Private wealth in western Europe is set to fall behind the Asia-Pacific region for the first time this year, partly as a result of the political and economic uncertainty unleashed by Brexit, Boston Consulting Group (BCG) said.
Western Europe’s private-household wealth grew by 3.2 percent to US$40.5 trillion last year, the smallest increase of any region, while Asia-Pacific had a surge of 9.5 percent to US$38.4 trillion, the consulting firm said in a report issued yesterday.
Those totals are expected to climb to US$41.9 trillion and US$42.3 trillion respectively by the end of this year, BCG said in an e-mail.
The wealth of the richest people is to climb faster than that of other groups in the years ahead, it said.
People with at least US$100 million are expected to see annual increases of 9.1 percent between last year and 2021, while those with between US$20 million and US$100 million are to have gains of 10.2 percent, BCG said, compared with 3.7 percent for households with less than US$1 million.
Wealth managers’ pretax profit margins last year dropped to 22.4 basis points from 33 basis points in 2007 in the face of falling revenue and pressure on fees caused by increased regulation and competition, BCG said.
That has forced companies to cut costs and sell unprofitable or high-risk businesses, it added.
Investors from the Asia-Pacific region were the biggest source of global offshore wealth last year with US$2.9 trillion, it said, followed by US$2.6 trillion from western Europe.
Offshore bookings are to remain a key area of growth for wealth managers, especially in the richest segments of the market, as investors seek refuge from factors ranging from political instability to weakening currencies, BCG said.
By the end of 2021, the growth rate for global private wealth is expected to be 6 percent, up from 5.3 percent last year, the report said.
While the increases in North America and Japan are to be driven mainly by the performance of existing assets, Asia-Pacific is to benefit more from new savings, reflecting the region’s superior growth prospects, BCG said, while in western Europe, the growth in wealth is to stem nearly equally from both sources.
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