A plunge in stock market performance and weak economic data took a toll on Taiwanese wealth generation in 2015. However, a robust equity market recovery in 2016 has boosted the retail savings and investment market, with gains of almost 10% on the Taiwan Futures Exchange in the first nine months of 2016. Between 2016 and 2020, Taiwans retail investment market is forecast to record a compound annual growth rate (CAGR) of 4.9%.
- Affluent individuals account for 25.9% of the population, with HNW individuals constituting just 0.45% of the total adult population. Affluent individuals hold 78% of the total wealth, or $987.2bn, of which the HNW share is around 29.8%.
- Over the forecast period, all asset classes are set to exceed economic growth. However, deposits are likely to decline as a proportion of savings, while investment holdings and equity mutual funds have recovered from a weak 2015 to see strong growth. Direct equity holdings will see the most growth over the next five years, recording a CAGR of 7.5%.
- Constituting only 0.9% and 2.6% respectively, bonds and mutual funds are strongly underrepresented in retail investors' portfolios, and despite above market growth neither are likely to become important parts of portfolios anytime soon.
- HNW individuals in Taiwan allocate around 15% of their investible assets outside of traditional investments, mostly in property and alternatives. In 2016, life insurance also became a significant facet of investor portfolios, accounting for around 25%. Of alternative investments, property remains the most popular asset class, with new regulations pushing real estate investment trusts into the spotlight.
Verdict Financials Wealth in Taiwan: Sizing the Market Opportunity 2016 analyzes the Taiwanese 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 Taiwanese 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 Taiwan 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 Taiwan.
- Evaluate your HNW proposition by understanding how the Taiwanese tax system will impact HNW clients.
- Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
Table of Contents
Economic concerns suppressed retail investment holdings growth in 2015
Critical success factors
SIZING AND FORECASTING THE TAIWANESE WEALTH MARKET
HNW individuals are growing their wealth faster than the mass affluent segment
Affluent individuals in Taiwan account for 25.9% of the total adult population
In Taiwan affluent individuals hold 78% of liquid assets
Taiwanese HNW individuals held $294.1bn in liquid assets in 2015
DRIVERS FOR GROWTH IN THE TAIWANESE WEALTH MARKET
The pace of growth of Taiwan's retail investment market is picking up
After a tough 2015, the retail investment market is set to make a comeback
Despite the stock market recovery, investors are likely to remain cautious about returning to equities
Wealth is forecast to outperform market growth in spite of the poor economic outlook
Retail deposits have fallen slightly as the equity market improves
Deposits are expected to achieve a CAGR of 4.2% between 2016 and 2020
Taiwan's bond market struggled in 2015, although positive steps could still push it in the right direction
Retail bond holdings form a minor part of portfolios
Taiwan's growing importance as a renminbi center is likely to be positive for the whole market
Equities and mutual funds will be boosted by the 2016 boom in the stock market
The stock market is recovering after a tough 2015
Retail equity investments are expected to recover and grow in 2016
Mutual funds' growth will be boosted by the increasing popularity of ETFs
HNW INVESTMENT PREFERENCES
HNW individuals hold 15% of their investible assets in non-traditional investments
Life insurance is increasingly important in the Taiwan market
Of non-traditional asset classes, HNW investors prefer property
Structured products are one of the most popular asset classes in Taiwanese alternative investment portfolios
Funds are the most popular method of accessing commodity investments among Taiwanese HNW investors
Offshore capability is key for wealth managers serving Taiwanese HNW investors
Taiwanese HNW individuals primarily invest offshore to achieve tax advantages
The majority of Taiwanese HNW offshore wealth is held in booking centers in Asia Pacific and offshore
Taiwan has a relatively high tax environment, which will continue to contribute to the popularity of offshore investments
Abbreviations and acronyms
Measures of growth
Verdict Financial's 2016 Global Wealth Managers Survey
Verdict Financial's Global Wealth Model methodology
Verdict Financial's Global Retail Investments Analytics methodology
About Verdict Financial
List of Tables
Table 1: Taiwan's personal income tax rates, tax year 2016
Table 2: Inheritance tax allowances, 2015
Table 3: Inheritance tax allowances for properties, 2015
Table 4: Total adult population segmented by asset band (000s), 2011-15
Table 5: Total adult population segmented by asset band (000s), 2016f-20f
Table 6: Total retail liquid assets by asset band, 2011-15
Table 7: Total retail liquid assets by asset band, 2016f-20f
Table 8: The US dollar exchange rate, December 31, 2014 and December 31, 2015
List of Figures
Figure 1: Affluent individuals account for 25.9% of Taiwan's population
Figure 2: Affluent individuals hold over 78% of liquid assets in Taiwan
Figure 3: Retail investments have staged a strong recovery in 2016
Figure 4: Investors remain wary of returning to equity investments
Figure 5: All asset classes will outperform the market over the next five years
Figure 6: Deposits are expected to outperform GDP growth over the forecast period
Figure 7: Bond holding growth will slow, but will continue to outperform GDP and wages
Figure 8: TAIEX lost 10% in 2015
Figure 9: Taiwanese equities recovered strongly in 2016
Figure 10: Onshore retail and institutional funds are heavily invested in money market products
Figure 11: Property REITs are by far the most popular alternative investment vehicle
Figure 12: Over a third of HNW wealth is held outside Taiwan
Figure 13: Tax efficiency is the primary driver behind offshore investment
Figure 14: Hong Kong leads the way for offshore investment bookings
Figure 15: As of June 2016 Taiwan has 30 DTCs in force
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