As Global Wealth Shifts East, Who Wins?

Asian economies are getting richer and, thus, the number of wealthy Asians is increasing. This isn't news. What is perhaps more interesting is the pace at which that process is unfolding. According to a new report by Capgemini and RBC Wealth Management, the number of Asia-Pacific millionaires rose past the number in North America last year! While North America remained the richest area, with high net-worth individuals' assets totaling $11.4 trillion, the Asia-Pacific region is not far behind, at $10.7 trillion. Which companies stand to gain from these increases in wealth in Asia?

"The first thing we do, let's call all the bankers." (With apologies to Shakespeare.)
When you have few or no assets, your demand for financial services is limited; indeed, a significant proportion of a society's poorest citizens do not even have a bank account (according to a 2009 FDIC survey, one-fifth of all U.S. households earning no more than $30,000 per year did not have a bank account). The wealthier you become, the more complicated your financial needs become.

The expansion of an affluent Asian class is an opportunity for European and U.S. banks, which have some expertise in wealth management, including institutions such as UBS (NYSE: UBS  ) or JPMorgan Chase (NYSE: JPM  ) . Local banks such as Singapore's DBS Group Holdings (OTC: DBSDY) are also fighting for their piece of this lucrative market (incidentally, the report showed that Singapore overtook Hong Kong in terms of the number of high-net-worth individuals, as a direct result of Hong Kong's 17% decline in stock market capitalization).

All work and no play...
But what fun is being wealthy if all you do is save and worry about how to preserve your wealth? High-net-worth individuals -- dollar millionaires in terms of investable assets -- are ideal targets for purveyors of luxury goods. A friend of mine moved to Hong Kong in the mid-1990s and went on to found (and ultimately sell) a publishing company with titles aimed at ultra-high-net-worth individuals in Hong Kong, China, and the Asia-Pacific region (China Boating, LP Luxury Properties, Jet Asia-Pacific, etc.). He continues to manage the business and is in no hurry to return to France -- one of the only countries in the world where the wealthy pay taxes on income and capital and where the top marginal tax rate could soon rise to 75%. Instead, it's advertisers like French luxury goods conglomerate LVMH Louis Vuitton Moet Hennessy (OTC: LVMUY) that come to him.

Other companies outside of banking and luxury brands stand to reap huge profits in Asia; in particular, our free report identifies "3 American Companies Set to Dominate the World."

Fool contributor Alex Dumortier holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of JP Morgan Chase. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (6) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 21, 2012, at 5:13 PM, portefeuille wrote:
  • Report this Comment On June 21, 2012, at 5:30 PM, portefeuille wrote:
  • Report this Comment On June 21, 2012, at 6:00 PM, xetn wrote:

    Don't overlook the rapid inflation that is taking place in most of Asia, especially China.

    The Chinese with over 1.3 billion, still have at least 2/3 of the population that are not participating in the the wealth transfer. In fact, the average Chinese has seen their basic services such as food escalate in price over the last two years. As a result, many of them are not fairing very well.

  • Report this Comment On June 21, 2012, at 7:51 PM, whitehead1 wrote:

    My friend is from India. He told me when he left India in 1990 there were about 20 millionaire in his city and now they have over 50,000 millionaire. Thats what I call growth. People are making over 25 to 100 times what they were making in early 90s. Obviously there is an inflation but they have more income too. While I got a job in USA and they offered me same money what I was making in 1997 and everything has gone up 3 times in USA. I call it trickle down poverty. In USA there will be few rich people but middle class will turn in to poor class.

  • Report this Comment On June 22, 2012, at 2:19 AM, AtriMukerjee wrote:

    Just to clarify the generally accepted definitions: I think a million dollars in investable assets qualifies as high net worth. Mass affluent are those with more than a hundred thousand but less than a million.

  • Report this Comment On June 22, 2012, at 2:50 PM, TMFAleph1 wrote:

    @AtriMukerjee

    Thanks for your clarification -- you're quite right. I will request a correction.

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