Saturday, September 22, 2012

ASIA-PACIFIC: Land of the Most Plenty

Well done, Asia-Pacific! In 2011, the region passed North America to lay claim for the first time as the place with the most high net-worth individuals, according to a just-released report by Capgemini and RBC Wealth Management. Asia had already eclipsed Europe in 2010. “High net worth” is defined as having “investable assets of US$1 million, excluding primary residence, collectibles and goods that can be consumed.”
But before Asians raise their self-celebratory glasses of baijiu/soju/sake/shiraz too high, they should consider that the report’s definition of Asia-Pacific includes Japan and Australia. Given how Japan sometimes behaves towards its neighbors (otherwise known as the Erstwhile Colonies), it is debatable whether Japan sees itself as part of the rest of Asia, and vice-versa. Sometimes it seems that Japan is its own planet, one that orbits an independent rising sun. Certainly, many marketeers see Japan as being a distinct place for business. In regards to the Aussies, it is also debatable whether they see themselves as part of Asia, other than as a matter of economic convenience. Of course, if the Chinese continue to buy up the mineral and fossil fuel resources Down Under at the pace that they’ve shown over the past few years, then never mind what the above-ground Aussies might think – the earth under their feet could very well be part of Asia. Excluding Japan and Australia (which together with China accounted for 75% of the number of wealthy), there’s little doubt that Asia still lags behind North America, and possibly even Europe.
But definitions aside, there are some noteworthy trends to chew on, like morsels of gingko nuts:
- There were 3.4 million of these lucky individuals across the region.
- However, while the number of millionaires rose, their overall investable wealth declined, by 1.1%, to US$10.7 trillion. As shown in the above chart, most of the declines occurred in India and Hong Kong.
- Thailand, Australia and Indonesia experienced the most percentage growth. Australians and Indonesians benefited from their natural resources bonanza. Thais were better off (despite devastating floods in November) due to the economic rebound that accompanied a more stable political environment; the country experienced far fewer scenes of red and yellow shirts bashing each other into an orange mess, as in earlier years.
- Indonesia was the only market where the MSCI equity index (a measure of stock price performance) was up.
It is difficult to predict how 2012 may turn out. Asia may retain its lead, but it’s tough to tell. China is down, but Hong Kong is back up, as are other Asian markets. And, the US has continued to crawl out of its sub-prime hole, so North America may reclaim its crown. In any event, 2011 was a watershed year for Asia’s wealthy. And it certainly will not be the only time when the region’s numbers will outstrip those from elsewhere.

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