Strong growth in Singapore household financial assets in '17

Singapore

STRONG growth in financial assets and a relatively stable debt level have boosted Singapore's per capita financial assets to seventh place in a global ranking.

Allianz Global Wealth Report said Singapore's per capita financial assets came to 90,650 euros in 2017, a growth of 8.9 per cent. In 2000, it was ranked 15th.

The report looks at global households' wealth and debt levels. It described 2017 as an "exceptional" year overall, where financial assets of households rose significantly by 7.7 per cent. In 2017 several factors including synchronised economic growth and still-low interest rates converged to create a goldilocks environment for investors, where both equity and bond markets accelerated.

Allianz chief economist Michael Heise said in a statement: "Last year was a very good year for savers. But it was as good as it gets; the post-crisis era is over for good . . . The signs are already worrying: rising interest rates, trade conflicts and increasingly populistic politics cause tensions and turbulence. The first month of the year gave a bitter foretaste.''

For Singapore, household financial asset growth of 8.9 per cent was the highest growth since 2012. The growth rate in 2016 was 7.3 per cent.

Growth drivers were securities which rose by 12.6 per cent, and insurance and pension assets which grew 10.9 per cent. Insurance and pensions were the dominant assets among private household portfolios, accounting for 49 per cent of total financial assets.

Loan growth in Singapore picked up at 4.7 per cent last year, after growing just 2.4 and 2.5 per cent in the previous two years. Still, the debt ratio was stable at around 75 per cent, much lower than South Korea's 97.5 per cent or Malaysia's 84.4 per cent.

In Asia, gross financial assets of households grew by 9.7 per cent, more strongly than the worldwide growth of 7.7 per cent. In the regional ranking Singapore came in second after Japan, and Taiwan was third.

2017 also saw a number of shifts. One was in the reversal of asset growth between industrialised and emerging countries. The US, for instance, accounted for 44 per cent of global growth in gross financial assets of households, while China accounted for 25 per cent. In the previous three years, the ratio has averaged 26 per cent vs 35 per cent - with China on top.

Worldwide household liabilities rose 6 per cent, slightly above the growth of 5.5 per cent in 2016. But in some countries, debt levels have reached critical figures in the last few years. The report's co-author Michaela Grimm pointed to some countries in Asia - Thailand, Malaysia, South Korea and China - as areas where "supervisory agencies should monitor developments very closely".

"In these countries, similarities to the credit excesses before the financial crisis cannot be overlooked."

2017 saw significant inflows into equities and investment funds. In the context of booming stock markets, securities saw the strongest growth of all asset classes in 2017, rising by 12.2 per cent and accounting for 42 per cent of all savings by end-2017. The second largest asset was receivables from insurance companies and pensions, which accounted for 29 per cent of the asset portfolio, and grew by 5.2 per cent last year.

In Asia bank deposits remained popular, accounting for 43 per cent of private household assets. Securities had a 38 per cent share, and receivables from insurance companies and pensions had 17 per cent share.