Growth of household wealth hits a snag: Credit Suisse

Thursday, Oct 15, 2015
Claire Huang
The Business Times

Singapore - HOUSEHOLD wealth per adult in Singapore had grown strongly from 2001 to 2012, but this upward trajectory has since plateaued in domestic currency units and declined in terms of the greenback, due to adverse exchange rate movements last year.

The trend is in line with Credit Suisse Research Institute's finding that the size and wealth of the middle class globally grew quickly before the financial crisis, but the growth subsided after 2007.

Its sixth annual global wealth report said rising inequality also put pressure on the share of wealth of the middle class in every region.

Total household wealth here at existing US dollar terms fell 5.8 per cent to US$1 trillion, from mid-2014 to mid-2015, but it rose by 1.8 per cent in domestic currency terms.

Even as household wealth per adult in Singapore hit a snag in recent years, average wealth per adult has risen 140 per cent to US$269,400 in mid-2015, compared with US$112,800 in 2000.

Most of the rise is linked to high savings and asset price movements from 2005 to 2012, the report said.

Singapore is now ranked eighth globally in terms of personal wealth per adult - the highest of all countries in Asia and well ahead of Hong Kong.

On a wealth-per-adult basis, Switzerland remains the richest nation in the world with US$567,100 in 2015, followed by New Zealand (US$400,800) and Australia (US$364,900).

Between 2000 and 2015, wealth in Singapore grew at an average annual rate of 6.2 per cent, in line with higher gross domestic product per capita growth over the same period, findings showed.

In terms of median wealth per adult, Singapore is ranked seventh in the world at US$98,900, beating Japan, which is in the eighth spot at US$96,100. New Zealand and Australia are the two highest in the world at US$182,600 and US$168,300 respectively.

Financial assets constitute 54 per cent of total household assets in Singapore, similar to that of Switzerland and the United Kingdom, said Credit Suisse, adding that the average debt of US$54,600 in Singapore is moderate for a high-wealth country as it equates to 17 per cent of total assets.

As for distribution of wealth here, the report said "Singapore shows only moderate inequality".

"Just 10 per cent of its people have wealth below US$10,000, versus 71 per cent for the world as a whole. The number with wealth above US$100,000 is six times the global average. Reflecting its very high average wealth rather than high inequality, 5 per cent of its adults or 205,000 individuals are in the top 1 per cent of global wealth holders, while its adult population accounts for just 0.1 per cent of the world total," it added.

As with many developed economies, Singapore has a high percentage of adults in the middle class at 62 per cent, owning US$334 billion of wealth or 31 per cent of the country's total.

Findings also showed that the number of millionaires (in US currency) in Singapore is projected to rise by 50 per cent in the next five years to reach 212,000 in 2020, from the current 142,000.

There are an estimated 752 ultra-high-net-worth individuals in Singapore with more than US$50 million net wealth.

Michael O'Sullivan, chief investment officer for the UK & EEMEA, private banking and wealth management at Credit Suisse, said: "Going forward, we expect the global economy to accelerate slightly, with the Chinese economy stabilising as it makes a transition towards consumption and services. Against this backdrop, wealth is set to continue its upward trajectory and could grow at an annual rate of 6.6 per cent (including inflation), reaching US$345 trillion in 2020."