Singapore expected to dislodge Switzerland as world's wealth management capital

Singapore expected to dislodge Switzerland as world's wealth management capital
China Daily/Asia News Network

SINGAPORE - By the end of this decade Singapore is expected to dislodge Switzerland as the wealth management capital of the world.

And it is not hard to see why.

Asia's new rich are growing at a staggering rate, spurred on by the economic rise of China and its knock-on effect throughout the region creating a new, rich middle class.

Asians with at least US$1 million (S$1.25 million) in disposable income are expected to see their combined wealth climb to US$15.9 trillion by 2015 from US$12 trillion in 2012, according to the Asia-Pacific Wealth Report 2013 by Royal Bank of Canada and French multinational Capgemini.

Reveling in good fortune of middle class Explosion of riches Reveling in good fortune of middle class China enters new luxury market era Reuters recently quoted Brookings Institution scholar Homi Kharas as saying the "old world" middle class will, in time, shrink from 50 per cent of the world's total to around 22 per cent.

Kharas went on to say rapid growth in China, India, Indonesia, Vietnam, Thailand and Malaysia will cause Asia's share of the new middle class to more than double from its current 30 per cent.

By 2030, Asia will host 64 per cent of the global middle class and account for over 40 per cent of global middle-class consumption.

Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore, says in a blog post, "The size of (Asia's middle class) currently stands at 500 million and will mushroom to 1.75 billion by 2020 - more than a threefold increase in just seven years."

"The world has never seen anything like this before; it's probably one of the biggest seismic shifts in history," Mahbubani added.

Boston Consulting Group says that while the "old money" of North America and Europe are still the wealthiest regions, accounting for US$43.3 trillion and US$35.8 trillion of private wealth, the Asia-Pacific region (excluding Japan) is fast catching up at US$28 trillion in 2012 - up nearly 14 per cent on the previous year. Data for 2013 is not due out until later this year.

Consultancy firm PricewaterhouseCoopers predicts that Singapore could dislodge Switzerland as early as 2015 as the world's wealth capital centre.

Others like WealthInsight, an industry research group, is not as bullish, saying Singapore is expected to outstrip Switzerland by 2020 as the world's leading wealth management centre.

Analysts say the reason for such projections is obvious - more wealth is being created in Asia and it is being created faster than anywhere else in the world. But not everyone is convinced.

Patrick Odier, chairman of the Swiss Bankers Association, says he does not see Singapore as a threat to Switzerland's private banking.

Singapore is a crowded market, with banks chasing a community of largely Asian clients who are less interested in complete secrecy - as has been the case in Europe - but more in achieving yield. "It seems pretty obvious that in time Singapore will overtake Switzerland," says Keith Pogson, head of assurance practice for banking and capital markets with EY.

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