Oct 19, 2005
Wealth of S'pore households grows by $34b
By Lorna Tan
Finance Correspondent
SINGAPOREANS are getting richer, and by the tune of about US$20
billion (S$34 billion).
The combined wealth of households here grew from US$270 billion to
US$290 billion by the end of last year, according to the latest
Global Wealth report by The Boston Consulting Group (BCG).
The wealthy elite contributed to the lion's share of the wealth,
with assets totalling US$275 billion. They are defined as those
with at least US$100,000 in assets under management, including
stocks, bonds, hedge funds and cash, but not property.
One of the main reasons why they have prospered is that Singapore
has moulded itself on Switzerland, at least when it comes to
changes in taxation and trust laws.
BCG vice-president and director Roman Scott said at the report's
launch yesterday that recent law changes have helped Singapore
become competitive and allow it to be positioned as the
Asia-Pacific's Switzerland.
There is 'absolutely nothing' in
Singapore tax and banking secrecy laws now that differentiates it
from Switzerland, he said.
However, Singapore's wealth figures pale in comparison to some
Asian countries such as South Korea.
The total wealth of households in Asia grew to US$7.2 trillion last
year from US$6.4 trillion in 2003, mainly because of strong
expansion in South Korea, Australia and Taiwan.
They each achieved impressive compound annual growth rates - 20 per
cent in Korea, 17.8 per cent in Australia and 8.7 per cent in
Taiwan.
Taiwan and China had the highest asset holdings in absolute terms
of US$1.47 trillion and US$1.44 trillion, respectively.
Wealth in both economies was extremely concentrated - about 2 per
cent of households hold about 70 per cent of riches.
The proportion of Asian assets held as shares has increased
slightly to 28 per cent, but most wealth is still held in cash and
deposits.
In fact, this cash-is-king preference is a worrying trend which
shows that the industry is 'failing' to provide suitable
alternatives, said Mr Scott.
He pointed out that there was an alarming increase in average cash
holdings by customers of banks in the Asia-Pacific to 43.2 per cent
of assets under management last year. This is up from 35.7 per cent
in 2003.
Wealth in Asia is expected to grow by 6.8 per cent annually from
last year to 2009 with the 'established wealth' segment - those
with more than US$5 million in investible assets - being the
fastest-growing.
BCG cited China, India and Russia as 'the most attractive growth
countries' in the near future and urged wealth managers to focus on
them for diversification.