It seems clear that the world’s largest group of wealthy people now live in Asia, no longer in North America.

The total wealth of high net worth individuals in Asia – defined as those with investable assets of $1 million or more – is projected to grow from $12 trillion in 2012 to nearly $16 trillion next year, according to a study by Royal Bank of Canada and Capgemini.

One consequence is that Singapore will overtake Switzerland as the wealth capital of the world within a decade, experts suggest.

Chinese investors have become the biggest foreign buyers of apartments in New York, London and Sydney.

The Economist Intelligence Unit says Asia will soon account for more than half the world market for luxury goods. Reuters reported recently that marina developers in Southeast Asia are “racing to build berths to address the latest problem vexing Asia’s rapidly-growing ranks of ultra-rich – insufficient parking lots for their superyachts.”

If you are attracted to the long-term theme of investing in exploding middle classes, focus on Asia.

According to the OECD, between now and 2030 the middle class won’t expand at all in the US or Europe and only moderately in Latin America. In Africa there will be substantial growth; in Asia, the middle-class population is set to explode.

“Demographics are superior to those in the West,” says analyst Tim Price of PFP Wealth Management, with “younger population motivated to work hard, in large part by the absence of the sort of social safety-net and associated welfare burden that exists in Western Europe.”

David Fuller's view

Here is On Target.

Before talking about Asia, I will point out that On Target commences with a fascinating and perhaps controversial (for some) article: “The Tribe with Winning Characteristics”.  Other features include a section on gold, “The Current Outlook for Shares”, “Investing for the Long-Term”, “The Great Tax Shambles”, “Why Lower Equity Returns Look Likely”, in reference to the US market, and the ever-interesting “Tailpieces” section.

Returning to the topic of Asia, as the region now holds the greatest amount of global wealth in addition to population, we can be sure that it will remain of considerable interest to international investment managers.  However, Greater Asia is a vast region of many interesting and diverse countries, from highly developed to emerging and also frontier economies.  International investors are unlikely to participate in all of these markets at the same time, so how will they select?

It will sometimes be on the basis of valuations, prospective GDP growth rates, currency considerations and aspects of governance, just as with any other region.  However, there is another important consideration which is easy to monitor and highly relevant for anyone interested seeking capital appreciation.  They will look at relative performance.  This inevitably rotates over time but currently, India has a runaway lead, having finally and decisively cleared six-year highs as Narendra Modi’s election victory became a certainty.

You want developed?  After all of its false starts since 1992, Japan (monthly & weekly) finally looks like the recovery candidate of the decade.  The next short to intermediate-term test will be to see how Topix performs on this third test of the 1300 region.

(See also Eoin’s section on India below.)