Singapore's wealthy grew their riches by 10.5% from last year

Singapore

AMID mounting geopolitical tensions and sluggish growth, Singapore's richest are getting richer, generating their wealth from feeding the robust demand for goods and services of Asia's growing middle class.

Across the rest of the world, however, billionaire wealth is dipping.

Fresh figures from a report by UBS and PwC on Friday show that the total wealth of Singapore's 22 billionaires climbed 10.5 per cent last year to US$71.3 billion.

This comes even as the combined fortunes of the world's ultra-rich shrank for the first time in a decade, down US$388 billion to US$8.54 trillion in 2018.

Singapore billionaires welcomed into their fold two new members, who have a combined net worth of US$8.6 billion, said the report.

Singapore's growth was in part lifted by the consumer and retail sector, which more than doubled year on year to account for 20 per cent of the country's billionaire wealth. Although real estate retains the largest share of the billionaire wealth pie (41 per cent), retail and consumer firms have been reaping the benefits of rising demand by the region's middle class.

Ravi Raju, UBS group's managing director and head of ultra high net worth for the Asia-Pacific, told reporters on Friday: "As the middle class (population) rises in countries like Indonesia, China and India, the consumer and retail industry is going to grow hugely - not just in Singapore, but also in China, Indonesia and India. These are areas where the middle class is going to consume from, and if you're in that space, there's going to be a lot of wealth creation."

The fortunes of Indonesia's wealthiest individuals grew 8.3 per cent to US$78.5 billion last year, while Thailand's wealthy got 1.6 per cent richer to US$94.8 billion.

UBS and PwC analysed the wealth of 2,101 billionaires across 43 markets and found that companies helmed by the ultra-rich in the Asia-Pacific were more profitable than those run by their peers over the past decade.

PwC private banking leader Julia Leong clarified that a billionaire has to control at least 20 per cent of the company or prove that he or she "exercises significant influence" over it for the company to be defined as "billionaire-controlled".

Billionaire-controlled businesses in the region, which include both private and listed companies, achieved an average return on equity (ROE) of 15.5 per cent in the last 10 years - higher than the MSCI ACWI Index's average of 11.3 per cent.

Among the region's star performers, the consumer and retail industry trailed "closely" behind the health industry, which reaped the highest average ROE of 19.6 per cent, said the report.

Over the same period, publicly listed billionaire-controlled companies in the region clocked an annualised average return of 18.3 per cent, outperforming the MSCI ACWI Index (9.1 per cent), said the report.

Ms Leong, asked why billionaire-controlled companies did better than others, said billionaires typically read the situation in the market well, and can therefore generate superior returns. "They take smarter risks and are very focused."

She added that self-made billionaires typically adopt long-term growth strategies, which yield superior, more stable returns.

"They do business not solely for the purpose of financial performance, but are also driven by their innate passion to make a difference," she said.

A KPMG report in May noted that the average revenue growth for long-term oriented companies was 6.1 per cent, compared to 4.2 per cent for other companies over the 15 years between 2003 and 2017.