Tapping the Malaysian Wealth Market

Tapping the Malaysian Wealth Market

Introduction
 
This report looks at the size and composition of the wealth market in Malaysia, analyzing the opportunities that exist for regional and local players and providing the best strategies for entry. Competitive dynamics and customer tendencies are analysed, including an insight into the offshore nature of investors in these markets.
 

 
Scope
 
Macroeconomic and savings and investment data collected directly from governmental sources such as the Bank Negara Malaysia
 
Insight into the Malaysian financial services market obtained through in-depth interviews with the main wealth managers and private bankers
 
Sizing and forecasting of mass affluent and high net worth individuals generated from Datamonitor's proprietary Global Wealth Model
 
Highlights
 
Much of Malaysia's economic growth in the 1990s was driven by strong foreign direct investments (FDI). However, since 2000, Malaysia has faced challenges in attracting FDI which include both domestic and international factors.
 

 
The majority of competitors targeting affluent individuals are competing in the mass affluent segment and have relatively simplistic product and service propositions.
 

 
A much more developed service line than wealth management is bancassurance, which all of the commercial banks offer in some form or another, either distributing their own products or those of third parties.
 

 
Reasons to Purchase
 
This report forecasts the market to 2008, allowing competitors to plan strategies on the basis of detailed market information
 
Allows wealth managers to monitor threats and opportunities posed by their main competition
 
Helps competitors plan products and services by giving key information on their customers' financial services preferences

TABLE OF CONTENTS
 
CHAPTER 1 INTRODUCTION 8
 
What is this report about? 8
 
Who is the target reader? 9
 
How to use this report 9
 
CHAPTER 2 MALAYSIA 10
 
Introduction and macroeconomic background 10
 
Population and GDP 10
 
Inflation and interest rates 12
 
FDI 13
 
Retail Savings & Investments 14
 
Islamic assets and liabilities 15
 
Affluent individuals 17
 
Offshore tendency 17
 
Affluent individuals and their assets 18
 
Regulatory environment 21
 
Financial services 21
 
Capital markets 22
 
Banking structure 24
 
Local players 24
 
Foreign entrants 25
 
Onshore services 25
 
Offshore services 28
 
Future outlook 30
 
Customer outlook 30
 
Wealth market outlook 33
 
Data 35
 
CHAPTER 3 APPENDIX 40
 
Definitions 40
 
AAGR 40
 
CAGR 40
 
Gini index 40
 
Liquid assets 41
 
Liquid asset bands 41
 
Research methodology 41
 
The Global Wealth Model 42
 
The UK sub model 42
 
Asia-Pacific sub model 42
 
Forecasting methodology 43
 
Datamonitor’s wealth numbers compared with others’ numbers 43
 
Bespoke Wealth Market Sizing 44
 
Further reading 45
 
Datamonitor Asia-Pacific Wealth Reports 45
 
Datamonitor Asia-Pacific Insight Reports 45
 
Datamonitor Global Wealth Service: Competitor Tracking 45
 
Datamonitor Financial Services Consulting 46
 
Asia-Pacific contacts 46
 

 

 
LIST OF TABLES
 
Table 1: Datamonitor’s wealth market coverage 8
 
Table 2: The local players have a large share of the Malaysian banking market 24
 
Table 3: Services offered by financial institutions in Malaysia 30
 
Table 4: GDP and S&I growth over the 1998-2003 period 35
 
Table 5: Interest rates, inflation and adult population, 1998-2003 35
 
Table 6: Components of GDP, 2003 35
 
Table 7: Malaysian retail liquid assets, 1998-2003 36
 
Table 8: Number of Malaysian mass affluent individuals, 1998-2003 36
 
Table 9: Liquid assets of Malaysian mass affluent individuals, 1998-2003 36
 
Table 10: Number of Malaysian HNW individuals, 1998-2003 37
 
Table 11: Liquid assets of Malaysian HNW individuals, 1998-2003 37
 
Table 12: Forecasted retail liquid assets, 2003-2008 37
 
Table 13: Forecasted number of Malaysian mass affluent individuals, 2003-2008 38
 
Table 14: Forecasted liquid assets of Malaysian mass affluent individuals, 2003-2008 38
 
Table 15: Forecasted number of Malaysian HNW individuals, 2003-2008 38
 
Table 16: Forecasted liquid assets of Malaysian HNW individuals, 2003-2008 39
 
Table 17: Wealth markets that have been modeled using the Global Wealth Model 44
 

 

 
LIST OF FIGURES
 
Figure 1: Major components of Malaysian GDP, %, 2003 12
 
Figure 2: Malaysia’s interest rates have fallen in recent years alongside US rates 13
 
Figure 3: Savings and investment assets in Malaysia have exhibited strong growth over the last five years 14
 
Figure 4: Deposits were the slowest growing investment vehicle for Malaysian investors between 1998 and 2003 15
 
Figure 5: The liquid wealth of mass affluent individuals in Malaysia grew at a rate of 8.6% CAGR over the 1998-2003 period 18
 
Figure 6: The number of Malaysian HNW individuals grew by 9.3% AAGR over the 1998-2003 period 19
 
Figure 7: The Islamic banking logo, which must be used alongside all Islamic products in Malaysia 27
 
Figure 8: HNW individuals will own more than a third of total retail liquid wealth in 2008 31
 
Figure 9: The mass affluent population will grow at a rate of 7.6% over the 2003-2008 period 32
 
Figure 10: There will be 22,500 more high net worth individuals in Malaysia in 2008 than in 2003 33