China, Asia grow more millionaires
Even as the growth of global wealth cooled a bit in 2015, China and Asia continued to outpace other countries and regions when it comes to expanding the ranks of millionaires.
In its annual report on global wealth, Boston Consulting Group (BCG) said on Tuesday that Asia-Pacific (excluding Japan), was the only region to post doubledigit growth, as the value of private wealth advanced 13 percent to $37 trillion last year. China was the main driver of that growth, the BCG report said.
When it comes to wealth creation, “China is still the most important market in Asia today,” said Mariam Jaafar, a partner in BCG’s wealth management practice in Singapore.
Asia-Pacific will account for about 40 percent of future wealth growth through 2020. “The majority of growth will come from upper high networth and high net-worth (HNW) segments,” added Jaafar.
Boston Consulting defines upper HNW as those with assets of $20 million to $100 million. HNWs are defined as having assets of $1 million to $20 million. The affluent are defined as holding assets of $250,000 to $1 million, while ultra HNWs have assets of more than $ 100 million, according to BCG.
Wealthy Chinese are fairly conservative when it comes to investments and are expected to remain that way in the future, BCG said. In 2015, the wealthy Chinese kept 79 percent of their assets in cash and deposits, 16 percent in equities, and 5 percent in bonds.
By 2020, BCG expects HNW Chinese to keep 77 percent of their assets in cash and deposits, 19 percent in stock and 5 percent in bonds.
China’s stock market turbulence last year helped to increase investor awareness about risk and alternative financial assets, Jaafar said. “Investors are starting to look more at wealth preservation,” she added.
The report noted that assets under management for women are expected to grow about 7 percent a year to $72.1 trillion by 2020, and female investor wealth is growing 1.4 percent faster than the growth rate of global wealth.
“I can say that the same trend of faster female wealth growth is true for Asia Pacific and is also true for China. We expect a growth of female wealth of 13.3 percent in the next five years, versus the overall growth of 12 percent. Similar to global trends, Chinese women’s wealth is mostly earned through inheritances, but (is) increasingly also self-generated,” said Jaafar.
The number of millionaire households in the world rose 6 percent in 2015 to 18.5 million, according to the report, a slowdown from 11 percent growth in 2014. The US is home to the largest number of millionaire households at 8 million.
China is second with 2.1 million, followed by Japan with 1.1 million and the United Kingdom with 961,000.
The value of private wealth in the world grew by 5.2 percent in 2015, to $168 trillion. That was below the 7 percent growth reported in 2014. The bulk of global wealth growth last year was driven by the creation of new wealth, rather than an increase in the value of existing assets. The report noted that many equity and bond markets were flat or even slipped in 2015.
Millionaires now control about 47 percent of the world’s wealth and will control 52 percent by 2020, BCG said.