Private households in China once again achieved the strongest growth in gross financial assets in 2016, with a rise of 17.9%, according to global insurer Allianz in the 8th edition of its Global Wealth Report yesterday.
China was followed by households in India, whose gross financial assets increased by 13.7%, and Thailand, where growth came to around 12%, reflecting a recovery on stock markets in particular.
The mid-table, where growth rates were between 5.4% and 9.8%, comprised Malaysia (5.4%), South Korea (6.5%), Israel (6.9%), Singapore (7.4%), Taiwan (9.0%) and Indonesia (9.5%). Japan came last, as in previous years, with much lower growth of just 1.8%.
Overall, gross financial assets of private households in Asia grew by 10.4% last year and much more strongly than in other regions of the world, as has been the case every year since 2008, the outbreak of the global financial crisis. In the rest of the world, they rose by 5.8% overall in 2016,
With gross financial assets of around EUR47.6 trillion (US$56 trillion), Asia is the world’s second richest region after North America, where households had gross financial assets worth almost two-thirds of those of the rest of the world combined (EUR 121.6 trillion) at the end of 2016. In relation to the population of 3.3 billion, however, financial assets of Asian households remain low.
Looking at gross per capita financial assets shows a different picture. Singapore tops the rankings with the equivalent of EUR125,645 per inhabitant, ahead of Japan (EUR 118,950) and Taiwan (EUR 111,300). The average figure for the rest of the world was EUR70,060.
Japanese households, though, have the highest net per capita financial assets
If liabilities are deducted from assets, Japan remained the nation with the highest net per capita financial assets in Asia in 2016, at an equivalent of EUR96,890. This put it ahead of Taiwan, where the average citizen had net financial assets of EUR92,360, and Singapore where the average figure was EUR89,570.
Access to financial services is crucial
Along with economic strength, access to financial services and financial knowledge in the population play a key role in the accumulation of financial assets. The governments of all of the countries analysed have stepped up their efforts in recent years to promote general financial education among the population and to safeguard and/or improve the efficiency and stability of the financial system.
Using the asset ratio (gross financial assets of private households as a percentage of gross domestic product) as an indicator of the maturity of a financial system exposes significant differences within the region, as would be expected. The asset ratios for the 10 countries analysed in Asia ranged from 511% in Taiwan to just under 38% in Indonesia in 2016. The regional average was approximately 232%, a good 50 percentage points lower than that of the rest of the world (286%). Japan was the only other country apart from Taiwan in which the asset ratio exceeded this global average, at 348%. Singapore's asset ratio was 257%, below the average for the rest of the world, but above the regional average.
Increasing diversification in portfolios
The diversification of a country’s portfolio also reflects its stage of development. The lower the share of bank deposits and the broader the distribution of assets across different asset classes, the more highly evolved the financial system generally is.
Bank deposits remained the most popular asset class among private households in Asia in 2016, representing 45.3% of total gross financial assets. Over a period of ten years, however, the proportion of bank deposits in private household portfolios has declined significantly. In 2006 it was just under 53%, and it actually rose to 56% in 2008 in the wake of the financial crisis.
The "Global Wealth Report" studies the asset and debt situation of households in more than 50 countries. Worldwide, financial assets climbed to a new record high of almost EUR170 trillion (US$200 trillion).