Indonesia: Massive growth of High Net Worth Individuals over last four years
As of 2011, there were over 37,400 HNWIs in Indonesia, with a combined wealth of US$241 billion
The total number of High Net Worth Individuals (HNWI) in Indonesia increased by 67% between 2007 and 2011, while HNWI wealth rose by 91% says a new report. Indonesia – 2012 Wealth Book: Asia’s Emerging Giant, available from ReportBuyer.com, notes that this was the highest growth for any major country in the world, above the likes of China (41% growth) and India (32% growth). The wealth of HNWIs in Indonesia was positively influenced by an appreciation of the local currency against the US dollar, strong local equity and real estate markets. The total number of HNWIs in Indonesia is forecast to grow by 123%, to reach just over 83,500 individuals by 2016. This represents a higher growth than other emerging markets such as China (83% growth) and India (103% growth).
As of 2011, there were over 37,400 HNWIs in Indonesia, with a combined wealth of US$241 billion.
The 119 page report finds that in 2011, equities were the largest asset class for HNWIs in Indonesia (25.4% of total HNWI assets), followed by real estate (24.6%), cash (14.9%), fixed income (14.2%) and alternatives (7.2%). Business interests’ recorded the strongest growth over the review period, driven by new business formation in the country. Equities were the worst performing asset class, mainly due to the poor performance of foreign equity markets. Over the forecast period, equities are expected to be the top-performing asset class for HNWIs, followed by business interests, real estate and alternatives. Consequently, there will be a movement away from cash and fixed income products towards equities. The reporth shows that in 2011, 38% of Indonesian HNWIs had second homes abroad. The largest destination for these homes is Singapore, followed by London.
Indonesian HNWIs hold 30% of their wealth outside of Indonesia, which is in line with the average for worldwide HNWIs. The report forecasts that local HNWIs to further decrease their level of investment in Europe to 15.2% of foreign HNWI assets by 2016, due to ongoing concerns regarding the euro and a possible double-dip recession in Europe.
A large proportion of local wealth is currently held offshore, mostly in Singapore-based private banks. HNWIs remain invested in Singapore for reasons such as tax efficiency and risk diversification, but also higher product sophistication across the straits. Private Banks such as Credit Suisse, Julius Baer and UBS have been quick to develop their presence in Indonesia. Other international private banks such as JPMorgan Chase and Merrill Lynch still serve Indonesia’s HNWIs from Singapore.
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