Despite a dip, Singapore still has highest concentration of wealthy households
By ARTHUR SIM 17 September 2009
(SINGAPORE) Thanks to the global economic crisis, wealth destruction has slashed the net worth of the rich all over. Singapore, however, has managed to stay on top with the highest concentration of millionaires.
According to a report by the Boston Consulting Group (BCG) 8.5 per cent of Singapore households had more than US$1 million in assets under management (AUM) in 2008.
The global economic crisis has, however, eroded some wealth here. According to earlier reports, BCG found that Singapore had the highest concentration of millionaires in 2007 too, but the percentage then was higher: 10.6 per cent.
Switzerland has the second highest concentration of millionaires at 6.6 per cent followed by Kuwait with 5.1 per cent.
Globally, the picture was not as rosy.
The number of millionaire households worldwide fell from 11 million to about 9 million, representing a drop of 17.8 per cent. The decline was steepest in North America and Europe, at 22 per cent in both regions, although the US continued to have the most millionaire households at nearly 4 million.
Interestingly, the BCG report found that the crisis narrowed the gap between the wealthy and non-wealthy. Wealth owned by households with less than US$100,000 in AUM increased 2 per cent in 2008; it declined in all other segments. Among households with more than $5 million in AUM, wealth fell 21.5 per cent.
This was attributed to the number of non-wealthy households rising 4 per cent and the number of wealthy households declining 12 per cent.
Things could start looking up next year.
‘Wealth will begin a slow recovery in 2010 but may not reach its pre-crisis level until 2013,’ said Ranu Dayal, a BCG senior partner and managing director based in Singapore. ‘We expect wealth to grow at an average annual rate of about 4 per cent from year-end 2008 through 2013.’
Mr. Dayal also believes wealth will grow fastest in Asia-Pacific (excluding Japan) at 9.5 per cent per year over the same period.
Still, Europe is currently the richest region in the world, after nudging out North America.
Europe had US$32.7 trillion in AUM in 2008, down 5.8 per cent from the previous year, followed by North America, with US$29.3 trillion.
Offshore wealth fell to US$6.7 trillion in 2008, down from US$7.3 trillion in 2007. Switzerland remained the largest offshore centre; it accounted for US$1.8 trillion, or 28 per cent of offshore wealth last year. Together, the UK, Channel Islands, Isle of Man and Dublin accounted for US$1.5 trillion while the US accounted for US$0.4 trillion.
Singapore accounted for US$0.5 trillion of offshore wealth while Hong Kong accounted for US$0.2 trillion.
BCG said that increased regulatory scrutiny is changing the landscape of cross-border wealth management, with pressure mounting on offshore centres that have based their edge primarily on tax avoidance. ‘Once their tax and legal advantages evaporate, so too will their appeal,’ Mr. Dayal said. ‘Being inconspicuous is a tenuous value proposition in an era of increasing oversight,’ he added.
BCG does, however, believe that Singapore and Hong Kong will continue to benefit from their proximity to other Asian countries, where wealth is expected to stage a faster recovery.
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Despite a dip, Singapore still has highest concentration of wealthy households
By ARTHUR SIM
17 September 2009
(SINGAPORE) Thanks to the global economic crisis, wealth destruction has slashed the net worth of the rich all over. Singapore, however, has managed to stay on top with the highest concentration of millionaires.
According to a report by the Boston Consulting Group (BCG) 8.5 per cent of Singapore households had more than US$1 million in assets under management (AUM) in 2008.
The global economic crisis has, however, eroded some wealth here. According to earlier reports, BCG found that Singapore had the highest concentration of millionaires in 2007 too, but the percentage then was higher: 10.6 per cent.
Switzerland has the second highest concentration of millionaires at 6.6 per cent followed by Kuwait with 5.1 per cent.
Globally, the picture was not as rosy.
The number of millionaire households worldwide fell from 11 million to about 9 million, representing a drop of 17.8 per cent. The decline was steepest in North America and Europe, at 22 per cent in both regions, although the US continued to have the most millionaire households at nearly 4 million.
Interestingly, the BCG report found that the crisis narrowed the gap between the wealthy and non-wealthy. Wealth owned by households with less than US$100,000 in AUM increased 2 per cent in 2008; it declined in all other segments. Among households with more than $5 million in AUM, wealth fell 21.5 per cent.
This was attributed to the number of non-wealthy households rising 4 per cent and the number of wealthy households declining 12 per cent.
Things could start looking up next year.
‘Wealth will begin a slow recovery in 2010 but may not reach its pre-crisis level until 2013,’ said Ranu Dayal, a BCG senior partner and managing director based in Singapore. ‘We expect wealth to grow at an average annual rate of about 4 per cent from year-end 2008 through 2013.’
Mr. Dayal also believes wealth will grow fastest in Asia-Pacific (excluding Japan) at 9.5 per cent per year over the same period.
Still, Europe is currently the richest region in the world, after nudging out North America.
Europe had US$32.7 trillion in AUM in 2008, down 5.8 per cent from the previous year, followed by North America, with US$29.3 trillion.
Offshore wealth fell to US$6.7 trillion in 2008, down from US$7.3 trillion in 2007. Switzerland remained the largest offshore centre; it accounted for US$1.8 trillion, or 28 per cent of offshore wealth last year. Together, the UK, Channel Islands, Isle of Man and Dublin accounted for US$1.5 trillion while the US accounted for US$0.4 trillion.
Singapore accounted for US$0.5 trillion of offshore wealth while Hong Kong accounted for US$0.2 trillion.
BCG said that increased regulatory scrutiny is changing the landscape of cross-border wealth management, with pressure mounting on offshore centres that have based their edge primarily on tax avoidance. ‘Once their tax and legal advantages evaporate, so too will their appeal,’ Mr. Dayal said. ‘Being inconspicuous is a tenuous value proposition in an era of increasing oversight,’ he added.
BCG does, however, believe that Singapore and Hong Kong will continue to benefit from their proximity to other Asian countries, where wealth is expected to stage a faster recovery.
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