Benson Shum, VP Capgemini China Market Sizing Economic Review - PowerPoint PPT Presentation

Benson Shum, VP Capgemini China

Market Sizing Economic Review Asset Allocation Spotlight Capgemini Global Financial Services in collaboration with 2

Market Sizing Capgemini Global Financial Services in collaboration with 3

Executive Summary • In 2008, Asia-Pacific (APAC) High net worth individual (HNWI) population and wealth dropped below 2006 levels: • Asia- Pacific’s HNWI population declined 14.2% from 2007 levels, and HNWI wealth declined 22.3% • Hong Kong suffered by far the most severe percentage drop in its HNWI population (down 61.3%) as well as HNWI wealth (down 65.4%) • Asia-Pacific Ultra-HNWI (UHNWI) population (down 29.6%) and wealth (down 35.1%) fell more compared to the global decline in UHNWI population (down 24.6%) and wealth (down 24.0%) • In 2008, Asia-Pacific HNWI Population and Wealth is Still Concentrated: • Japan, China and Australia still accounted for over three quarters (77.4%) of Asia- Pacific’s HNWI population, up slightly from 2007 (74.9%) • Asia-Pacific HNWI wealth remains concentrated with Japan and China commanding over 65% of the HNWI wealth Note: HNWIs hold at least US$1 million in financial assets excluding collectibles, consumables, consumer durables and primary residences Ultra-HNWIs hold at least US$30 million in financial assets excluding collectibles, consumables, consumer durables and primary residences Capgemini Global Financial Services in collaboration with 4

In 2008, the number of HNWIs in Asia-Pacific dropped 14.2% to 2.4m, lower than the 2006 HNWI population Number of Asia-Pacific HNWIs by Market (‘000s) , 2006-2008 Growth (2006-07): 8.7% Growth (2007-08): -14.2% 3,000 Total 2.8 m Annual Change Total 2.6 m 149 24 2007 - 2008 Total 2.4 m 96 117 44 2,500 71 20 88 78 138 36 66 37 19 123 Number of HNWIs ('000s) 68 42 118 Other Countries -7.4% 100 58 61 99 169 84 2,000 -20.4% Indonesia 157 105 129 -61.3% Hong Kong 413 343 364 -4.5% Thailand 1,500 -18.0% Taiwan -21.6% Singapore 1,000 -31.6% India -11.0% 1,517 1,484 South Korea 1,366 -23.4% Australia 500 -11.8% China -9.9% Japan 0 2006 2007 2008 Hong Kong (-61.3%) and India (-31.6%) witnessed the largest declines in HNWI population in the Asia-Pacific region. Note: All chart numbers are rounded Source: Capgemini Lorenz curve analysis, 2009 Capgemini Global Financial Services in collaboration with 5

Asia-Pacific HNWI wealth followed a similar pattern and fell below 2006 levels as it eroded by 22.3% to $7.4T Asia-Pacific HNWI Financial Wealth by country (US$ billions), 2006-2008 Growth (2006-07): 12.5% Total Growth (2007-08): -22.3% US$9.5T 10,000 Total Annual Change US$8.4T 807 2007 - 2008 Total HNWI Financial Wealth (US$ billions) 85 234 US$7.4T 626 8,000 523 72 215 225 386 469 319 671 Other Countries 182 -16.9% 331 437 62 176 265 Indonesia 181 -27.1% 540 351 190 6,000 272 498 276 Taiwan -24.8% 310 380 Hong Kong -65.4% 2,109 1,725 Thailand -15.6% 1,672 4,000 Singapore -29.4% South Korea -13.4% India -29.0% 2,000 3,815 3,695 3,179 Australia -29.7% China -20.7% Japan -16.7% 0 2006 2007 2008 Hong Kong (-65.4%), Australia (-29.7%), and Singapore (-29.4%) were the three countries in Asia-Pacific that witnessed the largest erosions of wealth. Note: All chart numbers are rounded Source: Capgemini Lorenz curve analysis, 2009 Capgemini Global Financial Services in collaboration with 6

In 2008, Japan, China and Australia still accounted for over three quarters (77.4%) of Asia- Pacific’s HNWI population HNWI Population by Country (‘000s), 2008 Japan accounts for 56.8% of the Asia-Pacific HNWI population (54.1% in 2007) 1,600 1,517 2007 2008 1,366 Number of HNWIs (‘000s) 1,200 77.4% of total Asia-Pacific HNWI population (74.9% in 2007) 800 413 364 400 169 129 123 118 105 96 84 78 61 71 58 44 42 37 24 19 0 Hong Kong China Australia India Indonesia Japan South Korea Singapore Thailand Taiwan In 2008, HNWI population in India dropped below South Korea’s HNWI population, while Hong Kong’s HNWI population dropped below that in Thailand. Note: Due to model upgrades, the number of HNWI’s for each market has been updated slightly for 2007 Source: Capgemini Lorenz curve analysis, 2009 Capgemini Global Financial Services in collaboration with 7

Economic Review Capgemini Global Financial Services in collaboration with 8

Executive Summary • The Asia-Pacific region was not spared from the effects of the global financial crisis. The trade and financial flows have inextricably integrated the Asia-Pacific region into the world economy and the region began to suffer as the financial crisis progressed. • The key drivers of wealth were hit hard by the crisis. GDP growth slowed down across the Asia- Pacific region in 2008, and private consumption dropped across the region as consumer confidence waned in late-2008. Market capitalization sank around 50% and housing prices also dropped across the region. • Asia-focused investments suffered significant losses in 2008 and investors moved to safer alternatives. Asia-focused hedge funds lost 21% of their value in 2008, which resulted in closure of large number of funds. Uncertainty in the global economy boosted demand for gold in a flight to safety by investors. • The region is likely to recover faster than the global economy. Stronger-than-average growth in emerging Asian economies, notably China and India, is likely to lessen the effects of the global economic crisis on the region in 2009. • Domestic-demand growth is expected to accelerate the pace of the recovery. The region is expected to focus on domestic-demand growth by implementing various measures to stimulate domestic consumption, lessen the region’s reliance on exports and accelerate the pace of recovery. Capgemini Global Financial Services in collaboration with 9

Growth Slowed Down Across Asia Pacific in 2008, and Even Contracted in Some Countries in Industrialized Asia Real GDP Growth Rates (%) 2007-2009F Emerging Asia a Newly Industrialized Economies a Industrialized Asia a 15 13.0 9.0 9.1 10 8.0 7.8 6.3 6.4 6.1 6.0 5.7 5.5 5.1 4.9 4.0 5 3.1 2.6 2.6 2.5 2.4 2.2 2.1 (%) 1.2 0.1 0 -0.4 -0.7 -1.0 -2.1 -5 -4.4 -4.5 -5.4 -6.5 -6.8 -8.6 -10 China India Indonesia Thailand South Korea Hong Kong Taiwan Singapore Australia New Zealand Japan 2007 2008 2009F Emerging Asia was a large contributor of growth for the Asia Pacific Region in 2008, which was mainly driven by China and India. Source: Economist Intelligence Unit, Aug 2009 Note a : Composition of “Emerging Asia”, “Newly Industrialized Economies” and “Industrialized Asia” is as per International Monetary Fund definitions Capgemini Global Financial Services in collaboration with 10

The Global Crisis Hit Asia-Pacific Hard, with Market Capitalization Dropping by an Average of 48.6% for the Region, in 2008 Market Capitalization - Change Rates (%) 2006-2007, 2007-2008 291.0 300 The Asia-Pacific region The Asia-Pacific region 200 witnessed an average growth witnessed an average drop of of 50.4% in market 48.6% in market capitalization capitalization in 2007 in 2008 (%) 118.4 100 54.8 52.4 40.3 40.6 34.5 18.5 11.6 6.0 0 -6.1 -28.1 -46.6 -46.3 -47.7 -49.9 -49.0 -50.9 -53.3 -58.1 -60.3 -64.1 -100 India China South Korea Indonesia Singapore Hong Kong New Zealand Thailand Australia Taiwan Japan 2006-07 2007-08 In 2008, India and China suffered large drop in Market Capitalization at 64.1% and 60.3% respectively, eroding significant amount of wealth. Source: World Federation of Exchanges, June 2009 Capgemini Global Financial Services in collaboration with 11

Asia Pacific Region is Likely to Experience Lesser Contraction Compared to the World Economy in 2009 Real GDP Growth (%), 2009F-2010F 10 Industrialized Asia a Emerging Asia a Newly Industrialized Economies a 8.0 8.0 6.3 5.5 5 3.5 3.4 2.6 2.6 1.9 1.6 1.3 1.0 0.8 0.7 0.6 0.5 % 0 -0.4 -0.9 -2.1 -2.7 -5 -4.4 -4.5 -5.4 -6.5 -6.8 -8.6 -10 World Asia and China India Indonesia Thailand Hong Kong Singapore Taiw an South Korea Japan Australia New Australasia Zealand 2009F 2010F Growth in Emerging Asia is likely to lessen the effect of global economic crisis on the region in 2009, and will emerge as a key driver of growth in 2010. Source: Economist Intelligence Unit, Aug 2009 Note a : Composition of “Emerging Asia”, “Newly Industrialized Economies” and “Industrialized Asia” is as per International Monetary Fund definitions Capgemini Global Financial Services in collaboration with 12

Asset Allocation Capgemini Global Financial Services in collaboration with 13