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Wealth in India: Sizing the Market Opportunity 2016

Published By :

Verdict Financial

Published Date : Nov 2016

Category :

Banking

No. of Pages : 42 Pages

Summary
Driven by economic performance, over the past few years the Indian wealth market has impressed with strong growth rates, which are expected to continue to 2020. India currently holds the crown as the worlds fastest growing major economy and, as such, it is beginning to positively distance itself from Brazil, Russia, and China. This, aligned with the substantial Indian population, underlines the huge potential of the market for wealth managers.

Key Findings
- Affluent individuals represent just 0.8% of the adult population, holding 93.5% of liquid assets. This reflects the high levels of wealth inequality in the country. Both the number of affluent individuals and their assets are forecast to grow strongly to 2020.

- Driven by a strong economic performance, the Indian retail savings and investments market will continue to exhibit rapid growth from 201620, with a compound annual growth rate (CAGR) of 11.8%. Assets will reach $2,361.7bn by the end of 2020.

- Deposits and equities will be the major drivers of growth in the market to 2020 as a result of robust economic and stock market performance. The drive for greater financial inclusion will also increase the share of the market held by deposits.

- Indian HNW individuals allocate 40.6% of their portfolios outside of traditional liquid asset classes, significantly above the global average. Direct property remains a key area of interest (38% of non-traditional assets), but private equity investment particularly in start-ups and mid-stage companies is gaining importance.

- Indian HNW offshore allocation is broadly in line with the global average (19.2% vs 18.7%). This is primarily driven by the desire for geographic diversification, and concerns about local currency volatility.


Synopsis
Verdict Financials Wealth in India: Sizing the Market Opportunity 2016 report analyzes the Indian wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.

Specifically the report:

- Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.

- Analyzes which asset classes are favored by Indian investors and how their preferences impact the growth of the total savings and investments market.

- Examines HNW clients attitudes towards non-liquid investments such as property and commodities.

- Identifies key drivers and booking centers for offshore investments.


Reasons To Buy
- Benchmark your share of the Indian wealth market against the current market size.

- Forecast your future growth prospects using our projections for the market to 2020.

- Identify your most promising client segment by analyzing the penetration of affluent individuals in India.

- Evaluate your HNW proposition by understanding how the Indian tax system will impact HNW clients.

- Review your offshore strategy by learning about HNW motivations for offshore investments and their preferred booking centers.


Table of Contents
EXECUTIVE SUMMARY
The Indian wealth market remains one of huge potential
Key findings
Critical success factors
SIZING AND FORECASTING THE INDIAN WEALTH MARKET
Wealth in India is extremely concentrated at the top end
Affluent individuals account for just 0.8% of India's population
India's wealth is heavily concentrated; the affluent hold over 90% of liquid assets
NRIs hold a sizable proportion of onshore liquid assets
DRIVERS OF GROWTH IN THE INDIAN WEALTH MARKET
India's retail savings and investments market will continue to grow strongly
Strong economic performance will drive growth
The Indian retail savings and investments market is dominated by deposits and direct equity
Deposit and equity holdings will continue to grow fast
Deposits will continue to drive the overall retail savings and investment market
Financial inclusion is slowly increasing deposits
Falling interest rates and high inflation may reduce the appeal of deposits
The Indian stock market is fueling investment in both equities and mutual funds
The volatility of the BSE500 Index is reflected in equity and mutual fund assets
Equities and mutual funds are proving popular among retail investors
Fixed-income funds continue to dominate the mutual fund market
Bond investments are set to follow GDP rates, albeit at a lower level
HNW INVESTMENT PREFERENCES
Indian HNW individuals allocate over 40% of their portfolios outside of traditional liquid asset classes
Direct property remains important, but is losing some of its shine due to lower returns
Private equity investment is increasingly popular among HNW individuals
Offshore investment is of secondary importance to Indian HNW individuals
Indian HNW individuals use offshore centers for geographic diversification and to protect against currency volatility
The US and the UAE account for almost 70% of offshore bookings in India
Taxation is relatively moderate in India, and is thus a limited driver for offshore holdings
The government faces an ongoing battle with tax evasion
APPENDIX
Abbreviations and acronyms
Supplementary data
Definitions
Affluent
Demat accounts
Domicile
Double tax convention (DTC)
FATCA
HNW
Liquid assets
Mass affluent
Onshore
Residency
Exchange of information
Tax information exchange agreement (TIEA)
Methodology
Verdict Financial's 2016 Global Wealth Managers Survey
Verdict Financial's Global Wealth Model methodology
Global Retail Investments Analytics methodology
Exchange rates
Bibliography
Further reading
About Verdict Financial
Disclaimer


List of Tables
Table 1: India: tax rates by income band, 2016-17
Table 2: India: adult population segmented by affluent category and asset band (000s), 2011?15
Table 3: India: adult population segmented by affluent category and asset band (000s), 2016f?20f
Table 4: India: total onshore liquid assets segmented by affluent category and asset band ($bn), 2011?15
Table 5: India: total onshore liquid assets segmented by affluent category and asset band ($bn), 2016f?20f
Table 6: Euro-US dollar exchange rate, December 31, 2014 and December 31, 2015


List of Figures
Figure 1: Affluent individuals accounted for less than 1% of the total Indian adult population in 2015
Figure 2: Affluent Indians hold over 90% of liquid assets
Figure 3: NRIs account for an increasing percentage of onshore deposits
Figure 4: The Indian retail savings and investments market will continue to grow strongly to 2020
Figure 5: Deposits are forecast to increase their share of the retail savings and investments market to 2020
Figure 6: Deposits and equities will be the major drivers of growth in the Indian retail savings and investments market to 2020
Figure 7: Deposit growth rates will continue to outpace real GDP until 2020
Figure 8: The Indian stock market is dominated by the finance sector
Figure 9: Direct equity and mutual fund investment is strongly correlated to the performance of the BSE500
Figure 10: Indian mutual funds are predominantly debt-oriented
Figure 11: Retail bond growth will continue to disappoint, lagging behind real GDP growth
Figure 12: Direct property accounts for over a third of Indian HNW illiquid investments
Figure 13: Indian HNW offshore allocation is broadly in line with the global average
Figure 14: Geographic diversification and currency volatility are the key drivers for offshore investment among Indian HNW individuals
Figure 15: The US and the UAE form the most important offshore booking centers for Indian HNW clients
Figure 16: India has a considerable number of TIEAs and DTCs in force, and aims to expand these over the coming years

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