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Private wealth in Kuwait nears $400 billion, growth to taper
July 2, 2017, 7:27 am
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Though overall private wealth in Kuwait is expected to grow at a compound annual growth rate (CAGR) of 5.3 percent, to reach around US$400 billion by 2021, it will register a decline from the 6.2 percent growth shown in 2016, says a new study on global wealth by the Boston Consulting Group (BCG).
 
The 17th annual BCG study, which outlined the evolution of private wealth from both global and regional perspectives, found that much of the growth in Kuwait’s private wealth in 2016 came from increases in equities. In the past year, equities increased by 10.5 percent, while cash and deposits grew by 4.9 percent and bonds by 2 percent.
 
Over the next five years till 2021, equities are once again expected to be the primary contributors to the growth rate, growing at a CAGR of
7.3 percent, while cash and deposits are projected to grow at a slower4.5 percent CAGR.
 
Taking an in-depth look at wealth distribution in Kuwait, the BCG study found private wealth held by ultra-high-net-worth (UHNW)
households (those with above $100 million) in the country grew by 9.6 percent in 2016. However, the growth of private wealth of this
segment is expected to decline to 6.7 percent CAGR through 2021.
 
The upper high-net-worth (HNW) segment (those with between $20 million and $100 million) experienced the strongest growth in 2016 at 14.3 percent. In the next five years, the projected growth of this segment will see a slight slowdown to 11.6 percent CAGR.
 
In Kuwait, private wealth held by the lower HNW segment (those with between $1 million and $20 million) witnessed a steady growth of 7.2 percent in 2016. Private wealth in this segment has a slower projected CAGR of 5.8 percent over the next five years.
 
The total number of millionaire households (those with more than $1 million in net investable assets) in Kuwait increased by 2.6 percent in 2016. Looking ahead, growth is set to remain steady at 2.6 percent CAGR by 2021.
 
Over the next five years, wealth in the Middle East and Africa region is set to reach $12 trillion, with the UAE, Oman, Qatar, and Saudi Arabia’s contribution accounting for 21.1 percent of this wealth.
 
In the Middle East and Africa (MEA), wealth expansion should stem, in relatively equal portions, from existing assets and higher household savings, said the BCG report.
 
Looking ahead, the share of wealth allocated to each asset class is expected to remain stable, with regional wealth projected to rise at an annual rate of roughly 8 percent through 2021.
 
The findings of BCG’s report also revealed that, in 2016, Switzerland remained the largest destination for the Middle East and Africa’s offshore wealth, accounting for 31 percent with a projected CAGR of 4.7 percent over the next five years.
 
This was followed by the UK/Channel Islands at 23 percent with a CAGR of 5 percent, and Dubai at 18 percent with a CAGR of 4.5 percent.
 
In its global perspective, the BCG study found that global private financial wealth grew by 5.3 percent in 2016, to reach $166.5 trillion. This growth was driven primarily by accelerating economic growth and the strong performance of equity markets in many parts of the world.
 
All regions experienced an increase in overall wealth, with Asia-Pacific once again being the fastest-developing region, with nearly double-digit growth of 9.5 percent.
 
Western Europe posted modest growth (3.2 percent) as uncertainty over Brexit played a role. By the end of 2017, the level of private wealth in Asia-Pacific is projected to surpass that in Western Europe, and by 2019, the combined level of private wealth in Asia-Pacific and Japan is
projected to surpass that in North America.
 
The study also found that offshore wealth grew at a slower pace (3.7 percent) than onshore wealth did (5.4 percent) in 2016. Switzerland remained the largest offshore center, with a 24 percent share, but that share is projected to decline through 2021.
 
Hong Kong and Singapore remain the fastest-growing offshore centers globally because of both their status as the preferred booking centers for regional clients and the anticipation of strong growth in Asia-Pacific.
 
Expansion is expected to continue in the long term, but China’s ongoing restrictions on investment outflows may slow it down to some degree in the short term, warned the BCG report.

 

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