WM Market Reports

Global Wealth Expands; Asia-Pacific Seen Growing Rapidly - Boston Consulting Group

Tom Burroughes, Group Editor, 9 June 2016

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Asia will overtake Western Europe as the world's second wealthiest region next year, according to BCG's latest Global Wealth report.

Global private wealth expanded by 5.2 per cent in 2015 from a year before to $168 trillion, and total wealth is predicted to reach $224 trillion by 2020, according to a survey by Boston Consulting Group. The growth rate slowed last year, however, from 7 per cent in 2014. 

All regions of the world experienced a slower pace of wealth growth last year apart from Japan, where the country’s accommodative monetary policy had a positive impact, BCG said in Global Wealth 2016

On a regional basis, North America remains top of the heap, with $60.4 trillion of private wealth in 2015. BCG estimates that will reach $76 trillion this year. In Asia-Pacific, private wealth last year stood at $36.6 trillion, and that figure is predicted to rise to $59.8 trillion this year. For Western Europe, the 2015 and estimated 2016 figures are $40.8 trillion and $48.7 trillion, respectively. In Japan, the figures are $13.6 trillion and $15.3 trillion. In the Middle East and Africa, they are $8.0 trillion and $11.8 trillion. 

Looking ahead, BCG expects Asia-Pacific to produce the fastest growth in private wealth and to overtake North America soon after 2020. The region is also expected to surpass Western Europe as the world’s second wealthiest region in 2017.

Overall, private wealth globally is expected to rise at an annual rate of 6 per cent over the next five years, reaching $224 trillion in 2020, it said.

As far as distribution of wealth is concerned, the upper-high net worth segment saw the strongest growth in 2015, rising 7 per cent, especially in Asia (21 per cent). (Upper-HNW is defined as between $20 million and $100 million; ultra-high net worth is set at more than $100 million, and lower-HNW set at between $1 million and $20 million.)

The number of millionaire households rose 6 per cent globally last year and their share of global wealth reached 47 per cent, which is expected to swell to 52 per cent in 2020.

“Unlike in recent years, the bulk of global wealth growth in 2015 was driven more by the creation of new wealth (such as rising household income) than by the performance of existing assets, as many equity and bond market stayed fairly flat or even fell,” the annual report said.

The study is based on a survey of more than 130 wealth managers and involves more than 1,000 data points related to growth, financial performance, operating models, sales excellence, employee efficiency, client segments, products, and trends in different markets and client domiciles. 

Asset allocation
In terms of where wealthy individuals are putting money to work, the vast majority of such assets last year were split between cash/deposits on one side and equities on the other, accounting for more than 80 per cent of wealth assets in total. Regionally, allocations varied: North America had a more pronounced tilt to stocks than was the case in other regions, for example.

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