A new survey of nearly 2,800 Asian clients of Standard Chartered with an average net worth of $1.4 million, has shown that the average respondent wants to achieve a steep 12 per cent compound annual growth of their wealth for the next ten years. 

The survey, FuturePriority Report, was conducted by the bank and intelligence provider Scorpio Partnership in October and November last year. Respondents said they want to grow their assets by an average $4 million within a decade. South Korea has the highest financial goal ($6 million), followed by India ($4.8 million) and China ($4.5 million). This will require highly aggressive double digit growth, for most of them.

Some have higher expectations than others. While at the more realistic end of the spectrum, individuals in Taiwan thought they could grow their wealth at around 7 per cent per annum to achieve $2.7 million within the next decade, those in Indonesia are eyeing a whopping 18 per cent CAGR of their assets, per year for the next decade to achieve $2.9 million more money.

This is a tall order on any private banker, particularly in the light of current market turmoil. Last year Asian equity markets fell by over $1 trillion, with declines led by Chinese markets (Shanghai and Shenzhen stock exchanges ended last year with total value traded of $7 trillion, $1.7 trillion lower than the previous year according to Reuters). India’s Bombay and National Stock Exchanges also suffered declines, as did Singapore's.

When asked whether it would be possible for the bank to grow wealth at this pace every year for the next decade, Foo Mee Har, global head of priority and international banking for Standard Chartered, said: “This is a reflection of their confidence in their own economy. You have to balance risk appetite with return expectations, and sometimes those expectations have to be managed.” She was present at the media briefing to launch the report at the bank's Hong Kong office. 

Indeed, wealth confidence is a defining characteristic of the affluent and a strong majority of Asia’s affluent (77 per cent) remain confident in growing their wealth in the next 12 months, although the confidence level is slightly lower than that of the previous year (81 per cent).

Of the nine countries surveyed, India and Indonesia stand out as being the most confident (88 per cent and 98 per cent respectively), while Singapore, Hong Kong and Taiwan share similar levels of wealth confidence at 70 per cent, 68 per cent and 67 per cent respectively.

Wealth creation

How are Asia’s affluent hoping to achieve these goals, aside from handing over to their private banker? 

A preference for tangible investment options is clear, with respondents stating high interest savings (43 per cent), gold (43 per cent) and property (34 per cent) as their top choices in the next 12 months. The Asian affluent are also fairly diversified and see themselves investing in an average of 3.3 product types in the next 12 months – slightly up on last year's 3.1. 

Also loans will be important. One hundred per cent are looking to take out financing this year including business loans, mortgages and personal loans, but rather than spending it on trophies they are borrowing money to make more money.

Asian affluents see themselves using an average of 1.6 types of loans this year mainly to finance personal use or large assets like property or business.

“The report showed that Asian affluent are sophisticated wealth builders, adopting a dual-prong approach of investing, and using credit or leverage to enhance their returns. They are careful about the use of credit as they also view it as a wealth management tool, with one-third of respondents saying that it can help them enhance investment returns when used carefully,” said Foo Mee Har.

International opportunities

The report also showed that while most respondents see Asia as the region offering excellent wealth creation opportunities, in the longer term they adopt a more international perspective.

The report analyses where the burgeoning rich see the greatest wealth creation opportunities. The study reveals that while Asia is top of mind for both the short and long terms, they are also not discounting opportunities beyond their doorstep. 

About a third of respondents view Europe and North America as offering good wealth creation prospects in the next 12 months. These numbers rise substantially over a five year horizon, particularly for Middle East & Africa and Latin America, showing that the Asian affluent investor takes a balanced, sophisticated and global view to wealth creation.

The survey canvassed individuals in China, India, Indonesia, Hong Kong, Malaysia, Singapore, South Korea, Taiwan and Thailand.