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Benchmarking Asia Pacific's Wealth Markets


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Benchmarking Asia Pacific's Wealth Markets

  1. 1. Benchmarking Asia Pacifics Wealth MarketsReport Details:Published:August 2012No. of Pages: 124Price: Single User License – US$5250Expanding their footprint in the Asia Pacific wealth market is one of the key priorities of mostinternational private banks. However, the region is composed of a series of highly diverse marketswith wildly different systems of regulation and levels of financial development. This report seeks toquantify these differences, allowing wealth managers to gauge the opportunity in each market.Features and benefits•Compare Asia Pacifics wealth markets across a number of criteria from affluent market growth, to average office rents and foreign entry limitations.•Gain insight into the broader market attractiveness with indexes comparing political stability, forecast inflation and currency stability.•Learn how the competitive environment differs across the region with comparisons of public ownership of banks and range of asset management services.•Understand the staffing environment in Asia Pacific including tertiary enrolment levels, recruitment costs and average private banker salaries.HighlightsThe 10 countries of Asia Pacific analyzed by this report are generally quite accommodating towealth managers, with most achieving a score of more than 50% on the Wealth ManagementOpportunities Index.The countries of Asia are, unsurprisingly, led by the regions financial center, Hong Kong. Thecountry has highly desirable markets, for equities and other securities, that are still highly regardedas places to base wealth operations. It also retains considerable attraction even as a source ofclients despite its small population.The low score given to China suggests that the best strategy for accessing the countrys wealthremains managing it from Hong Kong, particularly as many of the HNW individuals, as per a HurunReport and Bank of China survey, are eager to migrate, making an onshore wealth managementoffice on the mainland not as worthwhile as a branch in the SAR.Your key questions answered•What are the top markets for basing a wealth management operation in Asia Pacific?•Which countries are best to service offshore due to unaccommodating market conditions?•Which countries are being held back by poorly designed and executed regulations?•What factors besides a growing wealth market make a country more desirable for wealth managers?
  2. 2. •What are the typical salaries for private bankers and the recruitment costs associated with each market?Get your copy of this report @ points covered in Table of Contents of this report includeTable of ContentsOVERVIEWCatalystSummaryMethodologyEXECUTIVE SUMMARYWealth managers expanding in Asia need to direct their efforts to those markets offering the bestreturnAsia Pacific has become a focus for wealth managers expansion plansExpansion in Asia will have to be driven by investments in organic growth and new branchesThe Wealth Management Opportunities Index benchmarks strategic markets through acost/benefit analysisThe metrics have been weighted to prioritize key factors of the indexThe largest wealth markets in Asia are not necessarily the best for wealth managers to expand inSeven out of the 10 markets in Asia Pacific achieve a score of greater than 50Number one: Hong Kong retains its top ranking as the most attractive market in Asia Pacific inwhich to manage wealthWEALTH MANAGEMENT OPPORTUNITIES INDEX OVERVIEWIntroductionAsia Pacific has become a focus for wealth managers expansion plansAsia is now a key market for any wealth manager with global ambitionsWealth managers have prioritized investment in Asia PacificAsian countries selected by Datamonitor are some of the fastest growing in the worldThe Wealth Management Opportunities Index benchmarks strategic markets through acost/benefit analysisThe index combines sizing of a markets potential with an evaluation of its business challengesThe metrics have been weighted to prioritize key factors of the indexHong Kong comes out as the top jurisdiction for wealth managers in Asia PacificSeven out of the 10 markets in Asia Pacific achieve a score of greater than 50Number one: Hong Kong retains its top ranking as the most attractive market in Asia Pacific inwhich to manage wealthNumber two: Taiwans relatively sophisticated economy and an accommodative competitive scenemake it a strong target for expansionNumber three: Singapore has developed a market for private wealth management, only narrowlymissing out on second spot
  3. 3. Number four: South Korea was ranked fourth, but could become more attractive if attention isgiven to regulationsNumber five: Malaysias steps to liberalize its banking sector have made it more attractive as acenter for wealth managementNumber six: the Philippines has a good regulatory framework for private banks, if not the mostattractive market at the present timeNumber seven: Thailand has a decent regulatory framework for private banking, if low marketstabilityNumber eight: Indonesia needs to address local bank profitability and regulations to move up therankingsNumber nine: China fared well for a market that only recently embraced private banking, but wouldbenefit from more regulatory certaintyNumber 10: there is much potential in the Indian market, but conditions are not yet ripe foronshore wealth managersWEALTH MANAGEMENT OPPORTUNITIES INDEX: MARKET ATTRACTIVENESSIntroductionOverviewMarket attractiveness combines metrics on the potential of the market and its suitability as aplatformMarket stabilityThe business of wealth management requires a stable platform from which to manage assetsPolitical instability indexForecast inflationCurrency stabilityFrequency of banking crisesTier 1 capital ratioPotential customer baseAttractive markets for wealth managers need growing numbers of affluent investors who are ableto see value in adviceNumber of affluent individualsGrowth in number of affluent individualsProportion of mutual funds, bonds and equities in overall retail savings and investments portfolioStock market capitalization to GDPWillingness to use financial adviceUrban population percentageWealth management profitabilityThe financial sector in Asia Pacific has a wide range of margin on its activitiesBank operating costs to assetsBank provisions to non-performing loansBank return on assetsWEALTH MANAGEMENT OPPORTUNITIES INDEX: MARKET ENTRY BUSINESSCONDITIONS
  4. 4. IntroductionOverviewEase of entry has made Hong Kong and Singapore accessible but highly competitiveTaiwan scores strongly due to its low barriers to entry and good regulationEase of entrySingapore and Hong Kong have ensured that their markets are open to foreigners and startupsForeign entry limitationsCorruption perception indexPaying taxesStarting a businessAverage office rentRegulationAn accommodative regulatory scene is not a given in all Asia Pacific marketsDomestic financial sector liberalizationCentral bank transparencyDistinction between HNW and retail marketsRecruitmentHigh recruitment costs act as a barrier to market entryTertiary education enrollmentPrivate banking compensationLoyalty and motivatorsCompetitive landscapeStiff competition can be expected from local and international players in many marketsPublic ownership of banksCommercial bank branches per 100,000 adultsAsset Management servicesCustomer targetingAPPENDIXSupplementary dataDefinitionsAffluentHigh net worth (HNW)Liquid assetsMass affluentMeasures of growthOnshoreMethodologyWealth Management Opportunities Index: data sourcesPrivate Banking Remuneration DataWealth Management Opportunities Index: rescaling and inverting the measuresGlobal Wealth Model methodologyGlobal Wealth Managers Survey 2011
  5. 5. BibliographyFurther readingAsk the analystDatamonitor consultingDisclaimerList of TablesTable: Selected organic growth developments in Asia Pacific, 2011–12Table: Weighted market attractiveness scores, 2012Table: Weighted market entry and doing business scores, 2012Table: Unweighted market attractiveness scores, 2012Table: Unweighted market entry and doing business scores, 2012Table: Private Banking Remuneration data sourcesList of FiguresFigure: The Datamonitor Wealth Management Opportunities IndexFigure: The number of affluent individuals in Asia Pacific will reach 118 million by 2015Figure: Organic growth was focused in Asia Pacific, while Western Europe led the way in M&AactivityFigure: Datamonitor has selected the leading Asian economies, excluding JapanFigure: The Datamonitor Wealth Management Opportunities IndexFigure: Metrics that go to the heart of the wealth market are weighted more heavily in the indexFigure: Weightings for the market attractiveness metrics prioritize stable and profitable countrieswith consumers who are open to wealth adviceFigure: Weightings for the market entry and business conditions metricsFigure: Asia Pacific Wealth Management Opportunities Index rankings, by categoryFigure: Hong Kongs strengths lie in many of the indexs key metrics of stability, barriers to entry,and market potentialFigure: Taiwan scores highly on liberalization and the openness of its marketFigure: The Singaporean market is highly attractive, in part due to low barriers to entry andstabilityFigure: South Korea presents the least recruitment problems for private banks looking to hireFigure: Malaysias competitive scene and profitability make it a strong candidate for expansionFigure: A weak competitive landscape and a clear distinction between retail and HNW markets arethe Philippines main strengthsFigure: Thailands underdeveloped competitive landscape is a key benefit for new entrantsFigure: Indonesias wealth market has potential and few competitive obstaclesFigure: Chinas profitability and growth result in a favorable score for market attractivenessFigure: India has a great deal of wealth potential, but it also has high barriers to entry and lowmacroeconomic stabilityFigure: Hong Kong manages to combine stability with growth opportunityFigure: India has the most room for improving macroeconomic stabilityFigure: Market stability weightingsFigure: Singapore and Taiwan tie for the most stable political system for wealth managers
  6. 6. Figure: Most countries in Asia Pacific will see low inflation rates over the next five yearsFigure: Currency instability lowers the attractiveness of India as a booking centerFigure: Singapore and Hong Kong have pursued policy frameworks that have prevented anyrecent bank blowoutsFigure: All Asia Pacific countries have Tier 1 capital ratios that are already in line with Basel IIIFigure: While one of the most developed markets in the region, Hong Kong also holds the greatestpotentialFigure: Potential wealth management customer base weightingsFigure: Most affluent individuals are in China due to its population size and fast economic growthFigure: China and India will see a boom in the number of affluent individuals between 2011 and2015Figure: Thailands retail investors use the highest proportion of sophisticated financial products inthe regionFigure: China has the lowest stock market capitalization to GDP due to its reliance on industryFigure: Almost half of Singaporeans are willing to use the services of a financial advisorFigure: Hong Kong and Singapore are over 90% urban, unsurprising given their sizeFigure: China has the highest profitability score due to lower commercial rental costsFigure: Wealth management market profitability weightingsFigure: Bank operating costs are lowest in China due to state ownership and patronageFigure: Bank provisions to non-performing loans scores are highest in China and TaiwanFigure: The bank return on assets score is highest in IndonesiaFigure: Barriers to entry depress the scores of a number of countriesFigure: Singapore has taken care to ensure it is open for businessFigure: Ease of entry into wealth management market weightingsFigure: Half of the countries indexed in Asia have made notable efforts to attract foreign entrantsto the financial sectorFigure: The Philippines and Indonesia are perceived as being the most corrupt countries in AsiaPacificFigure: Higher taxation and corruption make India and the Philippines the worst countries in whichto pay taxesFigure: There are stark differences within the region in terms of the ease of starting a businessFigure: Office rents are very attractive in most of Asia PacificFigure: Singapores attention to the needs of the finance industry has resulted in an idealregulatory environment for private wealth managersFigure: Regulation weightingsFigure: Hong Kong, Singapore, and Malaysia have the highest financial sector liberalizationFigure: Asian central banks have generally maintained an opaqueness to their decision-makingFigure: The Philippines has the clearest distinction at the lowest level of AUMFigure: South Korea has the most conducive market for hiring private banking staffFigure: Wealth management staff recruitment weightingsFigure: South Korea has the highest level of tertiary enrollment and a skilled workforceFigure: High base pay in Singapore is a key drawback for private banks operating from the city
  7. 7. stateFigure: Singapores costly private bankers reduce its attractiveness as a wealth managementcenterFigure: Staff in the Philippines are the most loyal in the regionFigure: The Philippines has the lowest competitive barriers to entryFigure: Competitive landscape relative weightingsFigure: Many Asian countries have significant government control over their banking sectorsFigure: There is a low density of commercial bank branches per 100,000 adults across most ofAsia PacificFigure: Outside of Singapore and Hong Kong, the Asia Pacific wealth market lacks depthFigure: Citibank, a major player in Singapore and Hong Kong, has made significant investmentsinto its mobile appsFigure: Wealth managers in Asia Pacific lag behind more established markets in their customertargetingFigure: Yes Bank has a dedicated program for the affluent Indian woman, while StandardChartered has many tailored programs for expats and residents alikeFigure: Global Wealth Managers Survey 2011 geographic coverageContact: for more information.