wealth management

Jimmy Choos under your sari and an African safari for the Diwali long weekend?

A new report by Kotak Wealth Management and Ernst & Young – Top of the Pyramid 2014 – finds that India’s super rich are “ready for change” as a strong new government comes to power in New Delhi – and they’re spending to prove it.

 

By Avantika Chilkoti in Mumbai and Thomas Hale in London

Three major private banks have closed operations in India in recent months, as cultural and regulatory challenges derail groups initially drawn by growing wealth in Asia’s third largest economy.

An emerging market with a high savings rate, a collection of some of the world’s most flamboyant businessmen, and economic growth hovering around 5 per cent despite a sharp slowdown, India should be a gold mine for the private banking industry. 

With Chinese workers enjoying a break from their travails on May 1 for Labour Day, it is an opportune time to look at one gift recently bestowed on them by the country’s financiers.

The gift is a new investment opportunity going by the name ‘fund of trusts’, which conjures up a sense of diversification and safety. But a more accurate name might be ‘subprime for the masses’. 

No, not that Carlyle. And not that Buffett. Welcome to the alternate universe of Chinese finance.

A Chinese investment firm going by the name of Carlyle has accused the investment adviser to a fund known as the Buffett No. 1 Plan of committing fraud. The adviser of the Chinese Buffett fund has in turn accused the Chinese Carlyle of money laundering. Both deny the allegations. 

Asia’s rich now outnumber those in both the US and Europe. For high-end banks and other companies, Asia’s growing number of entrepreneurs are a significant source of new business. The FT’s Tom Griggs investigates.

For fund managers wondering whether China will confound nay-sayers and begin to offer the prospect of lucrative returns for foreign fund managers, the answer has not changed. It is: no, not yet.

On the contrary, near term profitability is shrinking, according to a report in Monday’s FTfm

Asia, with China at its heart, is fast growing into the world’s largest asset management region and is expected to double in size by 2015, according to a report sponosored by Citi Bank and Mirae Asset Group, released Thursday.

Such a large and growing pool of wealth is bound to attract some sharks and, in the hunt for business, the scene is set for a show-down between established western banks and their local Asian counterparts. 

Call it life imitating art. Three years after Danny Boyle’s Slumdog Millionaire was crowned Best Picture at the Oscars, a 27-year-old man from one of India’s poorest states has enacted his own poor-boy-makes-good inspirational story. But the story highlights a new Indian problem – what to do with sudden wealth. 

Given how much wealth is sloshing around greater China, it’s surprising how tough the private banking business here is—tough to the extent that a few private bankers have told the FT that their banks here are, for now, loss-making.

Thursday’s tie-up between Julius Baer and Macquarie illustrates some of the challenges facing the Asian wealth management industry, where clients tend to be savvy entrepreneurs and fierce competition has driven up costs to what many industry participants say are unsustainable levels. (Neither Mandarin-speaking private bankers nor ankle-deep office carpeting comes cheap.)  

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. 

Savers chanelling their money elsewhereFor the past several months, speculation has been rife that hot money was flowing out of China into places like Hong Kong and Macao, prompting spikes in the prices of luxury residential properties and revenues collected at the baccarat tables respectively.

Then in July there was an unexplained drop in reported bank deposits to the tune of US$176bn, adding more grist to the rumour mill. Now it turns out there is a more prosaic explanation, say Standard Chartered economists Wei Li and Stephen Green.