The emerging affluent in India are more confident about the growth prospects of business than their global peers, finds a new independent study commissioned by Standard Chartered. Around 90% of respondents in India feel there are good prospects for launching and growing successful businesses in India, encouraged by a strong economy and government leadership as well as appropriate regulation. Rising incomes are paving the way for increased spending, with overseas travel being the top priority in the next five years while buying property was the long-term wealth goal.
This study, conducted across 7,000 emerging affluent consumers across seven of Standard Chartered’s markets – Hong Kong, China, India, Indonesia, Kenya, Nigeria and Singapore –- offers new insights into the confidence levels, income expectations, saving plans, short and medium-term spending priorities, and long-term aspirations of people with rising incomes living in large cities.
The emerging affluent across Asia and Africa are confident about their market’s growth prospects, expect their incomes to rise, have clear spending plans, and are highly confident in achieving their long-term wealth goal, finds a new independent study commissioned by Standard Chartered.
A key finding in the study is a high level of confidence among the emerging affluent when it comes to the 10-year wealth goal. Respondents in six of the markets – Hong Kong, China, India, Indonesia, Nigeria and Singapore – say buying property is their top long-term financial aspiration, while launching their own business is the number one goal for the emerging affluent Kenyans.
Whether the 10-year wealth aspiration is to buy property or launch a business, on average as many as 87% of the emerging affluent believe they will achieve it. The figure is considerably higher in the developing markets, with 100% of Nigerians and at least nine in 10 Kenyans, Indians, Indonesians and Chinese saying they are confident about achieving their long-term financial goal.
Shyamal Saxena, Head, Retail Banking, India, Standard Chartered said: “At a time when many people are worried about the global economy, this study suggests it feels very different on the ground in India. These emerging affluent consumers are confident, ambitious and are driving wealth creation, which supports the long-term outlook for growth across these markets. Standard Chartered is focused on the fastest-growing cities in the world where there are high concentrations of affluent individuals seeking international banking solutions and comprehensive wealth solutions and advice. As disposable incomes rise and financial needs increase, we want to help our clients achieve their financial aspirations.”
The majority are optimistic about growth: on average, 75% of the emerging affluent say they expect their home market’s economy to grow in the next year. At 95%, the emerging affluent Indians are the most confident. By contrast, 48% of Hong Kongers are confident.
Most expect their incomes to rise: on average, 65% of the emerging affluent have seen their household disposable income rise in the past year. The trend is set to continue: an average 72% expect their incomes to rise in the next year. The figure is far higher in Nigeria (88%), India (88%) and Indonesia (82%).
As incomes rise, savings will increase: the emerging affluent plan to save more in the next year. On average, they plan to save 30% of the total household income, up from 26% in the past year. By comparison to Western economies, this is more than six times the proportion set aside by people in Britain and the US, according to the latest official statistics*. Official Government data in both Britain and the US showed that the savings ratio fell to just 4.9% in July this year, having peaked at over 10% in both countries in the wake of the financial crisis.
Spending patterns will change
- Short-term: the emerging affluent in Hong Kong and Singapore have different short-term spending priorities to their counterparts in the developing markets, with overseas travel topping the list. By contrast, the emerging affluent in India, Indonesia, Kenya and Nigeria say children’s education is their top spending priority in the next year
- Medium-term: in the next two to five years, buying a new property tops the list in six out of seven markets – China, Hong Kong, Indonesia, Kenya, Nigeria and Singapore
Property ownership – who owns the most
- One or more properties: 98% of the emerging affluent Chinese own property, while in Nigeria fewer than half (42% ) do
- Two properties: 39% of the emerging affluent Indians own two properties, while in Nigeria 8% do
- More than two properties: 18% of the emerging affluent Indonesians own more than two properties, while in Hong Kong 3% do
Future property purchases: appetite for buying property is strong in the medium-term, with nearly half of the emerging affluent planning to buy in the next two to five years, compared to just a quarter in the next year. The majority – on average 66% – plan to buy a home in the domestic market.
Travel: one in three plan to travel abroad in the next year and typically favour travelling to the US (26%) and Japan (26%). While it is not a key spending priority in the short-term, the emerging affluent in China, India, Indonesia and Nigeria say travelling abroad is a top three spending priority in the next two to five years.