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China HNWI wealth projected to grow to $8.25 trillion

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Staff writer ▼ | October 28, 2015
Julius Baer has released its fifth annual Wealth Report: Asia, which monitors the cost of living in luxury and wealth creation in Asia.
China HNWI
Wealth Report: Asia   The fifth annual report from Julius Baer
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It finds that in Asia, Julius Baer’s second home market, the pool of investable assets held by High Net Worth Individuals (HNWI) could reach $14.5 trillion by 2020, or a growth of 160% in the current decade.

In addition to the Julius Baer Lifestyle Index, which was launched in 2011 tracking the costs of goods and services for HNWI in 11 Asian cities, this year’s report includes forecasts of HNWI wealth creation trends in ten Asian markets for the next five years until 2020.

Despite its maturing economy, China’s HNWI wealth is expected to increase to $8,249.6 billion in 2020, trebling the 2010 figure and making it one of the biggest wealth creation engines in the region. The Philippines and India are also ranked in the top three in terms of HNWI wealth creation.

China: HNWI wealth is projected at $5.1 trillion in 2016, rising to $8.25 trillion by 2020. The projections of HNWI wealth are based on the assumptions of nominal GDP growth of around 10% between 2017 and 2020, boosted by expected appreciation of the Chinese currency versus the $throughout the forecasting horizon. While the Renminbi (RMB) declines in 2015, the longer term outlook points to an appreciation trend.

Hong Kong: Hong Kong’s HNWI wealth is expected to rise steadily to $1 trillion by the end of the decade. In recent years, Hong Kong’s stock index performance has been considerably better than that of Singapore’s stock market index. Further, Hong Kong benefits from strong trade and economic linkages with China. Hence, it comes as no surprise that, even as its nominal GDP rises 42% from $228.6 billion in 2010 to $325.3 billion by 2016, the HNWI wealth rises 56% from $484 billion to $756.3 billion in the same period.

India: HNWI wealth is forecasted at $1.425 trillion in 2016, rising to $2.3 trillion by 2020. India’s nominal GDP growth is projected to rise only by 3.2% this year due to the depreciation of the local currency versus the USD. However, the Indian economy has now found its footing and is in a period of positive development. Thus, India’s HNWI wealth in $is projected to rise by 94% between 2014 and 2020 (versus 74% for China). If this trend persists for a decade or more, India will narrow the wealth and economic gap with China.

Indonesia: Indonesian HNWI wealth, which was estimated at $154.9 billion in 2014, will rise to a little over $200 billion in 2020. Indonesia’s stock market and the currency have been under pressure since 2013 due to a persistently high current account deficit, high inflation and worries over stagnation in economic growth. Having said that, Indonesia has potential to surprise on the upside, thanks to a reform-minded government.

Korea: Korean HNWI wealth is expected to rise to just over $812 billion by 2020 from $540 billion in 2014. Korean economic growth has been steady post-2008. This year, Korean nominal GDP is expected to contract nearly 10% due to an anticipated 14% weakness in the Korean won against the USD. Apart from that, the Korean won appreciation up to 2020 is expected to boost nominal GDP growth, stock market returns and hence, HNWI wealth.

Malaysia: Malaysia’s HNWI wealth is estimated to rise to $308 billion by the end of the decade from $195 billion in 2014. Recent political developments in Malaysia have cast near-term uncertainty over its economic trajectory. However, over the longer term, we expect economic growth to be supported by investment growth from the Eleventh Malaysia Plan which covers 2016-20 and the Economic Transformation Programme. In addition, private consumption is expected to remain a key driver of economic growth.

Philippines: Blessed with some good governance, Philippine economic growth stabilised and accelerated. The currency strengthened and the Philippine stock market performed creditably. HNWI wealth is expected to double in the Philippines by 2016 to $121.6 billion from around $60.0 billion in 2010. It further rises to $197 billion in 2020.

Singapore: As a trade-dependent economy, Singapore is vulnerable to slowing global growth. However, Singapore continues to have ample room for policy easing in the face of cyclical headwinds. Singapore’s HNWI wealth is seen rising to around $603 billion in 2020, up from $424 billion in 2014. The Singapore dollar (SGD) weakens by 12% versus the $as per our estimate in 2015. However, the currency is expected to appreciate boosting GDP growth in the years ahead.

Taiwan: HNWI wealth in Taiwan is forecasted to grow at a modest but steady pace from $269 billion in 2010 to $533 billion in 2020. Improvement in economic relations with China has been a positive factor for Taiwan in the last few years.

Thailand: Thailand’s HNWI wealth is seen rising to around $344 billion in 2020, up from $272 billion in 2014. Thailand’s nominal GDP and HNWI wealth have been rather stagnant in the last four years. Thus far, increased government spending and gradually improving private investment have been insufficient to reinvigorate growth in the face of weak exports and private consumption.

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