Number of wealthy Malaysians to double by 2015
Written by Joanne Nayagam
Thursday, 15 September 2011 11:45
KUALA LUMPUR: In its first Asia Wealth Report released this year, private banking group Bank Julius Baer expects the number of high net worth individuals (HNWIs) in Malaysia to grow from 32,000 currently to 68,000 in 2015. Their net worth is expected to increase from US$140 billion (RM433 billion) to US$330 billion.
“We see that Asia is growing in a very dynamic way, accounting for almost 40% of global GDP alone if you basically look at China and India as of today,” said Dr Thomas Meier, Julius Baer CEO for Asia, in an interview with The Edge Financial Daily.
Because wealth is generated in growing economies, said Meier, it is natural for the group to understand how this wealth is translated to different individuals.
The report, prepared in cooperation with CLSA, was based on client surveys and interviews covering topics such as environment, philanthropy, investing, lifestyle and education and shows how Asia’s HNWIs view the world.
The key findings of the report include Julius Baer’s forecast that China and India alone will contribute over 40% of the global GDP growth for 2011 and 2012.
It also estimated a doubling of the number HNWIs across Asia from 1.16 million to 2.82 million as their wealth triples from US$5.06 trillion to US$15.81 trillion by 2015.
China alone is forecast to have 1.4 million HNWIs with a stock of wealth of US$8.76 trillion by 2015.
Growth in Malaysia will be broad-based and job creating.
Indonesia stood out with the highest growth rate in terms of number of HNWIs over the five-year period, rising from 33,000 to 99,000 with a stock of wealth of US$487 billion.
Four key factors will drive the rise in HNWIs in Malaysia.
The first is the country’s strong and stable long-term fundamental GDP growth derived from trade and agriculture, and increasingly the finance and banking sector, said David Lim, Julius Baer CEO for Singapore.
“The wealth report agrees that growth in Malaysia will be broad-based. It will be job creating. There will a lot more engagement of Malaysia with Asean and a reduction in the reliance of Malaysia on the Western markets,” he said.
The second factor is Asia’s strong currencies, which Julius Baer believes will continue to strengthen.
Asian currencies will not only benefit from their countries’ strong reserves but also rising inflow of foreign direct investments.
Furthermore, a stronger currency will also provide more “fire power” for asset acquisition abroad. “There will be that money flow back to Malaysia,” said Lim.
The other two factors are asset price appreciation from real estate and equities.
Equally important for HNWIs is understanding what needs to be done to sustain their lifestyle from a consumption and investment perspective.
One of the key components to determine a financial plan is the cost of goods and because HNWIs do not draw from the same basket of 20 items as many others, the report will help them plan for the long haul. For this, the Swiss private bank launched the Julius Baer Lifestyle Index, which captures the consumption costs in Asia Pacific and the inherent inflation.
The 20 items in the basket used for the index include high-value items from wedding expenses to wine and cars to legal costs, cigars and education.
“It is the cost of living the life of the rich,” said Meier.
The index covers price changes from April 2010 to April 2011, and is an aggregate of price changes sampled from Shanghai, Mumbai, Singapore and Hong Kong.
For the one-year to April 2011, the index was up 11.7% outpacing conventional consumer price index measures, which stood at 5.1% over the same period.
The rising number of HNWIs will also benefit luxury brands expanding in Asia. “Luxury goods and established brands will benefit from this wealth,” said Meier.
The key is brand reputation and management to get a brand into an iconic position said Lim.
Julius Baer was a sponsor in the Forbes CEO Global Conference which was held here over the past few days. The bank is present in Asia with offices in Singapore, Hong Kong and Indonesia.
This article appeared in The Edge Financial Daily, September 15, 2011.
Written by Joanne Nayagam
Thursday, 15 September 2011 11:45
KUALA LUMPUR: In its first Asia Wealth Report released this year, private banking group Bank Julius Baer expects the number of high net worth individuals (HNWIs) in Malaysia to grow from 32,000 currently to 68,000 in 2015. Their net worth is expected to increase from US$140 billion (RM433 billion) to US$330 billion.
“We see that Asia is growing in a very dynamic way, accounting for almost 40% of global GDP alone if you basically look at China and India as of today,” said Dr Thomas Meier, Julius Baer CEO for Asia, in an interview with The Edge Financial Daily.
Because wealth is generated in growing economies, said Meier, it is natural for the group to understand how this wealth is translated to different individuals.
The report, prepared in cooperation with CLSA, was based on client surveys and interviews covering topics such as environment, philanthropy, investing, lifestyle and education and shows how Asia’s HNWIs view the world.
The key findings of the report include Julius Baer’s forecast that China and India alone will contribute over 40% of the global GDP growth for 2011 and 2012.
It also estimated a doubling of the number HNWIs across Asia from 1.16 million to 2.82 million as their wealth triples from US$5.06 trillion to US$15.81 trillion by 2015.
China alone is forecast to have 1.4 million HNWIs with a stock of wealth of US$8.76 trillion by 2015.
Growth in Malaysia will be broad-based and job creating.
Indonesia stood out with the highest growth rate in terms of number of HNWIs over the five-year period, rising from 33,000 to 99,000 with a stock of wealth of US$487 billion.
Four key factors will drive the rise in HNWIs in Malaysia.
The first is the country’s strong and stable long-term fundamental GDP growth derived from trade and agriculture, and increasingly the finance and banking sector, said David Lim, Julius Baer CEO for Singapore.
“The wealth report agrees that growth in Malaysia will be broad-based. It will be job creating. There will a lot more engagement of Malaysia with Asean and a reduction in the reliance of Malaysia on the Western markets,” he said.
The second factor is Asia’s strong currencies, which Julius Baer believes will continue to strengthen.
Asian currencies will not only benefit from their countries’ strong reserves but also rising inflow of foreign direct investments.
Furthermore, a stronger currency will also provide more “fire power” for asset acquisition abroad. “There will be that money flow back to Malaysia,” said Lim.
The other two factors are asset price appreciation from real estate and equities.
Equally important for HNWIs is understanding what needs to be done to sustain their lifestyle from a consumption and investment perspective.
One of the key components to determine a financial plan is the cost of goods and because HNWIs do not draw from the same basket of 20 items as many others, the report will help them plan for the long haul. For this, the Swiss private bank launched the Julius Baer Lifestyle Index, which captures the consumption costs in Asia Pacific and the inherent inflation.
The 20 items in the basket used for the index include high-value items from wedding expenses to wine and cars to legal costs, cigars and education.
“It is the cost of living the life of the rich,” said Meier.
The index covers price changes from April 2010 to April 2011, and is an aggregate of price changes sampled from Shanghai, Mumbai, Singapore and Hong Kong.
For the one-year to April 2011, the index was up 11.7% outpacing conventional consumer price index measures, which stood at 5.1% over the same period.
The rising number of HNWIs will also benefit luxury brands expanding in Asia. “Luxury goods and established brands will benefit from this wealth,” said Meier.
The key is brand reputation and management to get a brand into an iconic position said Lim.
Julius Baer was a sponsor in the Forbes CEO Global Conference which was held here over the past few days. The bank is present in Asia with offices in Singapore, Hong Kong and Indonesia.
This article appeared in The Edge Financial Daily, September 15, 2011.
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