beyondbrics

The sight of a bright red Ferrari being delivered in Jakarta is still something that attracts attention. But not for long.

The number of high net worth individuals will triple in Indonesia to nearly 100,000 by 2015, the fastest rise in Asia, due to high economic growth, strong stock market  performance and currency appreciation, a new report says.

CLSA and Julius Baer released the findings this week of three months of research on  individuals in 10 leading Asian countries with more than $1m in investible assets, excluding property.

The projections assumed an average annual 10.5 per cent nominal GDP growth rate, 4 per cent currency appreciation and 12 per cent stock market rise across the region.

“The results of combining these relatively conservative assumptions, however, are staggering. Over the next five years, the number of HNWI in the region is set to increase at around 19 per cent annually,” the report says.

Indonesia outperformed all other countries in the study, trailed by China and India, mainly due to stronger appreciation of the rupiah, which is expected to rise 6 per cent per year and clock a nominal GDP growth rate of 16 per cent. Wealthy Indonesians’ total wealth will triple to $487bn, the report predicts.

The collective number of wealthy individuals in the 10 nations - including China, India, the Philippines, South Korea and Thailand, Singapore, Hong Kong, Malaysia and Taiwan –  will jump from 1.2m to 2.8m.

Asia’s wealth explosion has been detailed in a string of recent Asian bank reports but CLSA said it was unique in factoring in the rise of Asian currencies against the dollar.

“We asked ourselves: is the rise of Asian currencies a real factor?” Amar Gill, lead special projects researcher at CLSA, told beyondbrics. “The currency thing is the big surprise. Obviously, currencies are volatile, but if you take the view that Asian currencies are going to appreciate against the developed world…it adds to the overall number of high net worth individuals by slightly more than 25 per cent.”

Currency appreciation will be the key driver behind a projected tripling of the total net worth of Asia’s wealthiest, expected to make an astounding leap from $5,600bn in 2010 to nearly $16,000bn by 2015, Gill said.

Even with flat stock markets and property prices over the next five years, Asia’s wealth will balloon for one simple reason. “It’s the exchange rate,” Gill said.

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Age of austerity? not in Indonesia, beyondbrics