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SCB Julius Baer, the joint venture between Siam Commercial Bank and Julius Baer, has released its inaugural edition of the Wealth Report Thailand. The report focuses on the wealth management landscape in Thailand and takes an exclusive look at Thai high net worth individual (HNWI) clients’ attitudes towards wealth and investing, both onshore and offshore. The report also examines the outlook for the domestic economy and tracks the luxury expenditure trends of Thailand’s HNWIs.
The SCB Julius Baer Wealth Report Thailand released today found that Thai HNWI wealth is projected to grow at a five-year CAGR of 9.9% from 2015-2020E to USD 401.2 bn. Drivers behind this growth include steadily growing household wealth, economic development and a buoyant property and stock market. The SET Index is forecast to reach 1,800 points by the third quarter of this year, while the country remains fiscally strong.
“The Thai wealth market has grown tremendously in recent years and this trend is expected to continue as the overall population grows wealthier. We see vast potential for the market as compared to more mature markets in the region, as Thai HNWIs grow more sophisticated and regulations and policies are liberalized,” said Jiralawan Tangitvet, Chief Executive Officer, SCB Julius Baer.
The report also features the first survey of its kind on the Thai onshore wealth market. The survey findings indicate that Thai HNWIs have an overall preference for wealth creation over wealth preservation. They share a similar portfolio allocation to Global HNWIs in liquid assets such as stocks, bonds and funds. However, the majority of these assets are in onshore investment products. Thai HNWIs are not as invested in Real Estate and Alternatives with a portfolio allocation of 7% and 6%, respectively, in these asset classes as compared to Global HNWIs’ 17% and 9%, representing an untapped opportunity.
“Our decision to commission an in-depth client survey underscores our commitment to deliver the finest product and service offering in Thailand. Our research shows that Thai HNWIs are underserved and possess a keen interest in offshore investments. We believe our newly established joint venture is well positioned to help our clients achieve their long-term goals and objectives,” Jiralawan Tangitvet concluded.
The SCB Julius Baer Wealth Report Thailand covers significant findings:
- Thai HNWIs have a similar portfolio allocation to liquid assets (stocks, bonds and funds) as their global counterparts albeit mostly onshore. However, they are less invested in real estate and alternatives.
- Slightly less than half of respondents hold at least one offshore investment. Of these, equities and fixed income are most widely held in investment portfolios, followed by funds and direct real estate.
- Changing customer behavior towards investment, low penetration of investment products (especially offshore) and tax and regulatory changes underpin the opportunities to tap on the fast growing Thai wealth market.
- Three distinct client profiles were identified from the survey – the millennial entrepreneur (up to 40 years old), the mature investor (41-60 years old) and the techie retiree (older than 60 years).
- The millennial entrepreneur places a relatively high importance on digital financial services, and prefers wealth creation over wealth preservation owing to her growth-oriented mindset. Surprisingly, compared to the other two profiles, they have the least understanding of how to gain access to offshore investment opportunities.
- The mature investor is the most educated of the three profiles and has a slightly better understanding of how to access offshore investments. They currently have the greatest exposure to offshore assets.
- The techie retiree is the least familiar with offshore investments and expresses the greatest desire to have their money professionally managed. Interestingly, they are the most social media savvy of the three profiles.
- The report also focuses on Thailand’s ranking in the 2018 Julius Baer Lifestyle Index, which is based on a basket of 22 luxury goods and services that represent discretionary purchases of HNWIs in the region.
- Bangkok maintained its status as a relatively inexpensive city for shoppers, keeping at 7th place among 11 Asian cities from 2016 to 2018 in USD terms.
- Luxury goods are more expensive in Thailand due to excise taxes on some imported luxury products, whereas luxury services are generally well-priced due to lower operating costs in Thailand. Throwing an opulent wedding is the cheapest in Bangkok. However, shoppers undergoing lasik surgery, fitting for a men’s suit, or purchasing a box of cigars would have to pay the most extravagant prices in the region.
Notes to editors:
- HNWIs are defined as people with net investable wealth of USD 1 million or more, excluding property that is their main residence.
- 2018 data for the Julius Baer Lifestyle Index were collected during the period of June 2017 to July 2018.