NO CONFIDENCE IN NAJIB: As ringgit slides, ultra-rich move their wealth abroad

KUALA LUMPUR - Malaysia’s ultra rich who have a net worth of at least US$30 million (RM110 million) are increasingly moving their investments, and their families, out of the country, according to the latest report by property firm Knight Frank.

In its 2015 Wealth Report on the habits of ultra-high net worth individuals (UHNWIs), the London-based consultancy noted that while the wealth of the world’s richest grew by 3.1 per cent last year, those in oil-producing Malaysia only enjoyed a 2.7 per cent rise.

Nicholas Holt, Knight Frank’s head of research for Asia-Pacific, attributed the drop in the wealth of Malaysians as largely due to the weakened value of the ringgit and the falling prices of oil worldwide.

Such developments are likely to prompt Malaysia’s UHNWIs, which according to the report numbered 572 people, to invest more abroad.

“As the ringgit slides, more Malaysian UHNWIs will hedge to maintain their wealth by investing overseas,” Sarkunan Subramaniam, managing director of Knight Frank Malaysia, told a news conference at the report’s release here today.

“The current economic climate will see Malaysian capital moving towards safe havens such as London, New York, and Melbourne. We are also noticing Malaysians taking bigger interest in US real estate,” he said.

Knight Frank’s Holt (centre) attributed the drop in the wealth of Malaysians as largely due to the weakened value of the ringgit and the falling prices of oil worldwide.

According to the report gleaned from surveying some 500 bankers and fund managers from around the world, 10 per cent of Malaysia’s wealthiest have said this year that they are planning to emigrate.

Within this group, 88 per cent cited their children’s education as the top reason for leaving Malaysia, followed by 84 per cent who cited political issues and 83 per cent who cited quality of life.

Three-quarters of the group said they were opting out of Malaysia due to security concerns, while a further 55 per cent pinned it on the lack of civil liberties.

The study also noted that 72 per cent of UHNWIs from Malaysia plan to send their kids abroad for university, a higher proportion than from any other country surveyed, including China, India, Singapore, and Indonesia.

Sarkunan said Knight Frank didn’t have the exact data on where these ultra-rich kids are likely to go for university, but believed many of them will end up in London.

“A lot of these UHNWIs themselves went abroad to study, and because of this exposure they want to send their kids there too,” he said.

In fact, 46 per cent of Malaysian UHNWIs are sending their kids abroad for secondary school, and at increasingly younger ages, Holt added.

The study also projects that the number of UHNWIs globally will grow by 34 per cent between 2014 and 2024.

Most of this growth will occur in Asia, with its number of UHNWIs rising by 48 per cent.

The number of UHNWIs in Malaysia during this period will grow from 572 to 814, an increase of 42 per cent, slightly below the Asian average.

However, Holt said he didn’t think this would mean rising inequality.

“There’s a correlation between economic growth and the growth of wealth of UHNWIs.

“It’s a case of the pie growing, not of UHNWIs taking more of it,” he said.

Alvin Lee, head of Maybank’s regional private wealth division, who was also at the news conference, said the Asia-Pacific region is growing well.

The study also noted that 72 per cent of UHNWIs from Malaysia plan to send their kids abroad for university.

The report predicted that the city likely to experience the greatest swell of UHNWIs in the next few years till 2024 is Singapore, followed by Hong Kong, New York, London and Mumbai, as the ultra-rich move to find the best locations to park their wealth.

Do these UHNWIs know something other people don’t? Do they think differently?

“They hedge more than others. This is necessary to preserve their wealth,” Sarkunan said.

Holt added that he doubted the ultra-rich were different from other people.

“They’re just people who are good at seeing opportunities and going for them.

“Some of them are more daring than others, like Richard Branson failed many times before he succeeded. But they become more conservative as they get older,” he said. - TMI