Singapore households’ assets grew 5 per cent in first half-year: Study

SINGAPORE, Sep 23, 2020, BT. households are estimated to have seen asset growth of 5 per cent in the first six months of the year, despite the ravages of Covid-19, The Business Times reported.

The latest edition of the Allianz Global Wealth Report found that following a disciplined savings approach, “it seems as if Singaporean households might also be able to weather the pandemic crisis in 2020”.

The asset growth of five per cent, it said, “is a strong indication of a positive outcome for the whole year, given no further dramatic deterioration in the economic and sanitary environment”.

The report found robust growth in gross financial assets of Singapore households in 2019 of 9.3 per cent, the fastest increase in seven years, driven by strong growth in insurance and pensions of 11 per cent.

Bank deposits’ share of assets rose by 8 per cent to 34.9 per cent; securities, which had a portfolio share of 16 per cent, posted a more “modest” growth of 7 per cent.

Liabilities contracted by 1.3 per cent, the first decline since 2006. The debt ratio – liabilities as a proportion of GDP – fell to 65.1 per cent, the lowest value since the 2008 crisis.

Singapore in 2019 ranked third in the world for net financial assets per capita of 116,657 euro (S$186,760), after the US and Switzerland. It was ranked 16th in 2000. It ranked seventh in gross financial assets per capita of 153,642 euro.

The Allianz Global Wealth Report is based on data from 57 countries, covering 92 per cent of global GDP. In 43 countries, it drew from statistics from macroeconomic financial accounts; in the other countries, it estimated the volume of total financial assets based on information from household surveys and bank statistics, among other sources. Financial assets were converted into euro based on the fixed exchange rate at end-2019.

Globally, private households recorded a growth of 1.5 per cent in global financial assets in the first six months of the year, as bank deposits – fuelled by generous public support schemes and precautionary savings – rose by 7 per cent. “Very likely, private households’ financial assets can end 2020 … in the black,” said Allianz in a statement on Wednesday.

Globally, gross financial assets rose by 9.7 per cent in 2019, the strongest growth since 2005, despite escalating trade tensions and social unrest. The asset class of securities grew by 13.7 per cent, buoyed by a 25 per cent rise in stock markets.

Allianz noted that all asset classes clocked growth significantly above their long-term averages since the great financial crisis of 2008.

But the wealth gap between rich and poor countries has widened. In 2000, net financial assets per capita were 87 times higher on average in advanced economies than in the emerging markets. This ratio fell to 19 in 2016. In 2019, it rose to 22.

For the first time, the number of members of the global wealth middle class fell significantly from just over a billion people in 2018 to just under 800 million people in 2019.

Ludovic Subran, Allianz chief economist, said: “For the moment, monetary policy saved the day. But we should not fool ourselves. Zero and negative interest rates are a sweet poison. They undermine wealth accumulation and aggravate social inequality, as asset owners can pocket nice windfall profits. It is not sustainable… We need, more than ever, structural reforms post-Covid-19 to lay the foundation for more inclusive growth.”