Global liquid onshore assets will exceed USD100 trillion in 2016, according to the latest white paper from Datamonitor Financial: “The Global Wealth Market in 2015”, which reveals that the global wealth market will continue to grow steadily, though not as fast as immediately after the 2008-2009 financial crisis.
Global onshore liquid assets are worth more than USD92.3 trillion, of which USD31.4 trillion is held by high net worth individuals. The report finds that by 2016, there will be more than ten million millionaires around the world.
This report reveals that global equity holdings surpassed their previous peak value in 2013, having doubled since 2008 and within high net worth individual’s portfolios, alternative asset classes play an important role.
In aggregate terms, the world’s largest wealth markets are US, China and Japan, while Switzerland is the country where an average individual holds the biggest pot of assets: more than USD173,000.
India, although growing in total terms, is drastically low in the “per capita” ranking – only five of analysed markets are ranked lower. Western government sanctions have impacted the Russian wealth market, as have currency rate fluctuations.
“By the end of next year the number of millionaires around the world will exceed ten million”, says Bartosz Golba, Senior Analyst in the Wealth Management team at Datamonitor Financial.
More than a half of the world’s richest live in the US, the world’s biggest wealth market. It is followed by China and Japan, which switched their ranks in global wealth classification during the last five years. China is one of the markets that has maintained an impressive growth rate, exceeding 10 per cent every year since 2009.
“However, China is also a perfect example of unequal wealth distribution,” explains Golba. “Although second in aggregate terms, it is much further down the ranking in terms of assets per capita.
“In addition, we forecast the Chinese market’s growth to slow down slightly, which will most likely be the case in most of our analysed markets,” continues Golba. “There will be exceptions such as Greece, for example, where we see an opportunity to finally recover from the crisis, provided the country succeeds in settling with its creditors.”
Datamonitor Financial also analyses the significance of exchange rate fluctuations. The US dollar remains strong as 2014 saw the US dollar gain against most global currencies.
“The Japanese yen devaluation was one of the reasons why, in our markets rankings, Japan fell behind China,” says Golba. “However, the biggest losers without any doubt were Russia and Ukraine.”
General financial markets volatility encourages the wealthiest investors to search for alternatives to include in their portfolios. Alternative asset classes already account for around a third of an average millionaire’s portfolio.
“Wealth and asset managers must be aware of that, in the US in particular. Currently, US investors hold three times more equities and mutual funds than the global average, but they are expected to show the greatest increase in demand for alternatives,” adds Golba.