Hong Kong to be world’s wealthiest by 2020

Hong Kong is set to overtake Switzerland as the world’s wealthiest territory measured by savings per capita by 2020 thanks to its investors’ preference for near-cash products, according to a report.

Verdict Financial’s latest report found with a forecast compound annual growth rate of seven per cent, Hong Kong would be the third quickest growing developed wealth market over 2016 to 2020.

Verdict Financial’s senior analyst for wealth management, Bartosz Golba, said Hong Kong’s growing importance was no surprise.

“The market is exemplary in regard to explaining why the majority of global wealth managers put Asia-Pacific at the centre of their growth strategies. In real terms — taking inflation into account — no other region will see its value of liquid assets grow at a greater pace,” Golba said.

“What makes Hong Kong unusual is the local investors’ preference for near-cash products. Almost 85 per cent of liquid onshore assets of retail investors in Hong Kong are allocated to bank deposits, while the developed markets’ average stands below 62 per cent.”

Golba said this strategy protected portfolios from capital markets volatility and provided a significant cross-selling opportunity for wealth managers operating in Hong Kong.

The report also highlighted the unequal distribution of global wealth as developing countries often had a lower penetration of affluent individuals despite the country possibly holding more wealth than their developed nation counterparts.

“In the US, almost two thirds of the population can be considered affluent. As a country in which almost two per cent of citizens are millionaires, it remains an attractive market for private banks and wealth manager,” Golba said.

“While we are in a period characterised by volatile financial markets and wealth managers looking for optimal business strategy, there is one thing that remains constant. In aggregate terms, the US has been, and will remain, by far the world’s largest wealth market.”