Asia-Pacific driving global wealth, says Credit Suisse

Merrill Lynch and Capgemini released their 2011 Asia-Pacific Wealth Report in June, showing that Asia’s population of high-net-worth individuals (HNWIs) has overtaken Europe for the first time and that the region has become the second-biggest HNWI wealth management market behind the US.

This week it is Credit Suisse’s turn to deliver its Global Wealth Report 2011, which also highlights the potential in emerging markets, but by looking at the total wealth owned by the 4.5 billion adults around the world, rather than just the wealth owned by HNWIs.

“Since 2000, [global] wealth has more than doubled,” said Giles Keating, head of research for private banking and asset management at Credit Suisse. “Asia-Pacific has played a major role in creating that wealth.”

Global wealth has risen by 14% since 2010 to 231 trillion, of which 54% was created in Asia-Pacific. The region’s household wealth has reached $75 trillion, which is slightly lower than the $78 trillion in Europe and higher than the $65 trillion in North America, leading Credit Suisse to predict that Asia-Pacific will overtake Europe by 2016 to become the biggest single wealth region in the world with $118 trillion, compared to $113 trillion in Europe and $91 trillion in North America.

“We also look at the level of debt of each country to obtain a comprehensive picture of balance sheets,” said Keating. The debt level in emerging Asia is relatively low, given that the debt-to-asset ratio is only about 21%, compared to 34% in Europe.

This leaves plenty of room for the region to add leverage and grow even faster. Debt-to-GDP in emerging Asia, according to Credit Suisse data, is 53%, as opposed to 160% in Europe.

The report also found that people in most countries will reach their peak wealth between the ages of 55 and 64. While emerging markets have a much lower ratio of net financial assets-to-income than mature markets, Credit Suisse said that aging will drive demand for financial assets relative to real assets.

In terms of global wealth distribution, more than two-thirds of the global adult population, according to Keating, are worth less than $10,000 — and account for only 3.3% of total wealth. On the other hand, the 0.5% of the adult population with wealth of more than $1 million have 38.5% of global wealth.

Using historic wealth in the US as a yardstick, the report reveals that the current wealth levels of China, India and Africa are comparable to US wealth in 1968, 1916 and 1908 respectively, and are expected to jump to the levels in 1990, 1946 and 1930 during the next five years.

Although global wealth declined substantially during the financial crisis, the figure has rebounded to just above the pre-crisis level of $51,000 per adult. “Our projection is suggesting it will rise to almost $70,000 per adult by the year 2016,” said Keating.