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Homing in on HNWIs: Asia Pacific’s power players

The Capgemini and RBC report pointed out the fundamental facts regarding the wealth growth among Asia Pacific HNWIs. The region's population has grown 17% to 4.3 million, while their wealth has grown 18% to reach $14.2 trillion, compared to growth rates of 13% and 12%, respectively, in the rest of the world.

The report also noted the regions’ HNWIs' wealth is expected to grow at a compound rate of 9.8% through 2016 to add $4.6 trillion, which will take the region’s HNWIs wealth to $18.8 trillion in total by 2016.

One important fact is the region’s growth drivers for HNWIs. ‘While equity market performance across Asia Pacific was mixed in 2013, strong economic growth and real estate prices in key markets drove overall wealth growth,’ according to the Capgemini and RBC report. The report noted Asia Pacific region is expected to pass North America as the region with the highest HNWIs population by the end of 2014 and the greatest HNWI wealth by 2015. The Julius Baer – Bank of China report noted improvements in human capital and on-going structural reforms are lessening China’s reliance on manufacturing exports as the premier engine of growth.

Investments destinations in the region (excluding Japan) are also another factor for HNWIs to consider, especially among those keen on investing outside their home region. Here it was found HNWIs allocate 43% of investments to international markets, up from 30% a year prior, according to the Capgemini and RBC report. The report also indicated that, within this 43% of international allocation, HNWIs invested 15% in Europe, 14% in North America, 10% in Middle East and Africa and 5% in Latin America. For Chinese HNWIs, the US and Canada (61%) took top spot, followed by Hong Kong (34%), Australia (21%), continental Europe (15%) and the UK (11%) tying with Singapore (11%) in fifth place, according to the Julius Baer and Bank of China.

The final major factor to consider from the HNWI reports is the use of investment vehicles, which shows how those considered in the reports tend to allocate capital. Real estate (23%) remained the preferred asset class for HNWIs in the Asia Pacific ex Japan region, according to the Capgemini and RBC report data (Q1, 2014). In the meantime, cash and cash equivalents (22.6%) was second, equities was third (21.7%). Fixed income accounted for 18.2% and alternative investments accounted for 14.5%. The Julius Baer – Bank of China report also noted cross-border investments are viewed as one of the most exciting prospects over the next 12 months, which include investing overseas financially (44%) and buying properties (40%). 'Structured products that offer capital protection remain the preferred investment vehicle, but foreign exchange-linked products, bonds and overseas equities were listed as being of interest over the coming 12 months,’ according to the Julius Bare and Bank of China report.

CityWire HK

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