KUALA LUMPUR • Asia-Pacific millionaires are set to become the world's richest this year, a report said yesterday, driven by wealthy individuals in India and China.
The combined wealth of Asia-Pacific's super-rich will surpass its 2014 total of US$15.8 trillion (S$22.1 trillion) and overtake that of their North American counterparts, who currently form the world's richest group with a shared wealth of US$16.2 trillion last year, the study said.
However, two of South-east Asia's richest businessmen are feeling the pinch, after loading their business empires up with cheap US currency debt even as the dollar strengthens. Mr Anthoni Salim, who controls the First Pacific conglomerate, and Mr T. Ananda Krishnan, a major shareholder of Malaysian mobile phone operator Maxis, are feeling the pinch as the rupiah and the ringgit slump.
The duo's companies have among the most foreign-currency debt in their respective countries, with dollar liabilities totalling at least US$3.8 billion for Mr Salim and some US$2.3 billion for Mr Krishnan, data compiled by Bloomberg shows.
While the lessons of the 1998 meltdown have prompted both tycoons to take out currency hedges and seek to balance cash flows and liabilities, concern over their foreign debts is weighing on the two groups' shares and bonds.
Although Hong Kong-listed First Pacific stock is down 38 per cent this year, its bonds are still trading above par. The pain may be about to worsen as traders price in a 62 per cent chance the US Federal Reserve will raise interest rates by December, with 32 per cent saying a rise could come as early as this week.
"Without prudent foreign exchange risk management, a company would have increasing interest payments in local currency, a deteriorating credit profile and rising hedging costs," said Mr Mark Yu, a money manager at Atlanta-based Invesco Advisers, without referring to any specific Asean borrower.
Pressure will let up in the near term, considering that "the Fed is going to hike rates, global emerging market economic growth is slowing" and a more flexible yuan fixing will increase regional currency volatility, he said.
Since China devalued the yuan in August, Malaysia's ringgit has weakened 7.6 per cent, making it the worst-performing currency in Asia ahead of Indonesia's rupiah, which is down 6.1 per cent.
The Philippine peso has weakened 4.3 per cent this year, 2 per cent of that since the depreciation.
The research by computer services consultancy Capgemini and RBC Wealth Management said the Asia-Pacific region already had the largest number of high net worth individuals (HNWIs), with 4.69 million in 2014 against 4.68 million in North America. HNWIs are those with investible money of at least US$1 million apart from the value of their homes and other collectibles.
"Looking further ahead, HNWI wealth is expected to expand more in the Asia-Pacific than in any other region of the world, with much of the new wealth expected to come from the emerging economies of China, India, Indonesia and Thailand," the firms' Asia-Pacific Wealth Report 2015 said.
China had 890,000 millionaires with a total wealth of US$4.5 trillion in 2014, up 17.5 per cent and 19.3 per cent, respectively, from a year earlier. Globally, India recorded the fastest pace of growth in the number of millionaires - 26.3 per cent to 198,000 - while total wealth surged 28.2 per cent to US$785 billion, the report added.
The "Asia-Pacific continues its tremendous run in wealth creation and doesn't appear to be slowing down anytime soon", said RBC Wealth Management's Asia head Barend Janssens. He added that "despite some recent economic issues, the region's wealth is expected to lead global growth".
BLOOMBERG, AGENCE FRANCE-PRESSE