Date
27 March 2017
The Hong Kong currency's peg to the US dollar, along with solid rises in equity values and house prices, propelled the territory to the top of the world in terms of wealth. Photo: HKEJ
The Hong Kong currency's peg to the US dollar, along with solid rises in equity values and house prices, propelled the territory to the top of the world in terms of wealth. Photo: HKEJ

HK ranks high on global wealth scorecard

Here’s something to celebrate: Hong Kong registered the biggest rise in household wealth this year, according to the Global Wealth Report 2015 by Credit Suisse.

Hong Kong, which posted an 8 percent increase, edged out China (7 percent), the United States (6 percent) and Saudi Arabia (4 percent), which are the only jurisdictions that have seen positive growth in wealth this year.

Because of the strong dollar, most countries saw their wealth decrease. But Credit Suisse it is precisely the Hong Kong currency’s peg to the US dollar, along with solid rises in equity values and house prices, that propelled the territory to the top of the world in terms of wealth.

However, one should bear in mind that data for the report was compiled in June, well before the stock crash in July. Hong Kong’s figure would have been smaller if we marked to market because the Hang Seng Index fell around 20 percent from its peak.

Still that should not bother the super-rich, or those with over US$50 million in net assets. In fact, the number super-rich in Hong Kong reached 1,600 by mid-June, up 200 from last year.

Likewise, the number of millionaires (or with assets over US$1 million) in the city rose 6 percent to 107,000.

That provides a sharp contrast to the situation in Japan and France, which lost more than 600,000 millionaires in the wake of the strong US dollar.

However, Hong Kong’s wealth seems to be unevenly divided. The city’s middle class accounted for 44 percent, much lower than in other Asian jurisdictions like Singapore (62.3 percent), Japan (59.5 percent) and Taiwan (59.4 percent).

Australia has the highest percentage of its population classified as middle class at 66.1 percent.

In another survey, the Global Family Office Report 2015, Hong Kong achieved a 6 percent return for every US dollar of investment.

However, researcher Campden Wealth Research and UBS pointed out that family offices in Hong Kong were slightly underperforming peers in the Asia-Pacific, which achieved the second best investment performance globally.

They said the Asia-Pacific family office achieved impressive returns because of its high exposure in illiquid assets (which made up 43 percent of Hong Kong’s family office portfolio), including private equity (27 percent of Hong Kong’s family office portfolio).

What about China? About one in nine Chinese is classified as belonging to the middle class. Still, the country has the largest middle class in the world.

According to Credit Suisse, China has 109 million middle-class adults, or about 11 percent of its entire adult population. The average wealth of a middle-class adult in China is about three times the average wealth of an adult in the country.

Since the start of the 21st century, the wealth of China’s middle class jumped 330 percent to US$7.3 trillion. They represent about 32 percent of the country’s wealth.

That’s just for starters. According to Alibaba chairman Jack Ma, the country’s middle class, which he estimates at 300 million currently, will grow to 500 million in 15 to 20 years.

“That means China’s consumption will be three times that of the US, a future growth driver in the economy, and I am really excited about it,” Ma said.

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BK/JP/CG

EJ Insight writer

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