While latest figures from the annual RBC Wealth Management/Capgemini World Wealth Report show the Asia-Pacific region losing its top spot to North America in 2012, the longer-term trend is unquestionably in favour of the East. 

After the global report issued earlier this week set out broad themes, this website had a chance to drill down deeper into the detail of wealth trends in the Asia-Pacific region. 

Asia-Pacific was one of the main drivers of global HNW population growth in 2012. Asia’s HNW population increased by 9.4 per cent, to reach 3.68 million people - just behind North America’s population of 3.73 million. The trend however puts Asia on track to become the prevalent HNW individual region for years to come. With Asia home to over 60 per cent of the world’s population, some have said the HNWI growth trend is irreversible.

While North America reclaimed the position as the largest HNW market, Asia-Pacific, with many of the fastest-growing HNW markets, led in HNW wealth growth. The wealth of Asia-Pacific HNW individuals grew by 12.2 per cent to reach $12.0 trillion after decreasing by 1.1 per cent in 2011.

Relatively sound economic policy and robust fundamentals helped buffer the Asian economies. Other drivers of wealth such as equities and real estate performed well in 2012, leading to strong growth in both high net worth population and wealth

Singapore experienced a strong increase of 10.3 per cent and 11.5 per cent in its HNW individual population and wealth to 101,000 and $ 489 billion respectively. This growth was driven by strong performance in equity markets, real estate and marginal GDP growth.

Both Hong Kong and India reversed declines in HNW individual population in 2011 (Hong Kong lost 17.4 per cent of its HNW population while India lost 18.0 per cent), posting growth of 35.7 per cent and 22.2 per cent respectively in their HNW individual populations in 2012.

Hong Kong, overcame its poor performance in HNW population growth in 2011, to log a 35.7 per cent rise to 114,000 in 2012. Wealth also grew at a sharp clip of 37.2 per cent to $560 billion. This growth was propelled by a combination of relatively less conservative investing behaviour among many HNW individuals coupled with strong equity markets.

Growth in several other Asia-Pacific markets surged with Indonesia, Australia, China, New Zealand, and Thailand all posting double-digit growth rates in their HNW populations.

Preservation

In line with the global peers, Asia-Pacific (excluding Japan) HNW individuals demonstrated a greater focus on wealth preservation (38.9 per cent) than growth (31.5 per cent). HNW individuals in Japan had the least focus on wealth growth among all regions with only 15.3 per cent focusing primarily on growing their wealth.

Property remained an attractive pull for Asian HNW individuals, (ex-Japan), who favoured real estate, over all other investments, allocating 24.6 per cent of their portfolio to this traditional asset class; compared to a global average of 20.0 per cent.

Asia-Pacific, (ex Japan), HNW individuals allocated the balance of their portfolios to cash/deposits (22.7 per cent), equities (22.3 per cent), fixed income (16.7 per cent), and alternative investments (13.7 per cent), with most (20.5 per cent) of their alternative investments in structured products.

As is usually the case HNW individuals in Japan had the highest allocation to cash/deposits (49.4 per cent) compared to all other regions.

A desire to simplify wealth management relationships globally was also strongly driven by those in Asia-Pacific, (ex-Japan), where 49.2 per cent of persons Asia-Pacific (ex Japan) prefer to work with a single firm to manage all of their financial needs versus 16.6 per cent with multiple firms. However, Asia-Pacific (excluding Japan) HNWb individuals prefer to work with multiple experts (40.1 per cent) versus single point of contact (23.7 per cent) compared to 23.5 per cent and 34.0 per cent globally.

Going digital

In what might be a generational shift preference for digital contact, (38.2 per cent) was the strongest in Asia-Pacific (ex Japan) among all other regions, while only 23.8 per cent preferred direct and personal contact.

Looking ahead, 65.3 per cent of Asia-Pacific HNW individuals are confident in their ability to continue to generate wealth in the near future. This confidence comes alongside an increasing level of trust in wealth managers and firms and despite increasing, but still low, levels of trust in financial markets and regulators:

Some 50.8 per cent of Asia-Pacific persons said they had a high level of trust and confidence in their wealth managers, up from 42.5 per cent who did so a year earlier, though this was lower than the global average of 61.2 per cent.

A little less than half, (49.4 per cent), of Asia-Pacific HNW individuals said they had a high level of trust and confidence in their wealth management firm (an increase of three percentage points from 2012 levels, though lower than the global average of 61.4 per cent)

Trust and confidence in the financial markets remained almost the same, with around 47 per cent having a high degree of trust in the markets.