The Asia-Pacific region has become the largest market for high net worth individuals (HNWIs) globally, and is primarily driven by the increasing HNWI population in Japan, China and India. Economic growth and rising realty prices during the review period were the main reason for growth of HNWI numbers in the region. Growing wealth in this region and the emergence of Singapore and Hong Kong as offshore hubs have attracted a large number of wealth management companies to set up branches in the region.
Additionally, tax advantages and opportunities for global diversification have made offshore banking an attractive option for foreign banks in this region. Most wealth management companies are entering this highly lucrative market either through joint ventures, partnerships or by acquiring a domestic firm. The entry of international wealth management firms has made the market competitive and wealth management firms now offer premium services and sophisticated products to counter the fierce competition.
Most HNWIs in the Asia-Pacific region are either first-generation HNWIs or inheritors of family wealth. With the cooling of realty and equity markets there has been strong growth in fixed-income funds in Asia-Pacific, and most wealth management firms in the region offer a range of fixed-income products. An increasing number of HNWIs in the Asia-Pacific region are showing interest in investments of passion, such as art, jewelry and collectibles, as they are increasingly delivering higher returns than equities.
Wealth management firms in the Asia-Pacific region are facing severe profitability pressures due to stringent regulations laid down by banking regulators in this region. Offshore wealth centers catering to Asia-Pacific clients are growing at a rapid pace, with Singapore and Hong Kong emerging as key destinations.