Wealth in Taiwan: Sizing the Market Opportunity 2016

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A plunge in stock market performance and weak economic data took a toll on Taiwanese wealth generation in 2015. However, a robust equity market recovery in 2016 has boosted the retail savings and investment market, with gains of almost 10% on the Taiwan Futures Exchange in the first nine months of 2016. Between 2016 and 2020, Taiwan’s retail investment market is forecast to record a compound annual growth rate (CAGR) of 4.9%.

Scope

Verdict Financial’s “Wealth in Taiwan: Sizing the Market Opportunity 2016” analyzes the Taiwanese wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.

Specifically the report:

– Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.

– Analyzes which asset classes are favored by Taiwanese investors and how their preferences impact the growth of the total savings and investments market.

– Examines HNW clients’ attitudes towards non-liquid investments such as property and commodities.

– Identifies key drivers and booking centers for offshore investments.

Reasons to Buy

Benchmark your share of the Taiwan wealth market against the current market size.

Forecast your future growth prospects using our projections for the market to 2020.

Identify your most promising client segment by analyzing penetration of affluent individuals in Taiwan.

Evaluate your HNW proposition by understanding how the Taiwanese tax system will impact HNW clients.

Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.

Table of Contents

EXECUTIVE SUMMARY

Economic concerns suppressed retail investment holdings growth in 2015

Key findings

Critical success factors

SIZING AND FORECASTING THE TAIWANESE WEALTH MARKET

HNW individuals are growing their wealth faster than the mass affluent segment

Affluent individuals in Taiwan account for

25.9% of the total adult population

In Taiwan affluent individuals hold 78% of liquid assets

Taiwanese HNW individuals held $294.1bn in liquid assets in 2015

DRIVERS FOR GROWTH IN THE TAIWANESE WEALTH MARKET

The pace of growth of Taiwan's retail investment market is picking up

After a tough 2015, the retail investment market is set to make a comeback

Despite the stock market recovery, investors are likely to remain cautious about returning to equities

Wealth is forecast to outperform market growth in spite of the poor economic outlook

Retail deposits have fallen slightly as the equity market improves

Deposits are expected to achieve a CAGR of

4.2% between 2016 and 2020

Taiwan's bond market struggled in 2015, although positive steps could still push it in the right direction

Retail bond holdings form a minor part of portfolios

Taiwan's growing importance as a renminbi center is likely to be positive for the whole market

Equities and mutual funds will be boosted by the 2016 boom in the stock market

The stock market is recovering after a tough 2015

Retail equity investments are expected to recover and grow in 2016

Mutual funds' growth will be boosted by the increasing popularity of ETFs

HNW INVESTMENT PREFERENCES

HNW individuals hold 15% of their investible assets in non-traditional investments

Life insurance is increasingly important in the Taiwan market

Of non-traditional asset classes, HNW investors prefer property

Structured products are one of the most popular asset classes in Taiwanese alternative investment portfolios

Funds are the most popular method of accessing commodity investments among Taiwanese HNW investors

Offshore capability is key for wealth managers serving Taiwanese HNW investors

Taiwanese HNW individuals primarily invest offshore to achieve tax advantages

The majority of Taiwanese HNW offshore wealth is held in booking centers in Asia Pacific and offshore

Taiwan has a relatively high tax environment, which will continue to contribute to the popularity of offshore investments

APPENDIX

Abbreviations and acronyms

Supplementary data

Definitions

Affluent

Domicile

DTC

HNW

Liquid assets

Mass affluent

Measures of growth

Onshore

Residency

TIEAs

Methodology

Verdict Financial's 2016 Global Wealth Managers Survey

Verdict Financial's Global Wealth Model methodology

Verdict Financial's Global Retail Investments Analytics methodology

Exchange rates

Bibliography

Further reading

About Verdict Financial

Disclaimer

Table

Table 1: Taiwan's personal income tax rates, tax year 2016

Table 2: Inheritance tax allowances, 2015

Table 3: Inheritance tax allowances for properties, 2015

Table 4: Total adult population segmented by asset band (000s), 2011-15

Table 5: Total adult population segmented by asset band (000s), 2016f-20f

Table 6: Total retail liquid assets by asset band, 2011-15

Table 7: Total retail liquid assets by asset band, 2016f-20f

Table 8: The US dollar exchange rate, December 31, 2014 and December 31, 2015

Figures

Figure 1: Affluent individuals account for 25.9% of Taiwan's population

Figure 2: Affluent individuals hold over 78% of liquid assets in Taiwan

Figure 3: Retail investments have staged a strong recovery in 2016

Figure 4: Investors remain wary of returning to equity investments

Figure 5: All asset classes will outperform the market over the next five years

Figure 6: Deposits are expected to outperform GDP growth over the forecast period

Figure 7: Bond holding growth will slow, but will continue to outperform GDP and wages

Figure 8: TAIEX lost 10% in 2015

Figure 9: Taiwanese equities recovered strongly in 2016

Figure 10: Onshore retail and institutional funds are heavily invested in money market products

Figure 11: Property REITs are by far the most popular alternative investment vehicle

Figure 12: Over a third of HNW wealth is held outside Taiwan

Figure 13: Tax efficiency is the primary driver behind offshore investment

Figure 14: Hong Kong leads the way for offshore investment bookings

Figure 15: As of June 2016 Taiwan has 30 DTCs in force

Frequently asked questions

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