The performance of the Russian liquid wealth market is driven by strong growth in the retail savings and investments market. Given the predominant allocation in deposits, year-on-year growth has depended primarily on GDP and wage growth, which in turn have been influenced by commodity prices. While HNW wealth is forecast to record a compound annual growth rate (CAGR) of 12.3% between 2016 and 2020, the rest of the countrys affluent population is expected to develop at a slower pace.
- At the end of 2015, 1.79 million Russian adults could be considered affluent, representing just 1.6% of the adult population but accounting for 97% of total retail liquid assets. The total liquid wealth of affluent individuals amounted to $428bn, with HNW individuals holding $163bn (37.9%).
- The retail savings and investment market is forecast to grow by 9% in 2016 and 15% in 2017. From 2016 onward the macroeconomic environment is forecast to improve, and there should be a noticeable pickup in the retail savings and investment market.
- Russian investors allocate the largest proportion of wealth to deposits, constituting 93% of the average portfolio, while the countrys securities market remains underdeveloped.
- Russian HNW individuals allocate the majority of their wealth to traditional asset classes. Non-traditional investments account for only 14.5% of HNW portfolios.
- The main reasons Russian HNW individuals invest offshore are for a better range of investments and geographic diversification. The developed markets of Switzerland, the UK, and Singapore are preferred booking centers.
Verdict Financials Wealth in Russia: Sizing the Market Opportunity 2016 analyzes the Russian 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 Russian 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.
- Examines the tax landscape in Russia and future implications for investors.
- Benchmark your share of the Russian 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 penetration of affluent individuals in Russia.
- Evaluate your HNW proposition by understanding how the Russian tax system impacts HNW clients.
- Review your offshore strategy by identifying HNW motivations for offshore investments and their preferred booking centers.
Table of Contents
The Russian wealth market is set to record a CAGR of 12.3% to 2020
Critical success factors
SIZING AND FORECASTING THE RUSSIAN WEALTH MARKET
Affluent individuals will represent 3% of the adult population by 2020
97% of total liquid assets are held by affluent individuals
DRIVERS FOR GROWTH IN THE RUSSIAN WEALTH MARKET
Russia's retail savings and investments market is forecast to grow
Russia is dominated by deposits, reflecting an underdeveloped securities market
Deposits will continue to drive the Russian retail savings and investments market
Deposits growth will continue to outperform GDP
Interest rates have limited impact on demand for deposits
Oil producers and Western sanctions impact the Russian bond market
Steady growth is forecast for Russia's bonds
Equities and mutual funds are driven by the performance of the stock market
The Russian market has displayed favorable growth in 2016
Equity and mutual fund holdings have broadly followed the MICEX
HNW INVESTMENT PREFERENCES
HNW individuals allocate 14.5% of their investible assets outside of traditional investments
HNW investors allocate almost half of their non-traditional investments into property
Russian millionaires prefer alternatives to commodities
Russian HNW individuals have a significant propensity to invest offshore
The majority of offshore wealth is kept in bond investments
Access to a better range of investments is the major driver of investing offshore
Singapore, Switzerland, and the UK account for 71.5% of offshore bookings from Russia
Taxation in Russia
Abbreviations and acronyms
Exchange of information
2016 Global Wealth Managers Survey
Verdict Financial's Global Wealth Model methodology
Global Retail Investments Analytics methodology
About Verdict Financial
List of Tables
Table 1: Total Russian adult population by asset band (000s), 2011-15
Table 2: Total Russian adult population by asset band (000s), 2016f-20f
Table 3: Total Russian onshore liquid wealth segmented by asset band ($bn), 2011-15
Table 4: Total Russian onshore liquid wealth segmented by asset band ($bn), 2016f-20f
Table 5: Russian ruble-US dollar exchange rates, December 31, 2014 and December 31, 2015
List of Figures
Figure 1: Affluent individuals account for 1.6% of the Russian population
Figure 2: HNW individuals account for 36.7% of Russia's total liquid assets
Figure 3: Moderate growth is forecast for Russia's retail savings and investments market
Figure 4: Russian HNW individuals will increase deposit and decrease mutual fund allocations
Figure 5: Future growth will be driven by bonds and deposits
Figure 6: Steady GDP growth will contribute to more stable deposit holdings
Figure 7: Moderate growth is expected for Russia's bond market
Figure 8: MICEX index weightings are strongly concentrated around the energy sector
Figure 9: Stock market performance highly impacts the growth of equities and mutual funds
Figure 10: 85.5% of Russian HNW wealth is held in traditional liquid allocations
Figure 11: Russian HNW individuals hold nearly half of their liquid wealth offshore
Figure 12: Access to a better range of investments and geographic diversification are the leading motivations for offshore investments
Figure 13: Europe accounts for over three quarters of Russian HNW offshore bookings
Figure 14: Russia has DTCs with a vast number of countries around the world
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