Oct 1, 2008


Asset growth of rich to slow down

Financial crisis to hurt region's well-heeled this year and next, but they'll rebound, says report

By Grace Ng, Finance Correspondent

THE financial crisis will dent asset growth among the Asia-Pacific region's well-heeled this year and next, but their wealth will start expanding again and hit US$13.9 trillion (S$19.9 trillion) by 2012, predicted Merrill Lynch and Capgemini.

They also found that the well-off have been adapting to the bearish climate and wild markets by altering their investment mix.

Asian high net worth individuals - they hold at least US$1 million in investible assets - have been shifting assets to less volatile sectors since the second half of last year.

This includes Singaporeans, who are third richest in Asia with an average net worth of US$4.9 million. Well-heeled Singaporeans were relatively more willing to hold equities than their Asia-Pacific counterparts last year, according to the third annual Asia-Pacific wealth report released yesterday.

The report, which included surveys of financial advisers, found that Singaporeans put a third of their portfolios last year in equities and a third in cash and fixed income. One quarter went to real estate with the rest in alternative investments like structured products, hedge funds and currency.

In contrast, the wealthy in the Asia-Pacific region overall allocated 26 per cent to equities, and put 46 per cent of their holdings in cash, deposits and fixed-income securities - an increase of seven percentage points from 2006.

The report also stated that the region's high net worth individuals are likely to turn to fixed-income securities that offer less volatile returns next year.

It noted: 'They are also expected to increase their allocations to alternative investments, mainly in the form of hedge funds or other investments, more suited to uncertain market conditions.'

Mr Rahul Malhotra, the head of advisory for Merrill Lynch Global Wealth Management's Asia-Pacific business, said yesterday that 'growth prospects in the near term are likely to be compromised by the global slowdown'.

He did not forecast how much growth of Asian high net worth individuals' wealth might decline by next year, but in the longer term, the region's wealth will continue to expand at 7.9 per cent annually - higher than the 7.7 per cent global rate, he noted.

Singapore's millionaires club last year grew by about 10,000 people, or 15.3 per cent, to 77,000. This is 1.7 per cent of the population and puts Singapore joint seventh globally in terms of growth in numbers of such wealthy individuals. The total wealth of these well-heeled Singapore residents grew by 18.4 per cent to US$380 billion last year.

The Capgemini and Merrill Lynch report also showed that the number of emerging high net worth individuals - they have US$750,000 to US$1 million in investible assets - in Singapore grew 15 per cent to 24,000 last year. Their combined wealth was US$20 billion.

The ultra rich segment - with investible assets of at least US$30 million - rose 17 per cent to 1,000 with total wealth of US$159 billion.

Across the Asia-Pacific region, the number of ultra-rich individuals jumped 16.4 per cent to 20,400 last year.

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