Wealth growth in New Zealand goes into reverse in
Wealth growth in New Zealand goes into reverse in 2007
23 September 2008— The rapid growth in personal wealth enjoyed by New Zealanders in recent years went into reverse last year, according to The Boston Consulting Group’s eighth annual Global Wealth Report.
Personal wealth of New Zealanders (measured in local currencies) decreased by 4.8 percent from $NZ191.3 billion in 2006 to $NZ182.1 billion in 2007.
[Personal wealth is defined as assets under management (AuM). It includes cash deposits, money market funds and listed securities, but excludes wealth attributed to investors’ own businesses, residences or luxury goods.]
This represented a reversal from the 12.9 percent growth in the previous year and the average annual growth rate of 6.2 percent between 2002 and 2007.
The leader of BCG’s financial services practice in Australia and New Zealand, Matthew Rogozinski, said the changing fortune of New Zealand investors reflected a weakening economy and declining share prices in 2007.
“The financial crisis has cast a pall over markets this year, leading to further declines in asset values.
“But there are encouraging signs of a turnaround in New Zealand’s savings performance with the success of KiwiSaver, the voluntary retirement savings scheme introduced last year.”
Distribution of Wealth and Millionaire Households
The report found that personal wealth in New Zealand became more concentrated, with the number of millionaire households (i.e. those with at least $US1 million in AuM) increasing by 6 percent from 6,600 to 7,000 in 2007, despite the overall reduction in personal wealth.
However, millionaire households accounted for only 0.5% of all households in New Zealand, compared to 2.4% in Australia (ranking it 11th by country). Singapore topped the list with 10.6% of all households controlled AuM of at least $US1 million.
Worldwide, the number of millionaire households grew by 11.2 percent to reach 10.7 million.
Worldwide, wealth grew at a slower pace in North America, Europe, and Japan in 2007, but wealth markets in general proved resilient. Global wealth grew by 4.9 percent in 2007, to $US109.5 trillion.
The report covers data from the whole of 2007, when the effects of the financial crisis were evident but not as severe as they would become in 2008. Still, the crisis’s impact on some markets became clear by the end of last year. In North America—the epicenter of the turmoil—wealth grew by 3.8 percent in 2007, down from 8.9 percent in 2006.
Accessing the Other Third of Global Wealth
North America and Western Europe accounted for about two-thirds of the world’s wealth in 2007.
“The remaining third—what we call the other third of global wealth—was spread across emerging or less mature markets around the world, where wealth has been growing at much faster rates,” said Rogozinski.
Wealth markets in Asia-Pacific, Latin America, Eastern Europe, and the Middle East had about $US33 trillion in AuM in 2007. Most of these markets share a common set of challenges such as high entry costs, a scarcity of relationship managers (RMs), and increasing competition.
Wealth in Asia-Pacific totalled about $US25.5 trillion in 2007. In Latin America, AuM reached $US3.1 trillion in 2007. Russia is by far the largest wealth market in Eastern Europe. Its AuM totalled $US950 billion in 2007. The growth opportunity in the Middle East is concentrated in the six markets of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. In 2007 this region had an estimated $US1.5 trillion in AuM.
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