According to a new study by Julius Baer, Japan is now at a ‘pivotal juncture’ between domestic and external influences that will provide a fertile ground for wealth creation.
The inaugural Wealth Report: Japan from the Swiss private bank addressed to Japan as ‘a revitalised economy with compelling prospects’. The country is already home to over two million High Net Worth Individuals (HNWIs), having the minimum equivalent of $1 million in investable wealth.
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The report examines domestic drivers of growth as a result of the ‘Abenomics’ phenomenon and how the strong growth in the four ASEAN countries (Malaysia, Thailand, Indonesia, and the Philippines) can ‘intertwine to pull the Japanese economy out of a legacy of deflation’.
According to the Wealth Report: Japan’s Lifestyle Index, experts at Julius Baer forecast Japan to boost both basic and luxury spending. In 2013 the country generated close to 9% of the total global private consumption.
More specifically, in local currency terms, the average price increase for the Tokyo subset of the Lifestyle Index rose 1.6% in 2014. The largest contributors to this rise came from university fees (+44%), boarding school fees (+28%), and cigars (+18%), the report said. A preference for domestic universities as opposed to overseas schools stood out in Julius Baer’s survey, with an overwhelming 74% of respondents indicating such a preference, the highest among its counterparts in Asia, the report showed.
On the other hand, luxury property prices have risen by 11% in Japan since 2013, while they have fallen 15% in Hong Kong. Contrary to Tokyo, the Lifestyle Indices for Hong Kong and Singapore dipped by 1% and 3%, respectively, the report also revealed.
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By GlobalDataIn terms of generational transfer of wealth, skills, values, or knowledge, Japanese parents rated personal values as the most desirable element to pass on, and also the most difficult one to do so, said the Julius Baer report.
However, among Ultra High Net Worth families in general the continual transfer of wealth is often unsuccessful. According to a US research by Williams and Preisser 70% of families in their study failed to transfer their wealth successfully to the next generation.
In Asia, Julius Baer employs more than 1,000 across Hong Kong, Jakarta, Singapore, Shanghai and Tokyo. The firm is currently in the final stages of integrating Merrill Lynch’s International Wealth Management business outside the US.
