The Singaporean wealth market remains resilient and continues to grow despite the impact of COVID-19, with the affluent population witnessing 4.5% growth in 2021. With the country’s economy coming out of the ill-effects of COVID-19, this population segment, which includes mass affluent investors (holding liquid assets of US$50,000–$1m) and high-net-worth (HNW) individuals (holding liquid assets of more than US$1m), is expected to grow at an AAGR of 3.7% between 2022 and 2026, forecasts GlobalData, a leading data and analytics company.
According to GlobalData’s Wealth Market Analytics and Retail Investments Analytics, Singapore is one of the main financial hubs of Asia-Pacific and is home to many of the region’s wealthy, with its affluent population accounting for 30.6% of the city state’s population at the end of 2021, relatively high compared to the rest of the region.
Ravi Sharma, Lead Banking and Payments Analyst comments: “The COVID-19 pandemic had a severe impact on the Singaporean economy, with GDP declining by 5.4% in 2020. However, growth rebounded sharply in 2021 registering 7.6% growth, driven by successful vaccine rollout. As the country being one of the most effective markets globally when it comes to managing the pandemic, it made the city-state even more attractive for investors in addition to its enduring tax advantages.”
Sharma adds: “While Singaporean economy was affected by COVID-19, the country has been able to control the virus to a large extent. This coupled with quick restart of domestic economic activity and government stimulus, Singapore was able to register growth of 7.5% in the value of its retail savings and investments market in 2020, boosting its affluent population which grew by 5.9% during the same period.”
Among investments, equities were hardest hit by the pandemic with the Straits Times Index (STI) failing to recover losses in 2020. However, the market rebounded in 2021, and improved investor sentiment. Consequently, the equity asset class grew by 7.1% in 2021. The robust performance of stock market coupled with low interest rates on bank deposits has also improved the attractiveness of mutual funds as a savings and investment instrument as this asset class rose by 5.8% in 2021.
Sharma concludes: With economic recovery and a rise in investors’ confidence, growth in Singaporean financial market is expected to continue, supporting the growth of the affluent population going forward. However, the rising inflation, uncertain future trajectory of the pandemic, and external factors like ongoing Russia-Ukraine conflict could pose challenge for faster growth with 2022 expected to see the lowest growth in affluent Singaporeans since 2013.”