Business Times: Wealthy group growing fastest in S'pore

October 17, 2007
Wealthy group growing fastest in S'pore
By VIKRAM KHANNA IN SEOUL

SINGAPORE is home to the fastest-growing population of high net worth individuals (HNWIs) in the Asia-Pacific, according to a report by Merrill Lynch and Capgemini.

The 2007 Asia Pacific Wealth Report - released yesterday at the World Knowledge Forum, organised by the Maeil business newspaper, in Seoul - shows the number of HNWIs in Singapore rose 21.2 per cent last year to about 67,000.

India and Indonesia were the second and third-fastest growing markets for HNWIs, at 20.5 and 16 per cent respectively.

Overall, the number of HNWIs in the Asia-Pacific region grew 8.5 per cent this year to about 2.6 million.

Of the world's 10 fastest-growing HNWI markets last year, five were in the Asia-Pacific - Singapore, India, Indonesia, South Korea and Hong Kong.

HNWIs are defined as people with more than US$1 million in financial holdings excluding their primary residence. The report estimates overall HNWI wealth was about US$8.42 trillion at the end of last year.

In terms of the distribution of this wealth by market, Japan was the clear leader, accounting for 44 per cent or US$3.7 trillion, followed by China with 21 per cent or US$1.7 trillion. Singapore was the sixth-largest market, with HNWI wealth totalling US$320 billion last year.

Looking ahead, the report projects that Asia-Pacific HNWI wealth will grow about 8 per cent a year for the next three years to a staggering US$12.7 trillion by 2011.

In terms of investment behaviour, Asia-Pacific HNWI investors show certain characteristics, according to the report. In particular, they tend to prefer tangible assets - real estate and cash - to other investment classes.

They also invest most of their assets in the region. For instance, Singapore HNWIs allocated 52 per cent to the Asia-Pacific. However, in the future, Merrill Lynch and Capgemini reckon Asian HNWI investors will seek greater diversification, both by geography and investment classes.

Specifically, they foresee HNWIs seeking to invest in markets outside Asia and North America, and allocating a greater proportion of their wealth to fixed income and alternative investments such as structured products, private equity and hedge funds, as well as 'passion investments' such as wine and art.