Rich List: The unstoppable rise of Asia's tycoons

Strong regional economies and surging stock markets were kind to Asia’s wealthiest business families last year. Despite declining economic growth in China, where policymakers fought to curb excesses in the property and shadow banking sectors, there was sufficient consumer and investment demand across the world’s most buoyant region to boost profits for its leading companies and pay higher dividends to their tycoon shareholders.

The top 100 families in Asia (ex-Japan) received dividends in 2014 totalling more than $17.5 billion from the publically-listed companies they control. This was a 25.6% increase from the $13.9 billion earned the previous year and extends the rising trend since 2011.

Greater China, which includes mainland China, Hong Kong, Macau and Taiwan, provided 53 of the richest families, with total dividend income of $10.841 billion. In India, a further 15 families earned $2.762 billion or 16% of the regional total.

Li Ka-shing again retained his crown as Asia’s richest man, receiving $1.715 billion from his stakes in the now restructured CK Hutchison Holdings and Canadian oil group Husky Energy.
Other tycoons conspicuous in earlier years were also prominent in the 2014 list. These include India’s Tata family (3), whose interests encompass steel, power, cars, information technology, and much else; troubled Hong Kong property developers Joseph Lam (2) and the Kwok brothers (6); Evergrande’s tightly scrutinised Hui Ka Yan (4); Hong Kong’s ‘king of bling’ Cheng Yu-tong, who controls jeweller Chow Tai Fook (5); and the mercurial Ananda Krishnan, who shuffles his Malaysian private and public businesses as deftly as any of the region’s tycoons.

However, there were also several additions to the list and notable climbers.

Wang Jianlin (7), who is China’s richest man according to estimates based on total net worth, entered the FinanceAsia list following the Hong Kong initial public offering of his flagship Dalian Wanda Commercial Properties late last year, which then paid out a final dividend of Rmb0.95 per share. Galaxy Entertainment boss Lee Che Woo (9) received a $394 million special dividend even as the Macau casino industry struggled during China’s continued anti-graft campaign. And Tata Group chairman and family insider Cyrus Pallonji Mistry (11) leapt up the table, his wealth boosted by a 214% rise in the conglomerate’s payout.

The average age of the tycoons in the Rich List is 67; like everyone else they get older every year. So succession issues are a constant topic for speculation as tycoons reach their eighties or nineties and become sources of real-life soap opera.

Messy clan disputes between siblings have been well-reported and have afflicted the families of Li Ka-shing, Stanley Ho, and the Kwoks in Hong Kong, and are now causing turmoil in the Lippo Group.

There are nine women in the list – the same as in 2013. The richest (and youngest) is 34 year old Yang Huiyan (15), who received her Country Garden holding from her father Yang Guoqiang who created the company in 1992.

Self-made Chinese businesswomen include Wu Yajin (53), co-founder and chair of Longfor Properties, and Zhang Yin (87), who set up paper recycling company Nine Dragons Paper in 1995 and listed it in Hong Kong in 2006.

Economic and demographic support

The financial sector, which includes real estate as determined by the MSCI Global Industry Classification Standard, dominates the list with a 43% contribution to dividend earnings (see chart). Property companies account for two thirds of that share, reflecting the significance of developers in high-rent Hong Kong and also China, where the state still looms over the banking system.

Providers of discretionary consumer services and products also figure highly as does technology, which is indicative of the increasing wealth and evolving tastes in the region.

In addition to rising per capita incomes in the region’s emerging economies, such as Indonesia and the Philippines, the number of very rich people is also growing. According to the 2015 World Wealth Report by Capgemini and RBC Wealth Management, Asia is now home to more high net worth individuals than any other region, with 4.69 million owning investible assets of $1 million or more, and the number is growing at an annual rate of 9%.

The report, based on responses from over 5,100 rich people from 23 countries throughout the world, found that India led in growth for both HNWI population (26%) and wealth (28%) due to strong equity market performance and the reduced cost of its oil imports. China followed, with population and wealth growth rates of 17% and 19%, respectively, driven by GDP expansion and higher exports.

Despite its current travails, China was the stand-out equity performer among top economies in 2014, with the broad CSI300 index ending the year with gains of nearly 52%. The Indonesian Composite Index increased 21.15%, the 30-company Philippine Stock Exchange index rose 22.76%, and India’s BSESN index soared nearly 30%.

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Dividend payouts to top-100 families in China rose 24%, by 33% in Hong Kong and Macau, 22% in Taiwan, and a cracking 117% in India, where investor sentiment was encouraged by Prime Minister Narendra Modi’s promise to deliver reforms.

Where economic growth lost momentum and stock market performance was lacklustre, dividend payouts were flat compared with 2013, such as in Singapore, where the annual GDP growth rate slipped to 2.9% in 2014 from 4.4% in the previous year and the Straits Time Index was broadly flat (see Chart).

There was a similar trend in South Korea where there is a close relationship between dividend payouts and stock market and economic performance (see chart).

The biggest faller was Indonesia, where last year the aggregate national figure was inflated by an exceptional dividend payment to Samin Tan after he acquired a major stake in Asia Resource Minerals from the Bakrie Group.

There were also slightly lower payouts in Malaysia, hurt by the falling oil price, and in the Philippines, which nevertheless still posted strong economic growth.

Despite the dramatic plunge in global and, especially, Chinese equity markets this summer, as investors worried about China’s growth prospects and sought safe havens in more developed markets, the economic environment for Asia should continue to be supportive for the region’s mega-rich. Asian economies will likely continue to lead world growth this year, expanding at a 5.6% pace that is level with last year, as recoveries in India and resilience in Southeast Asia help to offset the slowdown in China, the IMF said in a report in May.

In any case, many companies in Asia ex-Japan consistently pay out healthy dividends – irrespective of the economic climate. They have delivered the second-highest dividend returns since 1999 (Australia has produced the highest), well ahead of companies in the US and Europe, according to research by HSBC.

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Li Ka-shing’s dividend income rose by 88.5% in 2014 but he has regularly received large increments as reflected in the low volatility (0.22) of his payments compared with the five-year average (see chart). Other tycoons and their families that have been quite consistent recipients include the Kwok brothers, the Lee family (22) who control Singapore’s Oversea-Chinese Banking Corporation, Malaysia’s Lee Shin Cheng (32) at IOI Group, and Henry Sy in the Philippines (41).

Payments have been more volatile for Cheng Yu Tung (5), Ananda Krishnan (8), Formosa Petroleum’s Wang family (23) and Yeoh Tiong Lay (30) controller of the eponymous YTL.

There is also a close relationship between families’ net worth (for instance, as calculated by Bloomberg) and the dividend income earned from the public companies they control (see chart).

Clearly some distortions are caused by exclusively focusing on public companies, with the most glaring omission perhaps being Jack Ma, whose Alibaba hasn’t yet paid a dividend (see box for details of methodology). But dividend payouts provide an accessible and convenient way of measuring wealth that mirrors families’ asset values and reflects a trend towards listing
companies as a new generation of managers succeed founding entrepreneurs.

A note on methodology

FinanceAsia analyses the publically listed assets of Asia (ex-Japan)’s leading business families and aggregates the dividends paid to them through their shareholdings or to their trusts or charitable foundations.

This methodology provides a more dynamic picture of wealth in the region than can be achieved by estimates of net worth, but clearly underestimates the fortunes of individuals and families whose wealth is mainly derived from non-income earning or wholly private assets.

We identify a large universe of companies with large or controlling shareholders and gather information on ownership stakes and dividend payouts based on statements made to stock exchanges, newswires and, in the first instance, declarations made in annual reports.

Some holdings are opaque because of complex cross-shareholding structures such as the Lee family’s control of Samsung and the Keswick’s control of Jardine Matheson, so there are inevitable instances of under-reporting of some tycoon’s wealth.

FinanceAsia's 2015 Rich List