10.47 AM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

A surging stock market results in more millionaires in UAE

The Dubai Financial Market: The UAE ranks No. 12 in the world by proportion of millionaire households, with 3.3 per cent – 33 out of every 1,000 households – holding private wealth of at least $1 million (Dh3.673 million).

Published
By Staff

The UAE ranks No. 12 in the world by proportion of millionaire households, with 3.3 per cent – 33 out of every 1,000 households – holding private wealth of at least $1 million (Dh3.673 million), according to a new report published by the Boston Consulting Group (BCG).

“As in all other regions, equities were the strongest contributor,” said Markus Massi, Partner and Managing Director, BCG. “The amount of wealth held in equities rose by 30.5 per cent across major MEA markets, compared with 6.4 per cent for bonds and 5.7 per cent for cash and deposits. With a projected CAGR of 6.5 per cent, private wealth in the region will reach an estimated $7.2 trillion by the end of 2018, approximately a 3.6 per cent share of total global wealth.”

According to the 14th annual Global Wealth Management Report by BCG, Saudi Arabia is the GCC country with the highest share of assets in 2013, with 51 per cent of households falling within the $5-100 million band, and seven per cent in the band with over $100 million.

By comparison, the UAE had 51 and five per cent respectively, within the same categories while Kuwait had 39 and three per cent respectively. 

In the report titled ‘Riding A Wave of Growth: Global Wealth 2014’, BCG addresses the current size of the market, the performance levels of leading institutions, and the state of offshore banking. It also provides a thorough analysis of key trends shaping the business landscape – including the growing importance of digital technology and the pursuit of optimal business models.

On a regional level, the report reveals that private financial wealth grew by 11.6 per cent to reach $5.2 trillion in 2013. Key drivers were generally high saving rates and continued strong nominal GDP growth in oil-rich countries, such as Saudi Arabia (13.4 per cent), Kuwait (13.6 per cent) and the UAE (12.8 per cent).

Qatar ranks first in the world with the highest density of millionaires, with 17.5 per cent holding private wealth of at least $1 million. Kuwait is fifth with nine per cent, while Bahrain (5.9 per cent) secured the sixth place. Oman and Saudi Arabia rank 10th and 13th respectively.

Qatar also ranks sixth globally by ultra-high-net-worth (UHNW) households, defined as households with more than $100 million in private wealth. Kuwait, in turn, is in seventh place while Bahrain holds the 16th spot.

The study found that MEA in 2013 had a 32.1 per cent offshore share – down from 34.4 per cent in 2008. And, with the current attractiveness of regional investment opportunities – compared to global ones – this figure is expected to continue to decrease to 31.6 per cent in 2018, with Saudi Arabia holding $1.4 trillion of the overall anticipated $7.2 trillion wealth.

Cash and deposits comprised 60 per cent of MEA’s wealth in 2008, which dropped to 52 per cent in 2013 as equities grew in popularity. This trend is predicted to continue until 2018, with the wealth breakdown anticipated to be 48 per cent in cash and deposits, 20 per cent in bonds, and 32 per cent in equities.

Given the positive development of onshoring and the trend towards more equities, the GCC is back on the map of international wealth managers. “We have observed a growing interest on behalf of international wealth managers to tap into the asset pool,” explained Massi. “However, to be successful, international wealth managers must adapt to local preferences or conditions and invest in building long-term relationships instead of short-term revenue maximisation.”

Global results

According to the report, global private financial wealth grew by 14.6 per cent in 2013 to reach a total of $152 trillion. The rise was stronger than in 2012, when global wealth grew by 8.7 per cent. The key drivers for the second consecutive year were the performance of equity markets and the creation of new wealth in rapidly developing economies (RDEs). 

The total number of millionaire households (in dollar terms) reached 16.3 million in 2013, up strongly from 13.7 million in 2012 and representing 1.1 per cent of all households globally. The US had the highest number of millionaire households (7.1 million), as well as the highest number of new millionaires (1.1 million).

Robust wealth creation in China was reflected by its rise in millionaire households from 1.5 million in 2012 to 2.4 million in 2013. The number of millionaire households in Japan fell from 1.5 million to 1.2 million, driven by the 15 per cent fall of the yen against the dollar.

“The growth of private wealth accelerated across most regions in 2013, although it varied widely by market,” added Massi. “As in 2012, the Asia-Pacific region – excluding Japan – represented the fastest-growing region worldwide, continuing the trend of high growth in the ‘new world’. But substantial double-digit growth increases in private wealth were also witnessed in the traditional, mature economies of the ‘old world’, particularly North America.”

Offshore wealth

Private wealth booked across borders reached $8.9 trillion in 2013, an increase of 10.4 per cent over 2012 but below the increase in total global private wealth of 14.6 per cent. As a result, the share of offshore wealth declined slightly from 6.1 to 5.9 per cent. Offshore wealth is projected to grow at a CAGR of 6.8 per cent to reach $12.4 trillion by the end of 2018, driven especially by investors in developing economies seeking higher levels of political and financial stability, greater depth in wealth management products and expertise, and geographic diversification.