Wealth Transfer from West to East Commences: What should you do?
It’s official: Singapore and Hong Kong are more attractive to asset holders than Switzerland.
And both countries prove that offshore wealth solutions are still well-sought-after.
The latest report released by BCG shows trend indicators that tell us what’s going in in the offshore world. The highlight of the report is the rise of Asia Pacific in the offshore world.
Consider these findings:
The Asia-Pacific’s wealth growth is driven by new wealth creation:
There are essentially two key trends we want to highlight from the report.
Key trend #1: Singapore and Hong Kong grow faster than Switzerland
Singapore and Hong Kong are the fastest-growing offshore centers in the world, and they show no sign of slowing down as the outlook of offshore wealth management in Asia Pacific region continues to be positive.
While Switzerland remains the world’s number one place in term of total offshore asset managed (24 percent of total offshore wealth worldwide,) asset holders start to look for promising jurisdictions elsewhere, as the country is beaten left and right, causing it to lose its status quo as the go-to place for securing wealth offshore. Singapore and Hong Kong answer the call.
Singapore and Hong Kong are attracting wealth at a compound annual growth rate (CAGR) of 8 percent and 7 percent, respectively — both are well over Switzerland’s 3 percent.
Key trend #2: Asia Pacific is the largest source of global offshore wealth — and the fastest growing, too
The same report reveals that the Asia Pacific investors become the world’s biggest source of offshore funds, accounted for $2.9 trillion of the global total of $10.3 trillion (followed by Western Europe, $2.6 trillion.) Not only that, but the region also boasts 6% CAGR — the highest among the rest.
The main driver of Asia-Pacific region’s growth is new wealth creation (accounted for 65% of total asset growth,) which means that the Asia-Pacific jurisdictions are aggressively securing new clients compared to other regions.
Why the two key trend indicators matter: Wealth transfer from West to East
Those two trends act as striking indicators of one major shift in the world’s economy: With the high growth rate and the investors’ funds ready to invest in any offshore products, it’s probably safe to say that much-talk-about wealth transfer from West to East is finally going mainstream.
Said to be following a 500-year cycle, the wealth transfer from West to East is an economic cycle that’s influenced by changes in economy and politics. It’s now moving Some of the ‘sign of times’ are as follow:
- Insolvent banks in the Western world.
- Trillions of dollars of U.S. debt.
- Economic woes in EU countries, such as Greece, Italy, and so on.
- The real money, namely gold, flows from West to East.
- 62 percent of new millionaires are from Asia,
There are more ‘signs’ to heed, but you get the point: Whether you like it or not, the world’s economic center of gravity is shifting to the East.
According to Richard Dobbs, one of the authors of the study, the center of gravity is determined by factors like rapid urbanization in developing countries, particularly China.
No, it’s not only China
If you think that the main driving factor of Asia-Pacific growth is China, you should think again. While it’s true that China is a financial powerhouse of the world, growth of wealth is not driven by China. How come?
Firstly, please note that the growth figures shown in the Asia-Pacific region could be more commanding if China, allegedly the main driver of offshore growth in the region, isn’t limiting its citizens’ asset movement to offshore jurisdictions.
Secondly, here’s another fact you should think about: according to a report by HSBC, if you leave China out in the mix, the ASEAN region alone would only need a decade to exceed U.S. financial wealth. The wealth in the region has risen from 5 percent to 8 percent of the total, and there’s no sign of slowing down.
Singapore and Hong Kong are earning asset holders’ trust, which will lead to long-term expansion. They are on the driver’s seat, directing the offshore trends.
They’ve proven once again that, despite the global clamp down on offshore services, asset holders will continue to trust offshore solutions for asset protection.