Asia's savers 'not working their cash'

HONG KONG • Asia's legendary savers are missing out on greater wealth by being too conservative, says a study by Standard Chartered released yesterday.

An average of 39 per cent of "emerging affluent" individuals in seven Asian countries rely on savings accounts to meet their top savings goal, while just 18 per cent use investments in equities, data in the survey shows.

"What came out in the study, which is surprising, is the conservative nature of many of the emerging affluent," said Ms Karen Fawcett, StanChart's retail banking head.

"We're suggesting that with a little more advice, they could be making more money from their hard-earned savings."

The most extreme example of a cautious approach is from Pakistan, where 50 per cent of those polled said they keep their savings at home in cash, avoiding the banking system altogether, according to the report.

Banks from StanChart to HSBC are seeking to tap into burgeoning middle-class wealth to revive earnings hobbled in recent years by mounting capital charges as well as regulatory and legal costs.

The "emerging affluent" segment is one of the pillars of Ms Fawcett's digital-driven strategy to expand StanChart's retail business, which accounted for about a third of the lender's global operating income last year. All but 18 per cent of the retail division's US$4.7 billion (S$6.5 billion) of income last year came from Asia, the bank's annual report shows.

Gross savings in East Asia and the Pacific amounted to 45 per cent of the region's gross domestic product in 2015, more than 22 per cent for the European Union and 19 per cent in North America, according to World Bank figures.

Different income ranges were applied to the Asian countries in the StanChart study, conducted by research firm GlobeScan.

Respondents from China, for example, came from households with gross monthly incomes of 20,000 yuan to 40,000 yuan (S$4,000 to S$8,000), while in Singapore, the range was S$5,000 to S$16,000.

Ms Fawcett defines emerging affluent as a consumer class that is able to set aside money each month to build savings for future goals. By switching from a basic savings approach to a "low-risk wealth-management investment strategy", savers could boost their returns over a 10-year period significantly, for example by as much as 86 per cent in Hong Kong, says the report.

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A version of this article appeared in the print edition of The Straits Times on April 25, 2017, with the headline 'Asia's savers 'not working their cash''. Print Edition | Subscribe