Household Wealth Grew 560B (2000) to 1T (2009)

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Huat ah!!!!!

 

http://business.asiaone.com/Business/News/...305-331708.html

 

Strong balance sheets for Singapore households

 

Latest available data shows household net wealth grew from $560 billion in 2000 to $1.09 trillion in 2009.

 

Tue, Mar 06, 2012

The Business Times

 

By Teh Hooi Ling, Senior Correspondent

 

SO how rich have the aggregate Singapore households grown in the last decade or so? Data from the Singapore Yearbook of Statistics shows that household net wealth grew from $560 billion in 2000 to $1.09 trillion in 2009 - the latest available number. That is compounded growth of 7.7 per cent a year.

 

Other numbers given were total assets, the split of the assets between financial assets and residential properties, and how much of the total asset holding was funded by loans.

 

I decided to plot the charts for these numbers so as to get a picture of how strong or weak the Singapore household balance sheets are, and where do most Singapore residents put their money.

 

Table 1 shows the total assets and total liabilities of households, and the net wealth from year 2000 until 2009. Total assets grew from $699.5 billion to $1.28 trillion - a rise of 7 per cent a year. That's slower than the growth of net assets.

 

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In other words, debt in the household balance sheet has been growing at a slower pace than total assets.

 

In that same period, total liabilities of households which include mortgage loans from financial institutions and the Housing & Development Board (HDB), and personal loans such as car loans and credit/charge cards expanded from $139 billion to $191.5 billion. That is a growth of 3.6 per cent a year.

 

However, the proportion of total assets financed by loans fell from 20 per cent to 15 per cent.

 

So the household balance sheet of Singapore residents is on the whole pretty strong.

 

Of the mortgage loans, the financing of private properties by financial institutions registered the fastest expansion. It rose by 9.1 per cent a year, from $43 billion to $94 billion. Loans provided by HDB actually fell - from $59 billion to $46 billion.

 

As for personal loans, credit and charge card loans grew the speediest. They climbed from $2.6 billion to $6.2 billion - or 10.4 per cent a year.

 

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Now, let's take a look at the composition of assets in the Singapore households.

 

Again, contrary to the general perception, the data showed that the proportion of residential property in the households' balance sheet has fallen from 56 per cent in 2000 to 47 per cent in 2009. Conversely, the holdings of financial assets expanded from 44 per cent to 53 per cent during that same period.

 

Of the holdings in residential properties, HDB made up 52 per cent in 2000, and private properties 48 per cent. The balance swung sharply towards private housing - to 54 per cent - in 2007.

 

The global financial crisis in 2008 brought the value of private housing lower. As at 2009, the numbers were equally split between public and private housing. Today's numbers might actually show a bigger proportion of assets in HDB, given the strong run-up in public housing prices in the last two to three years.

 

Meanwhile, how have the holdings in financial assets changed over the last decade or so?

 

The financial assets are classified into four classes: currency & deposits, shares and securities, life insurance and Central Provident Fund (CPF).

 

From Chart 3, you can see that currency and deposits have always formed a big chunk of Singapore households' asset holdings. As a percentage of total assets, it was 16 per cent back in 2000 and grew to 18 per cent by end of 2009.

 

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Despite the numerous investor education programmes run by the Singapore Exchange (SGX), the percentage of household assets in shares and securities amounts only to 14 per cent in 2009. Still that's an improvement from 11 per cent in 2000.

 

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Of the four classes of financial assets, insurance grew the fastest. Its share doubled from a mere 4 per cent at the start of the millennium to 8 per cent in 2009.

 

The percentage of cash held in CPF has been pretty constant in the last decade. It fluctuated between 12 and 14 per cent.

 

So how much cash is there in the banks? If we totalled up the deposits in the banks and finance companies, the numbers came to $493 billion as at end 2011.

 

But relative to the size of Singapore's economy, how much cash is there in the system? I tallied up the deposits in the banks and finance companies, and added in the CPF sums due to members.

 

From Chart 5, you can see that as at end last year, the total amount of cash is more than 210 per cent that of Singapore's 2011 GDP!

 

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The cash levels shot up distinctly in 2008, and they continued to grow in 2009 until 2011. Either Singapore residents have become more risk averse following the global financial crisis of 2008, or Singapore's reputation as a safe haven attracted a lot more cash from overseas into our local banking system.

 

Finally, let's look at the cash on the sidelines relative to the aggregate market capitalisation on SGX.

 

From Chart 6, you can see that as the stock-market prices climbed between 2002 and 2007, cash relative to market cap gradually fell. That reversed sharply in 2008, due primarily to the fact that total market cap on SGX plunged from $797.8 billion in 2007 to just $393 billion by end-2008.

 

Since then, the total market cap has risen to $669 billion in 2009, $901.9 billion in 2010 and $775.8 billion in 2011.

 

From 91 per cent in 2008, the cash-to-market-cap ratio has fallen to 64 per cent by the end of last year. Meanwhile, the cash plus CPF ratio has gone from 129 per cent to 90 per cent.

 

The ratio as at end of last year approximated that of 2003. Some market watchers use this ratio to gauge the under or overvaluation of the stock market. By that reasoning then, we are at valuation levels that are similar to 2003.

[Hwt]

500,000,000,000 dollars of cash in banks. 5,000,000 residents. In average, every household member has 100,000 dollars in banks. Now I realize I am poor.......