The Swiss bank has issued another survey of global wealth trends around the world, finding examples of growth - and some concerns about the plight of Millennials - in Asia and other regions.

The Credit Suisse Research Institute, part of the Swiss bank, predicts that total global wealth of households will reach $341 trillion by 2022, while the number of millionaires will reach a record of 44 million, and there are projected to be 193,000 ultra-high net worth individuals by that date.

Data on various Asian markets shows a mixed picture, with evidence of growth overall in most countries of the region.

In its eighth edition, the organisation’s Global Wealth Report showed that throughout 2017, wealth expanded at a faster pace than in previous years, reflecting widespread equity market gains in equities and rises in non-financial assets.

In Asia, Singapore’s household wealth grew 3.4 per cent in the year to mid-2017 to reach $1.2 trillion and is projected to increase by 2.3 per cent a year in the next five years to reach $1.3 trillion in 2022.         The number of millionaires in Singapore expanded by 2.7 per cent to 152,000 in 2017, owning total wealth of $570 billion, an increase of 8 per cent, the report said. The number of ultra-high-net-worth individuals in Singapore grew at a faster rate of 15.3 per cent to 981, ranked 20th globally.

In China, wealth per adult has risen strongly to $26,870 by 2017 from $5,410 in 2000. The report said “there is reason to be cautiously hopeful about the prospects for growth in China’s household wealth in the near term”. In terms of total household wealth, China is second to the US, and ahead of Japan. Real assets stood at $15,980 per adult in mid-2017. China has 2 million millionaires, and more residents holding over $50 million than any country other than the US.

Turning to Japan, wealth growth over the past 17 years has been sluggish; today, average wealth in the country is only 18 per cent higher in dollar terms, and 15 per cent in yen. Sluggish markets and a lower savings rate than in previous years are to blame, Credit Suisse said. The proportion of the population with wealth over $100,000 is six times that of the global average. At the turn of the century, Japan was a close second to the US in terms of residents in the top 10 per cent and 1.0 per cent of wealth holders, but that gap has widened subsequently.  

In India, the report highlighted major inequality: some 92 per cent of people have less than $10,000 in wealth and 0.5 per cent of adults have a net worth of more than $100,000. Some 340,000 of its adults fall into the top 1.0 per cent of global wealth holders and 1,820 adults have more than $50 million, and 760 have over $100 million.

In a specialist part of the report, it examined “unlucky Millennials”, describing this population cohort as struggling, in contrast with Baby Boomers, to accumulate wealth amid rising burdens of paying for an aging population, and also laboring to pay off debt inflated by higher education loans.

“The Millennials have not been a lucky cohort so far. They faced the rigors of the financial crisis and the high unemployment that followed in many countries, and have also been widely hammered by high and rising house prices, rising student debt and rising inequality. Their pension outlook is also worse than that of preceding cohorts,” it said.

Millennials have a more positive picture in China and certain other emerging market countries, however, the report continued.  

Michael O’Sullivan, chief investment officer, international wealth management, at Credit Suisse, told this news service in a call that Millennials are having a difficult time in certain respects. “Compared to other segments of the population and other groups, they are worse off as they have more debt, such as student debt and in terms of the outlook they have less of a chance to accumulate wealth than was the case with Baby Boomers,” he said.  

“Millennials need to think more about financial planning and at an earlier stage than is the case with the older generation, he continued. An issue is that Boomers are a large population cohort and they create a large burden on current taxpayers as they age, squeezing the ability of the current generation to build wealth, he added.

Pyramid
Credit Suisse talked about the current “pyramid” of wealth and gaps between the richest and poorest individuals around the world. The bank estimates that 3.5 billion individuals – 70 per cent of all adults around the world – have wealth under $10,000. A further 1.1 billion adults (21 per cent) fall between $10,000 and $100,000. The total wealth of these categories is around $40 trillion. Of those between $100,000 and $1.0 million, there are about 391 million such persons, making up 7.9 per cent of the total, with those above $1.0 million holding a total of $128.7 trillion, or 45 per cent of the total wealth.

Within the millionaire-plus segment, Credit Suisse estimates there are 35.9 million high net worth adults with wealth between $1.0 million and $50 million, of whom the vast majority (31.4 million) fall into the range of $1 million and $5 million; there are 3.0 million adults worth between $5 million and $10 million, and 1.6 million adults who have between $10 and $50 million.

The report noted that Europe and North America had similar numbers of high net worth individuals from 2007 to 2009, but North America opened up a gap that significantly widened since 2013. Today, that region makes up 16.4 million members (46 per cent of the total) versus 10.8 million (30 per cent) in Europe. Asia-Pacific countries, excluding India and China, have 6.1 million members (17 per cent), with a further 2 million in China (5 per cent). The remaining 1.2 million high net worth individuals (2 per cent of the total) reside in India, Africa, and Latin America.

Ultras

The bank said its figures suggest that 148,200 adults worldwide can be classed as ultra-high net worths (net worth above $50 million). Of this number, 54,800 are worth at least $100 million, and 5,700 have assets over $500 million. The total number of UHNW adults has risen 13 per cent over the past year, with all regions seeing growth.

North America has 51 per cent of all UHNW individuals, and Europe and Asia (ex-India, China) account for 22 per cent and 21 per cent, respectively. China has 18,100 UHNW individuals, a gain of 3,000 on the year. In the UK, at 4,700, there was a gain of 400 UHNW individuals, recovering some lost ground in the aftermath of last June’s vote to leave the European Union.

Putting recent shifts in context, the Swiss bank said latest figures show total wealth is, on some measures, haven’t fully recovered to where it was in 2007 before the financial tsunami.

“After the turn of the century, there was at first a rapid rise in global wealth, with the fastest growth in China, India, and other emerging economies, which accounted for 25 per cent of the rise in wealth, although they owned only 11 per cent of world wealth in the year 2000,” the report’s authors said. “Global wealth declined in 2008, but has trended upwards since then at a significantly lower rate than before the financial crisis,” it continued. “In fact, in US dollar terms, wealth in Europe and Africa remains below the 2007 level, before making any allowance for rising population numbers,” the bank said.

“The muted trends in recent years are due in part to US dollar appreciation – in local currency terms, wealth per adult has risen every year since 2012 in every region. But the level of growth has been insufficient to prevent median wealth from declining almost everywhere in the world,” it said.