Switzerland tops the current ranking of the world’s wealthiest territories measured by savings per capita, with the average Swiss citizen holding more than $186,000 in liquid assets, according to financial services research and insight firm Verdict Financial. The US and Hong Kong follow in second and third place respectively.
The company’s latest report, which analyses 69 wealth markets across the globe, indicates that by 2020 the rankings will change, with Hong Kong taking the lead, and Switzerland falling to third place.
Bartosz Golba, Verdict Financial’s Senior Analyst for Wealth Management, explains: “With a forecast compound annual growth rate of 7%, Hong Kong will be the third quickest growing developed wealth market over 2016–20. Hong Kong’s growing importance is not a big surprise. The market is exemplary in regard to explaining why the majority of global wealth managers put Asia-Pacific at the center 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."
“What makes Hong Kong unusual is the local investors’ preference for near-cash products. Almost 85% of liquid onshore assets of retail investors in Hong Kong are allocated to bank deposits, while the developed markets’ average stands below 62%. This protects portfolios from capital markets volatility, and at the same time provides a significant cross-selling opportunity for wealth managers operating in Hong Kong.”
On the other hand, Verdict Financial’s savings per capita ranking highlights the unequal distribution of global wealth. Golba continues: “Look at India, for instance, which is already the world’s tenth biggest market in terms of total assets held by high net worth individuals. It will be ranked sixth by 2020, by which point Indian millionaires will hold more wealth than their Australian counterparts. At the same time, however, the average individual’s savings stand below $2,000, making India one of the worst performers in our assets per capita classification.”
According to Golba, the low penetration of affluent individuals as part of overall population is typical for developing nations. He explains: “The higher the country’s development level, the larger the penetration of the world’s wealthiest people. In the US, almost two thirds of the population can be considered affluent. As a country in which almost 2% of citizens are millionaires, it remains an attractive market for private banks and wealth managers.
“While we are in a period characterized 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.”