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The Global Wealth Market in 2016; Analyzing 69 country wealth markets worldwide.

The Global Wealth Market in 2016; Analyzing 69 country wealth markets worldwide.

Summary

The global wealth market is on a continuous growth path. Worldwide liquid onshore assets will exceed $100tn no later than 2017. But the market is not homogenous: rates and reasons for growth differ between affluent segments, the level of economic development in any given nation, and local conditions. Volatile exchange rates affect not only the relative strength of regional wealth markets but also investors’ preferences with regards to different asset classes. This means that understanding not just the actual size of a market but also all the above factors is crucial for wealth managers expanding to new countries and developing client targeting strategies.

Key Findings

  • The wealthiest individuals grow their assets faster than the rest of the population, with the $10m+ segment forecast to increase its growth rate in the coming years. This underlines the fact that the majority of global wealth is held by a small number of people.
  • Most developing economies are deposit-heavy, with equities and mutual funds the domain of mature markets. However, increasing capital market volatility has encouraged sophisticated investors to seek the safe haven of deposits, particularly as bond yields remain low.
  • Inequality in wealth distribution is clearly seen in frontier markets in particular, where 83% of liquid assets are held by less than 1% of the population.
  • The US is and will remain by far the biggest wealth market in the world. The Asia Pacific economies will lead the growth of liquid asset pots in developing markets.
  • Currency exchange rates have a significant impact on countries’ relative strength against other wealth markets. As a result of British pound depreciation following the EU referendum, the UK will be overtaken by Germany in the biggest markets classification.
  • The Swiss remain the wealthiest in terms of value of savings per individual, but as growth is slowing down in Western Europe in general by 2020 Hong Kong will lead the way.
Synopsis



Verdict Financial’s “The Global Wealth Market in 2016” examines the size and liquid assets held by the global affluent population – both current and forecast through to 2020. The report covers 69 countries and six regions and uses our proprietary datasets.

Specifically the report:
  • Sizes and forecasts the global wealth market – both in terms of liquid assets and population. Data is segmented by 12 asset bands, providing breakdowns into HNW, mass affluent, and mass market segments.
  • Analyzes the composition of savings and investment portfolios across all the markets covered, highlighting differences between mature and developing economies.
  • Looks at the pace of regional wealth markets’ growth, analyzing the impact of inflation and exchange rate fluctuations on the growth in real terms.
  • Identifies the largest and the fastest-growing markets, providing global rankings in terms of assets both from an aggregate and per capita perspective.
Reasons To Buy
  • Understand the dynamics of regional wealth markets and how this is set to change by 2020.
  • Learn about local preferences regarding tendencies towards investing in different asset classes.
  • Discover the main drivers for offshore investments.
  • Identify the markets and affluent segments offering the highest growth potential.
  • Find out challenges for growth in regional wealth markets.


EXECUTIVE SUMMARY
Different local factors drive the growth of the global wealth market
Key findings
Critical success factors
SIZING AND FORECASTING THE GLOBAL WEALTH MARKET
The global wealth market is on a continuous growth path
Globally, the affluent market is worth more than $84tn
Affluent individuals will hold more than $110tn in liquid assets by the end of 2020
The global affluent population totals 350 million individuals and continues to grow
The wealthiest will grow their assets at an even faster rate
Global retail savings and investment trends
Equities and mutual fund holdings have reached pre-financial crisis values, but growth has been slowing
Bond holdings have been decreasing
For HNW individuals, less liquid asset classes play an important role
Retail savings and investment geographical analysis
Attitudes towards deposits differ clearly between mature and emerging markets
Investors in the US hold three times more equities and mutual funds than the developing markets average
Bond holdings are significantly affected by yields
Offshore holdings represent a significant proportion of global wealth
Globally, HNW investors hold 22.7% of their wealth offshore
Motivations for off shoring wealth differ by country
REGIONAL WEALTH MARKETS GROWTH ANALYSIS
Global wealth is distributed unequally
HNW individuals hold a third of global wealth
The mass affluent segment is more important in developed markets
Inequality in wealth distribution is clearer in frontier markets
Developing countries will be chasing mature markets
Kazakhstan will be the fastest-growing wealth market over 2016-20
Central and Eastern Europe will be the fastest-growing region
Developing markets' impressive growth is offset by inflation
Relative wealth market strength depends on exchange rate fluctuations
THE GLOBAL WEALTH MARKETS RANKINGS
The US will remain by far the biggest wealth market in aggregate terms
China ranks second, although developed markets still dominate the top 15
HNW segment rankings highlight the growth of Asia Pacific
Wealth market rankings are affected by exchange rate volatility
Liquid assets per capita analysis
By 2020 the average Hong Kong citizen will be wealthier than their Swiss counterparts
Large emerging markets' rankings highlight unequal wealth distribution
APPENDIX
Abbreviations and acronyms
Supplementary data
Coverage
Countries classification
Definitions
Affluent
Averages
CAGR
Developed (mature) economies or markets
Developing economies or markets
Emerging economies or markets
Frontier economies or markets
HNW
Liquid assets
Mass affluent
Mass market
Onshore
Methodology
Verdict Financial's 2015 Global Wealth Managers Survey
Global Wealth Model methodology
Global Retail Investments Methodology
Exchange rates
Bibliography
Further reading
About Verdict Financial
Disclaimer
List of Tables
Table 1: Global total liquid assets ($bn), end of year 2013-20f
Table 2: Global number of affluent individuals (millions), end of year 2013-20f
Table 3: Global total retail savings and investments, end of year 2013-20f
Table 4: Top 10 countries in terms of deposit allocations (%) as of 2015, with results for 2010 and projections for 2020
Table 5: Top 10 developed countries in terms of deposit allocations (%) as of 2015, with results for 2010 and projections for 2020
Table 6: Top 10 countries in terms of equities and mutual funds allocations (aggregate %) as of 2015, with results for 2010 and projections for 2020
Table 7: Top 10 countries in terms of bonds allocations (%) as of 2015, with results for 2010 and projections for 2020
Table 8: Retail non-resident savings and investments in selected markets ($bn), 2015
Table 9: Top 10 (and selected) global wealth markets in terms of forecast CAGR, 2016-20
Table 10: Top five (and selected) global wealth markets in terms of forecast real CAGR, 2016-20
Table 11: Countries with the highest and lowest CPI rate over 2011-15
Table 12: Top 10 (and selected) countries with the lowest CAGR (2011-15) if current exchange rates are used
Table 13: Top 15 wealth markets in terms of liquid assets ($bn) 2010, 2015, and 2020f
Table 14: Top 15 wealth markets in terms of HNW liquid assets ($bn) 2010, 2015, and 2020f
Table 15: Top five markets in terms of liquid assets ($bn), 2015, using August 2016 exchange rates
Table 16: Top 10 markets in terms of onshore liquid asset holdings per individual ($), 2015
Table 17: Top five (and other selected) developing markets in terms of onshore liquid asset holdings per individual ($), 2015
Table 18: Global total liquid assets ($bn), end of year 2006-12
Table 19: Global number of affluent individuals (millions), end of year 2006-12
Table 20: Global total retail savings and investments, end of year 2006-12
Table 21: Our geographic coverage spans 69 markets and six regions
Table 22: Country classification in terms of level of market development
Table 23: US dollar exchange rates: part one
Table 24: US dollar exchange rates: part two
List of Figures
Figure 1: HNW global onshore liquid assets have been growing
Figure 2: The $10m+ segment is set to experience the highest growth over the next few years
Figure 3: Deposits account for almost half of global savings and investments
Figure 4: HNW investors hold 20.3% of their portfolio in alternative asset classes
Figure 5: Central and Eastern European markets are deposit-heavy
Figure 6: Mature market average deposit holdings are below the global midpoint
Figure 7: Developing markets have relatively low allocations in equities and funds
Figure 8: Hungarian investors currently have the highest allocation in bonds
Figure 9: Globally HNW individuals offshore almost a quarter of their assets
Figure 10: Tax efficiency is the second most important driver of offshore investments
Figure 11: The wealthiest 8.7% of the global population hold over 90% of the world's liquid assets
Figure 12: Mass affluent individuals represent 37% of developed market populations
Figure 13: Verdict Financial's Frontier Markets Wealth Pyramid highlights significant inequalities in wealth distribution
Figure 14: Developing markets will continue to grow faster than mature economies
Figure 15: Western Europe will struggle with growth in the foreseeable future
Figure 16: In real terms, frontier markets' growth over 2016-20 will exceed mature economies growth only slightly
Figure 17: In real terms, Asia Pacific's wealth market has been growing much faster than other regions
Figure 18: The US dollar has gained against most currencies since 2010
Figure 19: Kazakhstan is one of the fastest-growing wealth markets
Figure 20: India has been improving its HNW liquid assets rankings
Figure 21: By 2020 Hong Kong will overtake Switzerland in terms of assets per capita
Figure 22: Our geographic coverage spans 69 markets and six regions

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