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Market Research Report

Wealth in India: Sizing the Market Opportunity 2016

Published by GlobalData Product code 404553
Published Content info 42 Pages
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Wealth in India: Sizing the Market Opportunity 2016
Published: November 23, 2016 Content info: 42 Pages
Description

Summary

Driven by economic performance, over the past few years the Indian wealth market has impressed with strong growth rates, which are expected to continue to 2020. India currently holds the crown as the world's fastest growing major economy and, as such, it is beginning to positively distance itself from Brazil, Russia, and China. This, aligned with the substantial Indian population, underlines the huge potential of the market for wealth managers.

Key Findings

  • Affluent individuals represent just 0.8% of the adult population, holding 93.5% of liquid assets. This reflects the high levels of wealth inequality in the country. Both the number of affluent individuals and their assets are forecast to grow strongly to 2020.
  • Driven by a strong economic performance, the Indian retail savings and investments market will continue to exhibit rapid growth from 2016-20, with a compound annual growth rate (CAGR) of 11.8%. Assets will reach $2,361.7bn by the end of 2020.
  • Deposits and equities will be the major drivers of growth in the market to 2020 as a result of robust economic and stock market performance. The drive for greater financial inclusion will also increase the share of the market held by deposits.
  • Indian HNW individuals allocate 40.6% of their portfolios outside of traditional liquid asset classes, significantly above the global average. Direct property remains a key area of interest (38% of non-traditional assets), but private equity investment - particularly in start-ups and mid-stage companies - is gaining importance.
  • Indian HNW offshore allocation is broadly in line with the global average (19.2% vs 18.7%). This is primarily driven by the desire for geographic diversification, and concerns about local currency volatility.

Synopsis

Verdict Financial's "Wealth in India: Sizing the Market Opportunity 2016" report analyzes the Indian 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 Indian 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 Indian 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 the penetration of affluent individuals in India.
  • Evaluate your HNW proposition by understanding how the Indian tax system will impact HNW clients.
  • Review your offshore strategy by learning about HNW motivations for offshore investments and their preferred booking centers.
Table of Contents
Product Code: VF0045CI

Table of Contents

EXECUTIVE SUMMARY

  • The Indian wealth market remains one of huge potential
  • Key findings
  • Critical success factors

SIZING AND FORECASTING THE INDIAN WEALTH MARKET

  • Wealth in India is extremely concentrated at the top end
    • Affluent individuals account for just 0.8% of India's population
    • India's wealth is heavily concentrated; the affluent hold over 90% of liquid assets
    • NRIs hold a sizable proportion of onshore liquid assets

DRIVERS OF GROWTH IN THE INDIAN WEALTH MARKET

  • India's retail savings and investments market will continue to grow strongly
    • Strong economic performance will drive growth
    • The Indian retail savings and investments market is dominated by deposits and direct equity
    • Deposit and equity holdings will continue to grow fast
  • Deposits will continue to drive the overall retail savings and investment market
    • Financial inclusion is slowly increasing deposits
    • Falling interest rates and high inflation may reduce the appeal of deposits
  • The Indian stock market is fueling investment in both equities and mutual funds
    • The volatility of the BSE500 Index is reflected in equity and mutual fund assets
    • Equities and mutual funds are proving popular among retail investors
    • Fixed-income funds continue to dominate the mutual fund market
  • Bond investments are set to follow GDP rates, albeit at a lower level

HNW INVESTMENT PREFERENCES

  • Indian HNW individuals allocate over 40% of their portfolios outside of traditional liquid asset classes
    • Direct property remains important, but is losing some of its shine due to lower returns
    • Private equity investment is increasingly popular among HNW individuals
  • Offshore investment is of secondary importance to Indian HNW individuals
    • Indian HNW individuals use offshore centers for geographic diversification and to protect against currency volatility
    • The US and the UAE account for almost 70% of offshore bookings in India
    • Taxation is relatively moderate in India, and is thus a limited driver for offshore holdings
    • The government faces an ongoing battle with tax evasion

APPENDIX

  • Abbreviations and acronyms
  • Supplementary data
  • Definitions
    • Affluent
    • Demat accounts
    • Domicile
    • Double tax convention (DTC)
    • FATCA
    • HNW
    • Liquid assets
    • Mass affluent
    • Onshore
    • Residency
    • Exchange of information
    • Tax information exchange agreement (TIEA)
  • Methodology
    • Verdict Financial's 2016 Global Wealth Managers Survey
    • Verdict Financial's Global Wealth Model methodology
    • Global Retail Investments Analytics methodology
    • Exchange rates
  • Bibliography
  • Further reading
  • About Verdict Financial
  • Disclaimer

List of Tables

  • Table 1: India: tax rates by income band, 2016-17
  • Table 2: India: adult population segmented by affluent category and asset band (000s), 2011?15
  • Table 3: India: adult population segmented by affluent category and asset band (000s), 2016f?20f
  • Table 4: India: total onshore liquid assets segmented by affluent category and asset band ($bn), 2011?15
  • Table 5: India: total onshore liquid assets segmented by affluent category and asset band ($bn), 2016f?20f
  • Table 6: Euro-US dollar exchange rate, December 31, 2014 and December 31, 2015

List of Figures

  • Figure 1: Affluent individuals accounted for less than 1% of the total Indian adult population in 2015
  • Figure 2: Affluent Indians hold over 90% of liquid assets
  • Figure 3: NRIs account for an increasing percentage of onshore deposits
  • Figure 4: The Indian retail savings and investments market will continue to grow strongly to 2020
  • Figure 5: Deposits are forecast to increase their share of the retail savings and investments market to 2020
  • Figure 6: Deposits and equities will be the major drivers of growth in the Indian retail savings and investments market to 2020
  • Figure 7: Deposit growth rates will continue to outpace real GDP until 2020
  • Figure 8: The Indian stock market is dominated by the finance sector
  • Figure 9: Direct equity and mutual fund investment is strongly correlated to the performance of the BSE500
  • Figure 10: Indian mutual funds are predominantly debt-oriented
  • Figure 11: Retail bond growth will continue to disappoint, lagging behind real GDP growth
  • Figure 12: Direct property accounts for over a third of Indian HNW illiquid investments
  • Figure 13: Indian HNW offshore allocation is broadly in line with the global average
  • Figure 14: Geographic diversification and currency volatility are the key drivers for offshore investment among Indian HNW individuals
  • Figure 15: The US and the UAE form the most important offshore booking centers for Indian HNW clients
  • Figure 16: India has a considerable number of TIEAs and DTCs in force, and aims to expand these over the coming years
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