Residents of Singapore, one of the most prosperous nations in the world, appear to have considerably more financial discipline and wealth creation acumen than people in most other countries. Despite its tiny landmass and small population, Singapore is No. 1 in Asia and No. 4 in the world — after the United States of America, Switzerland, and Denmark, in that order — in terms of financial asset (cash, stocks, bank deposits) ownership.
The just-published 2024 global wealth report by Allianz, a leader in financial services, puts the following countries in the Top 5, based on net financial assets per capita in 2023:
- United States
EUR 260,320 (SGD 372,674) - Switzerland
EUR 255,440 (SGD 365,688) - Denmark
EUR 172,200 (SGD 246,522) - Singapore
EUR 171,930 (SGD 246,134) - Taiwan
EUR 148,750 (SGD 212,950)
The per capita difference between Denmark and Singapore is of a mere EUR 270, which brings Singapore within touching distance of the global Top 3 of financial asset (cash, stocks, bank deposits) ownership.
The Allianz report also gives the comparative ranks of countries — in terms of financial asset ownership — in the two decades between 2003 and 2023. While the US was No. 2 in 2003 and Switzerland was No. 1 then, their positions have now been reversed in 2023. In contrast, Denmark has jumped to No. 3 from No. 15 and Singapore has moved up to No. 4 from No. 11 during this 20-year period. Taiwan has moved up five places, from No. 10 in 2003 to No. 5 in 2023.
Among the major Asian economies, one-time powerhouse Japan has slipped from No. 4 in 2003 to No. 12 in 2023, with a per capita financial asset ownership of EUR 91,940 (SGD 131,621).
Other than Singapore, Taiwan, and Japan, no other Asian nation makes it to even the Top 20 of the Allianz rankings.
Australia has moved up from No. 18 (in 2003) to No. 11 (in 2023) with a per capita financial asset ownership of EUR 99,490 (SGD 142,429).
Former No. 8 (in 2003) United Kingdom, one of the financial hubs of Europe, now sits at No. 13 (in 2023, with a per capita financial asset ownership of EUR 80,110 (SGD 114,685).
Global ranking of countries
Singapore’s capital-funded pension system is main driver
This Allianz global wealth report, in its 15th edition, “looks at the asset and debt situation of households in almost 60 jurisdictions”, said The Straits Times.
Analysing why Singapore residents have done so well in terms of financial asset ownership, ST said: “Allianz’s global research team in Munich attributed this to Singapore’s capital-funded pension system, the Central Provident Fund (CPF).”
It added that “Singapore’s gross financial assets in 2023 grew 5.8 per cent — almost twice as fast as in 2022”, driven by income gains of private households.
The global wealth report, titled ‘Surprising Relief’, said in its executive summary: “Against the backdrop of resilient economies and booming markets despite monetary tightening, global financial assets of private households recorded strong growth in 2023: With an increase of +7.6%, the losses of the previous year (-3.5%) were more than made up for. Overall, total financial assets amounted to EUR 239 trn at the end of 2023.”
There was a shift in which asset classes benefited. The report said that “growth in the three major asset classes was quite uneven. Securities (+11.0%) and insurance/pensions (+6.2%) benefited from the stock market boom and higher rates, growing significantly faster than the average of the last 10 years. In contrast, growth in bank deposits fell to +4.6% after the pandemic-related boom years, recording one of the lowest increases in the last 20 years.”
‘Shrinking’ middle class is outcome of growing wealth
Talking about the changing economics of Asian nations and the associated private wealth creation, the report said: “Twenty years ago, there was hardly any private wealth in countries such as Cambodia, Indonesia or Vietnam; this also applies to India and China, at least with regard to the vast majority of the population: everyone was ‘middle class’, but the middle was poor. It was only with the accumulation of wealth that greater differences in wealth ownership emerged.”
In these countries, said the report, “The rapid growth in wealth went hand in hand with the first differentiation of the population into different wealth classes.”
As a result, dynamic Asian economies such as India and China are actually seeing a “shrinking” of their middle class, because the vast segment of their population that was once the “middle class” has now been split into various wealth groups. There are still a few very rich people at the top of the financial pyramid, but below them come many different wealth categories now.
