http://www.straitstimes.com/archive/...-asia-20131006
S'pore households '2nd richest in Asia'
Securities market's recovery drove growth of financial assets, says Allianz wealth report
Published on Oct 06, 2013
By Rachael Boon
Singapore households were the second wealthiest in Asia last year after Japan, spurred by the strong stock market, said the latest Allianz Global Wealth Report.
In global terms, Singaporeans came in seventh.
Mr Michael Heise, chief economist at financial services provider Allianz, said: "Taking net financial assets per capita as the yardstick, Singapore's households remained the second richest in the region after Japan despite the below-average growth of their gross financial assets of 10.4 per cent."
The recovery of the securities market mainly drove this growth.
Households here have also made significant advances in catching up with the wealth of average Japanese households.
Allianz said that back in 2007, "the gross financial assets of the average Japanese citizen were still 33,000 euro higher than those held by the average Singaporean, a difference that had shrivelled to just under 12,800 euro by the end of last year".
But the financial assets of the average Japanese dwarfed those of the average Chinese citizen, for example - "almost 20 times as high".
The report also found that Singaporean portfolios held the highest proportion of life insurance policies and pension funds - the most important asset class for them.
Mr Heise said this is hardly surprising, given that Singapore is one of the most rapidly ageing societies today.
This means Singaporeans will mostly have to fall back on such "capital-funded old-age provision".
Mr Heise also noted that debt levels among Singaporeans are on the rise.
"During the past three years, liabilities grew more strongly than assets, with two-thirds being mortgage loans," he said, referring to Singaporeans.
With Singapore's population on the rise, the year-on-year per capita growth of net financial assets slid to 7.9 per cent, which translates into average net financial assets per capita of 66,400 euro (S$112,800).
Last year, Singaporean households were the most indebted in the region, in per capita terms.
They took out loans worth a total of 30,780 euro last year, compared with the average Japanese citizen, who took out loans worth 26,340 euro.
On a more macro view over a five-year period, the report said that "the increase in the lending volume has significantly outpaced gross domestic product growth virtually across the board since 2007".
Singapore came in second after South Korea, which had the highest debt ratio in relation to GDP last year - 90.1 per cent compared with 81.5 per cent in 2007.
Singapore's debt in the same period rose from 69.8 per cent to 86.1 per cent of GDP.
Allianz said that apart from home loans, the debt take-on was often for durable and consumer goods - a trend likely to stay.
Developments like these have boosted a larger segment of the Asian population to the "middle wealth" status.
However, the proportion of "high wealth" households in Asia has remained at 3.7 per cent, owing to developments in Japan, said the report, even if regional economic hubs have seen the ranks of the wealthy rise in recent years.
Even with more Asians achieving wealth, Allianz said: "There is still a great deal of catch-up work to do, given that 80 per cent of the region's population remains in the 'low wealth' category."
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