Asia-Pacific had the largest decline of HNWI wealth in 2018, falling 4.8% to $20.6trn, according to the report. The region also had the largest decline in HNWI numbers.
Globally, HNWI wealth was down $2trn during the year, according to the report. It is also the first time in seven years that wealth declined. Only the Middle East saw an increase in wealth during the period.
The report said that China was the “key reason” for the decline, accounting for nearly 50% of the drop in Asia-Pacific and 25% globally. It explained that Chinese markets lost at least $2.5trn in market capitalisation due to uncertainties in US-China trade relations and foreign exchange-related pressures. In addition, other major economies in Asia-Pacific, such as Japan and India, saw negative growth rates of around 3% and 6% respectively.
Meanwhile, Europe was responsible for around 24% of the overall $2trn decline in HWNI wealth globally.
Shift in assets
The market volatility in 2018 has also made Asia-Pacific investors shift investments from equities to cash or alternative products.
“Within an atmosphere of upheaval, near-term global economic recovery remains uncertain. Geopolitical and trade concerns have left the global economy and stock markets on a low note for the year,” the report said.
As of the first quarter of 2019, allocation toward equities was down to 21.9% from 26.4% last year.
On the other hand, cash allocations was up to 28.2% (from 26.2%), while alternative allocations were at around 13.7% (from 9.9%).
The report said that alternative investments have become an attractive investment option, especially with the growth of startups and fast-growing, early-stage companies in Asia-Pacific.
Despite the market turbulence last year, HNWI globally continue to trust their wealth managers, the report noted.
“Their sentiments may be the result of a series of pilot initiatives from wealth managers and efforts over the last few years to enhance HNW client experience,” the report said.