Daily Management Review

Asia-Pacific is a new center of millionaires’ concentration


According to Capgemini, the number of rich people and their fortune in the region increased during 2015 by 9.4% and 9.9% respectively. At the end of 2014, North America managed to stay on top in terms of income millionaires, but now it has lost this status.

travel oriented - Flickr
travel oriented - Flickr
Asian millionaires are now superior to North American, not only quantitatively but also qualitatively. Capgemini issued a new report on results of 2015, which showed that there are about 5.1 million dollar millionaires in the Asia-Pacific Region (APR), and their total fortune is estimated at $ 17.4 trillion. Over the past year, these indicators increased by 9.4% and 9.9%, respectively, allowing APR to get around of North America (USA, Mexico and Canada), not only by number of rich people, but also by the level of their income. According to the study, North America is home for 4.8 million millionaires, whose fortune is estimated at $ 16.6 trillion in total.

With regard to individual countries, the United States continues to hold the leadership with a significant margin. Over the past year, number of millionaires in the country has increased by 2%, and is now 4.46 million people. America is followed by Japan, Germany and China (the latter increased number of rich people by 16%). At the same time, total share of the four countries accounts for 61% of all millionaires in the world.

The study also found that wealthy clients of Swiss banks were keeping 21.4% of their assets in cash and cash equivalents in the I quarter of 2016, compared to 28.2% for the same period last year.

Capgemini defines wealthy customers as individuals, whose fortune exceeds $ 1 million.

"Since customers do not get any interest, they are looking for alternative investment opportunities," - Tobias Wolf notes, senior manager at Capgemini Consulting.

The Swiss National Bank cut interest rates to record lows in January 2015 in attempts to weaken the Swiss franc.

The Swiss banks, except for Alternative Bank Switzerland, have not yet imposed negative rates for retail customers. Some, however, introduced a fee on deposits for some corporate, private and institutional customers.

UBS, Switzerland's largest bank, can clap negative rates on wealthy private clients, and add new service fees to ensure profitability and capital gains, said Head of the bank.

However, lower interest rate is not the only reason why millionaires are redirecting investment in alternative assets. Above that, there is a desire to evade taxes, and avoid transferring information about their assets to US tax authorities.

One of recent examples is an investigation on Credit Suisse Group AG’s activities in Israel led by the American authorities. The Ministry of Justice suspects the Swiss bank of helping clients who had dual US-Israeli citizenship to evade US taxes.

Information on foreign bank clients - US citizens - should automatically be transferred to US tax authorities, according to terms of the FATCA (Foreign Account Tax Compliance Act). 

source: marketwatch.com