had the highest cash/deposits allocation at 41%.
Exposure to equities fell as a plunge in regional markets prompted a broad sell-off. By the end of 2008, Asia Pacific HNWIs had 23% of their wealth in equities, down three percentage points from the previous year. In Australia, HNWIs cut back their allocations to the asset class to 25% from 38%, while Hong Kong HNWIs scaled back their exposure to 21% from 33%.
Investments in home-region and domestic markets rose to 67% from 53%, as global market uncertainty deterred Asia Pacific HNWIs from investing in other regions.
“Capital preservation will remain a priority for the region’s HNWIs in the short term. As markets recover and risk appetite returns, we expect Asia Pacific HNWIs to adopt a more balanced investment approach and increase their allocations to other regions gradually,” said Arvind Sundaresan, Head of Sales for Asia Pacific at Capgemini’s Financial Services Global Business Unit.
view the 2009 World Wealth Report
Source: Capgemini
HSBC makes further changes to Asia business
October 13, 2009--HSBC has made a series of changes to its senior level management team in light of its decision to transfer Michael Geoghegan, chief executive, to Hong Kong.
In a move designed to strengthen further the bank’s position in Asia, Mark McCombe, currently chief executive of HSBC’s global asset management arm, will join Mr Geoghegan in February next year as chief executive of the bank’s Hong Kong arm.
John Flint, group treasurer and deputy head of global markets, will replace him at the helm of HSBC’s asset management unit.
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Source: FT.com
Bosera Asset Management to design blue chip index ETF
October 13, 2009--Bosera Asset Management has been authorised to develop an exchange-traded fund based on the Shanghai Stock Exchange Mega-cap Index.
The index represents the share prices of 20 blue chips with the largest market capitalization and highest fluidity on the SSE, including Industrial and Commercial Bank of China, China Petroleum & Chemical, Ping An Insurance and Citic Securities.
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Source; ETF Express
China Wealth Fund to Buy Shares in Nation’s Three Largest Banks
October 12, 2009-- China’s $300 billion sovereign wealth fund said it will continue increasing its stakes in the nation’s three biggest lenders, seeking to bolster investor confidence after Chinese shares fell last quarter.
Central Huijin Investment Co., a unit of China Investment Corp., “recently” bought Shanghai-traded shares in Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd., according to statements issued late yesterday.
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Source: Bloomberg
Japan seeks to ease business debt burden
October 9, 2009--The Japanese government is expected on Friday to outline a scheme to help small and medium-sized companies seek a reprieve on debt repayments of up to three years, as part of a broad programme to help businesses weather the impact of the global downturn.
The scheme being considered aims to make it easier for borrowers to ask their bank for an extension of principal and interest payments for a maximum of three years and would be limited to small businesses and individuals with mortgages who have lost their jobs.
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Source: FT.com
BSE allows trade in Nifty ETFs
October 9, 2009--The Bombay Stock Exchange’s (BSE’s) benchmark index, the Sensex, may be more talked about and valuable as a brand compared with the National Stock Exchange’s (NSE’s) Nifty, but the latter brings more business for NSE. Now, the Nifty may bring business for BSE, too, as the country’s oldest exchange has decided to allow trading in all exchange-traded funds (ETFs) listed on its rival exchange. These include Nifty-based ETF.
BSE has allowed ETFs listed on NSE to be traded on its platform as permitted securities. For this, the promoter of the ETF will not have to pay any listing fee. BSE, around two weeks ago, allowed trading in NSE’s gold ETFs. On October 7, it gave permission for trading of all NSE’s ETFs, including Nifty Bees, which reflects the Nifty’s movements.
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Source: Business Standard
Asia steps in to slow dollar’s fall
October 8, 2009-Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China.
The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by China’s decision to in effect re-peg the renminbi to the dollar since July last year.
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Source: FT.com
Gold ETFs: Volumes high; firm Re caps return
October 8, 2009--Record gold prices may be deterring jewellery buyers, but they are triggering trading interest in Gold Exchange Traded Funds (ETFs). All gold-ETFs have seen volumes double in the last two days. GoldBEeS, which saw an average of 22,000 units traded last week, has seen a surge to 42,000 trades in the last two days.
However, Indian investors who bet on gold-ETFs a month ago have not participated actively in the recent rally. Their returns have been depressed, capped by the rising rupee. Despite the 5 per cent run up in international gold prices in the last one month, prices for domestic gold-ETFs are where they were last month. GoldBEeS, Benchmark Mutual Fund’s gold-ETF, which closed flat in Wednesday’s trade, has been hovering around Rs 1,570-levels for the last one month.
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Source: Hindu Business Line
DB Index Research -- Weekly ETF Reports -- Asia-Pacific
October 7, 2009--Highlights
Market Overview
There are 184 equity based ETFs in the Asia Pacific region with 240 listings across 12 countries and 15 exchanges. Japan has the largest market share by AUM accounting for 42.11% of the whole market, whilst China has the largest market share by turnover with 47.84%.
There was one new listing in the last week. Nikko Asset Management listed one new fixed income ETF on the Tokyo Stock Exchange.
Turnover
Monthly average daily turnover declined 16.4% in the last week. Turnover for the previous week was USD 1024m. The largest ETF by turnover was the China 50 ETF issued by China Asset Management with USD 271m accounting for 26.5% of total turnover.
Assets Under Management
AUM declined 1.9% in the previous week. AUM as of Oct 5th were USD 57.7bn. The largest ETF by AUM is the TOPIX ETF, managed by Nomura Asset Management, with AUM of USD 6.4bn.
To request a copy of the report click here
Source: Aram Flores and Shan Lan -DB Index Research
Ex-Deutsche team sets up Asian debt venture
October 7, 2009--A team of distressed debt traders who resigned from Deutsche Bank earlier this year have set up their own boutique investment bank in Hong Kong.
SC Lowy, which opened on Thursday, will deal exclusively in distressed and illiquid investments across Asia, an asset class that has become increasingly fashionable among banks and hedge funds since the financial crisis struck.
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Source: FT.com
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