80% of all affluent households live in the West, but strong shift EastBY WANDER MEIJER
The growth of developing economic powerhouses in Asia is starting to impact personal fortunes with a fast increase in households with more than US$ 100,000 investable assets – according to a TNS survey conducted in 24 countries worldwide.
While the United States still ranks as the world’s most prosperous country, with 31 million affluent households, the study reveals that the emerging economies of India and China have overtaken many European countries in this measure of consumer wealth.
It also shows that emerging markets now rival their developed counterparts in terms of the amount that people have to invest. The UAE and India appear in the top five countries where the affluent have more than US$ 1M investable assets on average, alongside Singapore and Hong Kong.
While incidence of affluence would naturally be higher in small, wealthy countries such as Luxembourg (29%) and Singapore (20%), there are huge contrasts between markets with large populations; while 27% of the US are affluent, only 1% can say the same in India and China. This demonstrates a great contrast in wealth distribution within emerging markets even where the actual number of affluent households is large, and highlights a need for very precise marketing strategies to reach the right audience.
It is not only size that matters, when examining the growth potential of each market, the research confirms that emerging markets will become new centers of affluence in coming years. India and China have surpassed major European markets such as Germany and France and the entrepreneurial spirit of people in these markets is already paying off in terms of personal wealth.
Fundamental social shifts are unearthed when examining the demographics of the world’s affluent; while they average 57 years old in North America and Europe, this falls to the early 40s in Australia and Singapore, with Hong Kong having the youngest affluents with an average age of just 38 years.
The findings also demonstrate regional contrasts in terms of what the affluent actually invest in. While the Chinese and Indian affluent are keen investors in precious metals (cited by 35% and 33% of respondents respectively), this is just 3% in Sweden, Norway and the Netherlands.
Despite today’s pan-global financial trends, it’s important to recognize the diversity in local preferences when it comes to asset allocation. There are big differences between markets, even when they border each other geographically: only 5% of Norwegians invest in bonds, compared to 31% of Swedes. And while the popularity of commodities fluctuates at a global level, they are very popular among India’s affluent.
Eighty percent of all affluent households are still living in the Western world, which holds just 12% of the world’s population. As the gravity of the global economy shifts to the East, the share of the world’s most affluent households will naturally shift with it.
How does Hong Kong fit into this picture? It is a mature economy, but it still has many characteristics of an emerging market; the affluent are younger, invest in stocks and commodities and the entrepreneurial spirit is [still] here. The incidence of affluent households (15%) also holds the middle ground between the old world (20-30%) and the upcoming economies of China and India (1%). If Hong Kong maintains its position and optimal blend between East and West, it will retain the best of both worlds: the entrepreneurial spirit and the opportunities of emerging Asia and the world class infrastructure, education and rule of law of developed economies. It is the perfect place in which to get safely rich.