Singapore tops Asia in terms of gross financial assets

Insurance and pensions identified as most popular asset class

Singapore tops Asia in terms of gross financial assets

Insurance News

By Gabriel Olano

Singapore has taken the top spot in gross financial assets per capita in Asia, beating out other developed Asian economies such as Japan and Taiwan, according to a report by global insurer Allianz.

The Allianz Global Wealth Report also ranked Singapore eighth worldwide in terms of gross financial assets at €125,645 as of end-2016. Japan and Taiwan were the other Asian countries in the global top 20, at ninth and 13th respectively. Switzerland topped the list at €268,840 per capita.

Gross financial assets are defined as the sum of assets such as bank deposits, securities and insurance assets before subtraction of liabilities such as loans.

According to the report, Singapore’s solid performance could be due to stagnant debt growth, leading to declining debt ratios. However, debt ratios, or total liabilities as percentage of total assets, remain relatively high at 73.7%.

Singapore’s per capita liabilities remained at €36,075 at the end of 2016, which is among the highest in Asia.

“On the other hand, asset growth accelerated considerably in 2016, reaching 7.4%, mainly due to high growth of insurance and pensions assets, whose share in the asset portfolio of Singaporean households is higher than in all other Asian countries at 46.3%,” said Allianz in the report.

The ageing of Singapore’s population is also one of the reasons behind the rise in assets.

“Households in Singapore have accumulated quite a lot of pension assets... (reflecting) the design of the Singaporean pension system with its strong second pillar of funded obligations,” said Michael Heise, Allianz chief economist.

“However, given the rather sharp rise in the old age dependency ratio, this is the right thing to do.”

Insurance and pensions are the largest asset class in Singapore at 46%, followed by bank deposits at 37%. For the rest of Asia, bank deposits were the most popular asset class at 45.3%.

“Private households in Singapore, South Korea and Taiwan particularly favoured life insurance policies and pension funds,” the report said.

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