Wealth in Singapore: Sizing the Market Opportunity

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Singapore is one of the world’s pre-eminent offshore investment centers, with 81% of the wealth invested in funds sourced from non-residents. However, the onshore market is a major source of assets under management (AUM) in its own right, with 1.0 million affluent individuals despite the city state’s small population. As a regional trading hub Singapore’s growth rates are closely tied to the health of regional powerhouses such as China, India, and Indonesia; however, even with growth slowing in some of these economies, Singapore’s wealth market will continue to post rates that are the envy of the developed world.

Scope

HNW individuals totaled 29,600 in 2015, a tiny proportion of the overall population and well below the levels seen in the US or Switzerland.

 HNW liquid assets are expected to grow by roughly 7.5% a year between 2015 and 2019.

 Bonds will be the fastest-growing asset class, but more due to greater availability than client demand.

 While Singapore attracts significant offshore investment, residents are also keen to invest abroad – 34% of AUM is invested offshore.

Reasons to Buy

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

Forecast your future growth prospects using our projections for the market to 2019.

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

Evaluate your HNW proposition by understanding the investment mix of the local onshore investment market.

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

Table of Contents

EXECUTIVE SUMMARY

Singapore's small domestic wealth market is as attractive as its large offshore sector

Key findings

Critical success factors

SIZING AND FORECASTING THE SINGAPOREAN WEALTH MARKET

While primarily a major offshore center, Singapore also has a substantial onshore element

Offshore investors do not book in Singapore to keep their funds in deposits

In contrast, managed funds are dominated by offshore AUM

Favorable domestic conditions will drive further expansion in onshore wealth

A sizable proportion of Singapore's population will move into the affluent market in the coming years

The bulk of Singapore's onshore wealth is concentrated in the hands of the affluent

HNW portfolios above $10m in AUM will experience the highest growth

DRIVERS OF GROWTH IN THE SINGAPOREAN WEALTH MARKET

Total retail investments growth moderated in 2015 but should bounce back

Growth in retail savings and investments will rise and steady in the coming years

Onshore wealth is still largely a deposit game – a stabilizing factor for future savings and investments growth

Wealth invested directly in the equity and bond markets has risen, but deposits will have an enduring allure

Deposits have been a drag on wealth growth, and this is set to continue

Singaporeans tend to favor deposits, with little change forecast

GDP growth is moderating once again and inflation is negative

After a brief splurge, bond holdings will grow more slowly in the future

Equities and mutual funds have been held back by poor market performance

The STI has struggled to post solid year-on-year returns

The performance of the stock market has the ability to stampede retail equity investors

Mutual funds will only slowly regain their share of retail investors' portfolios, as inflows remain steady

HNW INVESTMENT PREFERENCES

Illiquid investments make up a significant percentage of onshore assets

Property holds a long-term attraction for HNW individuals

Private equity and hedge funds are also popular HNW investments

Offering commodity investments is a good strategy in what remains a regional trading hub

Offshore investments drain 34% of Singaporean HNW wealth from local institutions

Onshore banks need to offer offshore services to capture a greater share of HNW portfolios

A greater range of investment options is the top driver for offshoring wealth

Global links will help wealth managers capture much of the wealth booked offshore

Singapore has been more open to DTAs than TIEAs, but this is changing

Tax rates are low and stable in Singapore, making it an attractive destination for foreign and local wealth

APPENDIX

Abbreviations and acronyms

Supplementary data

Definitions

Affluent

Bonds

Cash

Deposits

Domicile

DTA

Equities

FATCA

HNW

Liquid assets

Mutual funds

Onshore

Residency

TIEAs

Methodology

Verdict Financial's 2015 Global Wealth Managers Survey

Verdict Financial's 2014 Global Wealth Managers Survey

Global Wealth Model methodology

Global Retail Investments Analytics methodology

Bibliography

Further reading

About Verdict Financial

Disclaimer

Table

Table 1: Average monthly income from work per employed household member by deciles , 2000-15

Table 2: Personal income tax rates and charges, 2012?16

Table 3: Singapore: adult population segmented by affluent category and asset band (000s), 2010?14

Table 4: Singapore: adult population segmented by affluent category and asset band (000s), 2015e?19f

Table 5: Singapore: total liquid wealth segmented by affluent category and asset band ($bn), 2010-14

Table 6: Singapore: total liquid wealth segmented by affluent category and asset band ($bn), 2015e-19f

Table 7: Singapore-US dollar exchange rate, December 31, 2014 and December 31, 2015

Figures

Figure 1: Deposits are mainly an onshore market in Singapore

Figure 2: Funds see the strength of the offshore center shine through

Figure 3: The number of affluent individuals in Singapore grew well below average in 2015

Figure 4: 2016 will see a rebound in growth, but years of double digit increases are behind Singapore

Figure 5: Growth in retail wealth is slowing as economic growth has dipped

Figure 6: Lower growth will mean deposits creep up as a proportion of retail assets

Figure 7: All asset classes except bonds will see lower growth going forward

Figure 8: Singaporeans have returned to the deposit market as a store for their savings

Figure 9: Singaporean Savings Bonds have rebooted the retail bond market

Figure 10: Singapore's status as a financial hub can easily be seen in the dominance of financials

Figure 11: Local stock market performance has not encouraged investors into the market

Figure 12: Equity investments have become more important to the investment management community

Figure 13: Local direct property has reduced as a share of the non-traditional portfolio

Figure 14: Singaporean investors hold a significant proportion of their wealth offshore

Figure 15: Access to better investment options drives Singaporean HNW investors to offshore wealth

Figure 16: European wealth centers compete with Asian investment opportunities

Figure 17: Singapore has aggressively pursued tax agreements with partners around the world

Figure 18: Stamp duty is payable by both sellers and buyers of fixed property in Singapore

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