THE average high net worth individual (HNWI) in Singapore has US$4.9 million of investible assets, slightly more than the regional and global average

THE average high net worth individual (HNWI) in Singapore has US$4.9 million of investible assets, slightly more than the regional and global average, the Merrill Lynch-Capgemini Asia Pacific Wealth Report has found.

Globally, HNWIs have investible assets of about US$3.9 million, while the regional average at end-2006 was US$3.3 million.

Singapore’s wealthy allocated most of their investible funds - 36 per cent - to real estate. This was second only to South Korea, where the wealthy invested 42 per cent in property.

Other allocations by Singaporeans were 18 per cent cash and 26 per cent equities.

On real estate, Merrill Lynch Asia-Pacific investment strategist Stephen Corry told reporters yesterday the region’s property cycle is ‘closer to the bottom than to the top’.

A recent report by the firm found the boom is still in its early stages and said prices do not appear excessive relative to income. Asian property prices have also lagged global prices.

But Mr Corry said there are two exceptions: ‘High-end Hong Kong and Singapore properties are looking expensive. I actually see good value in the mass residential side. The price gap between high-end and lower-end property has reached unprecedented levels.’

The Merrill Lynch-Capgemini Asia-Pacific wealth report aims to give a detailed profile of the region’s HNWIs and their investment preferences.

The report found that Singapore has about 928 ultra HNWIs, comprising 1.39 per cent of the population.

These are people whose investible assets exceed US$30 million, as opposed to ‘ordinary’ HNWIs whose qualifying threshold is US$1 million.

The number of ultra HNWIs in the region grew 12.2 per cent to 17,500 at end-2006, said Gregory Smith, Capgemini Australia’s vice-president for wealth management.

‘We are seeing a sharp rise in the number of ultra HNWIs,’ he said. ‘This is particularly evident in China, where that country’s phenomenal economic growth is reflected in a high concentration of ultra HNWIs.’

The study found that more than 28 per cent of the region’s ultra HNWIs are in China.

In terms of the sources of Singaporeans’ wealth, 36 per cent was derived from businesses and 22 per cent inherited. In total, wealthy Singaporeans’ assets are estimated at US$320 billion, giving them a 4 per cent share of the Asia-Pacific’s total wealth pie.

About 43 per cent of HNWIs in Singapore are aged 41 to 55 and 39 per cent aged 56 to 70. Merrill Lynch market managing director (South Asia) Kong Eng Huat said: ‘(Singapore) individuals tend to be more active investors and are continuing to build their wealth. They are also actively planning or in the process of transferring wealth to their beneficiaries and children.’

‘Those with inherited wealth tend to have a more complex portfolio structure and restrictions. They tend to focus on capital preservation.’

The Merrill Lynch-Capgemini report expects the wealthy in the region to diversify into fixed-income and alternative investments and to increase their international exposure. At the moment, 51 per cent of their assets are invested in the Asia-Pacific.

Source : Business Times - 19 Oct 2007