Thirty years ago, a movie about a bachelor in Asia wouldn’t have made it out of a Hollywood pitch meeting. And a movie about a billionaire in Asia whose lifestyle was so extravagant it makes the Hiltons and Kardashians seem like beige minivan drivers by comparison… well, that would have been the realm of Disney fantasy.
And that film – if it somehow saw the light of day – would not have made it beyond the local indie theatre.
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But that very movie is out right now, and it’s huge. Crazy Rich Asians, which is the talk of Singapore (where it takes place), has beaten Tomb Raider at the box office, as well as Disney’s Christopher Robin. And that reflects something far bigger than its sweet romantic comedy plot suggests.
The shift from west to east
A few decades ago, global wealth was concentrated in the west – and in the U.S. in particular, which in 1987 was home to 44 of the world’s 140 billionaires. Japan, West Germany (before the fall of the Berlin Wall) and the United Kingdom had the next most billionaires. Hong Kong rounded out the top 5, though with just six billionaires.
But times have changed. According to the Billionaires Report 2017 issued by investment bank UBS and professional services firm PriceWaterhouseCoopers, Asia today is home to 637 billionaires – more than any other part of the world.
That compares with 563 billionaires in the U.S., and 342 in Europe.
And on average, Asia is adding three new billionaires a week, with two of them coming out of China alone.
According to research firm Capgemini, Asia now also has the biggest population of high net worth individuals (HNWIs), at 5.1 million as of last year, compared with 4.8 million in the U.S. Asia is adding 1,200 new HNWIs every single day.
(As defined by Capgemini, HNWIs are people with more than US$1 million in investable assets, excluding their primary residence, collectibles, consumables and consumer durables.)
Asia also leads the world in total wealth attributable to these HNWIs. In 2016, Asia surpassed the U.S. to become the world leader – with US$17.4 trillion in HNWI wealth. Last year, total HNWI wealth in Asia hit US$18.8 trillion, growing nearly 9 percent per year since 2015. That’s nearly twice as fast as the rate of growth in HNWI wealth in the U.S.
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The big role of Asia’s stock markets
Crazy Rich Asians is based on the fictitious life story of the heir of Singapore’s wealthiest family that made a fortune on real estate after emigrating from China, when Singapore was still mostly malaria-infested swampland.
Singapore’s real-life richest people are brothers Robert and Philip Ng. They’re the founders of Sino Group, one of the largest real estate developers in Asia. Their conglomerate comprises, among other businesses, three listed companies in the Hong Kong Stock Exchange with a combined market capitalisation of US$17.6 billion.
The Ngs aren’t alone in having their money in the stock market. In 2016, 63 percent of Asia’s 568 billionaire-linked companies were publicly-listed. In contrast, just 37 percent of the 421 U.S. companies and 40 percent of the 256 companies in Europe linked to billionaires were trading on an exchange.
So Asia’s stock markets are generating significant amounts of wealth for business owners – which is a clear sign of a vibrant, capitalist-driven society.
With more millionaires being minted in Asia than anywhere else in the world, and a booming middle-class, the region in fertile ground for raising capital. There are 100 million retail trading accounts in China’s two stock exchanges, plus tens of millions more throughout Asia.
And of the nearly 1,500 companies that went public in 2017, two-thirds were from the Asia-Pacific region. Those 935 companies raised US$73 billion (40 percent of the world total amount raised from IPOs) from investors, and have minted thousands of new millionaires and dozens of new billionaires along the way.
The shift has already happened
We’ve written previously about how Asia has become the driving force of the world economy, with the region expected to contribute 62 percent of global GDP in the 2010 to 2020 period.
According to investment management company KKR, the Asian middle class is expected to grow from 1.4 billion people in 2015 to 3.5 billion by 2030.
The region is already home to the world’s largest market for just about anything under the sun – including automobiles, smartphones, computers, real estate, airplanes and soon, even military equipment and weapons. The entire world is clamoring to sell these products to Asians.
There are few crazy rich Asians today – but lots of normal Asians who are vastly wealthier than they were 30 years ago. And that, along with the fact that there’s a market for Crazy Rich Asians, reflects the shift from west to east.
Editor, Stansberry Churchouse Research