- Asia ex-Japan accounted for 18.5% of total global financial assets, proportion more than trebled since 2000
- Taiwan set to become the new number #1 in Asia by net per capita financial assets, replacing Japan
- China rose to 28th place and 6th in Asia
Growth in Financial Assets in Industrial Countries Slowing
It is certainly no coincidence that slowing growth has hit Europe, the US and Japan the hardest. In Western Europe (3.2 percent) and the US (2.4 percent), asset growth more than halved in 2015. At the other end of the spectrum is Asia (excl. Japan), where financial assets expanded by 14.8 percent. The region's lead over the rest of the world is only getting bigger. Of the total global financial assets of EUR 155 trillion, the region Asia (excl. Japan) accounted for 18.5 percent in 2015; this not only means that the proportion of assets held by this region has more than trebled since 2000 but also that the region’s share now far outstrips that of the eurozone (14.2 percent).
Huge Regional Disparities in Debt Growth
At 4.5 percent, the liabilities of households grew in 2015 at the same rate as they had in 2014. All in all, household debt came to EUR 38.6 trillion at the end of the year, a good quarter higher than the value prior to the outbreak of the major financial crisis. Developments varied considerably from region to region: In Asia (excl. Japan), debt growth picked up and in some countries like South Korea or Malaysia debt ratios, i.e. household liabilities measured as a percentage of nominal economic output, came in at levels seen in the US, Ireland or Spain at the height of the housing boom.
As financial assets and debt grew in sync in 2015, global net financial assets, too, i.e. the difference between gross financial assets and liabilities, expanded at almost the same rate: they were up by 5.1 percent on a year earlier – clearly below the development in the three previous years when growth figures were in the double-digit region.
Taiwan is Set to Become the New Number #1 in Asia
In the global ranking of the richest countries (per capita financial assets, see table), in net terms, three Asian countries – Japan, Taiwan and Singapore – were among the Top 10 in 2015; back in 2000, it was only Japan. With EUR 83,890 net financial assets per capita, Japan also managed to defend its top position in Asia, although only by a razor-thin margin. Extrapolating recent trends, at the end of this year Taiwan could become the new number 1 in Asia. In gross terms, Japan already lost its top rank to Singapore. A decade ago, Japanese households were still 50 percent richer than Singaporeans. Clearly, the lost decades of stagnation and deflation have left their mark on Japanese wealth.
In sharp contrast to Japan’s descent, China rose through the rankings and climbed to rank 28 in 2015; back in 2000, it was still on position 40. With EUR 11,500 net financial assets per capita, Chinese households are nowadays richer than the average households in the eastern European EU countries. Besides China, only South Korea managed to improve its ranking over the last decade, it now sits on rank 21, ahead of, for example, Spain and Portugal. Indonesia, Thailand and Malaysia, slipped in the rankings; in the case of Malaysia, the high debt burden is first and foremost to blame. Finally, India did not fall further behind, but nor did it advance. For a country with such huge potential, sitting stubbornly at the bottom of our list, reads rather like failure. In terms of general wealth of households, India wasted the last couple of years.
Global Wealth Distribution is Getting More Equal
The analysis of wealth distribution shows a mixed picture. The success story written by the emerging markets helped more and more people to participate in general progress and prosperity and created a new global middle class. In tandem with this development, poverty levels have dropped significantly across the globe over the past few decades. Although the vast majority of the five billion people living in the countries included in our analysis still belong to the low wealth class*, its share is slightly down: today, 69 percent of the total population (as opposed to 80 percent in 2000) belong to this wealth category. This is because in recent years, more and more people, almost 600 million in total, have achieved promotion to the middle wealth class. The proportion of global assets held by this wealth class has also grown significantly, rising to 18 percent at the end of 2015, almost three times the figure at the start of the millennium. So the global middle class has not only been getting bigger in terms of the number of people it encompasses; it has also been getting increasingly richer.
Although there are now fewer households who count among the global high wealth class in the traditional advanced economies, this wealth class has also been growing in recent years: at the end of 2015, around 540 million people across the globe could count themselves among the high wealth class, 25 percent more than in 2000. This also means that the high wealth class is much more diverse than it was in the past, when it was more or less a club open exclusively to western European, American and Japanese households: these regions and countries now account for 66 percent of the group as a whole, compared with over 90 percent in the past. The share of global financial assets attributable to this wealth class has also fallen. This development reflects a broader distribution of wealth, at least at global level.
“The emergence of a truly global middle class in such a short timespan is one of the most important developments for the world economy. To date, this process is being driven primarily by China. If in future more populous countries such as India manage to unleash their potential in full, this success story can continue for the foreseeable future”, commented Heise.+
* As in previous years, the "Allianz Global Wealth Report" splits asset owners into three global wealth classes. The global wealth middle class encompasses all individuals with net assets of between EUR 7,000 and EUR 42,000.