The rich are becoming richer

They are becoming richer at a faster rate too

DON’T the rich always grow richer, while the poor well, remain poor.

If you’re already disheartened, it gets worst. The rich are getting richer, and at a faster rate too.

A 36-page report released by the Boston Consulting Group (BCG) last month showed that global personal financial wealth grew by 12% in 2017 to US$201.9 trillion.

This total, roughly 2.5 times as large as the world’s gross domestic product (GDP) for the year (US$81 trillion), more than doubled the previous year’s rate, when global wealth rose by 4%.

It also represented the strongest annual growth rate in the past five years in dollar terms.

“The main drivers were the bull market environment in all major economies, with wealth in equities and investment funds showing by far the strongest growth and the significant strengthening of most major currencies against the dollar,” said BCG in the report.

The increasing millionaires and billionaires now hold almost half of global personal wealth, up from slightly less than 45% in 2012, says BCG. In North America, which had US$86.1 trillion of total wealth, 42% of investable capital is held by people with more than US$5mil in assets. Investable assets include equities, investment funds, cash and bonds

In terms of asset classes, US$121.6 trillion (60%) of global wealth took the form of investable assets – mainly equities, investment funds, currency and deposits, and bonds, with the remaining US$80.3 trillion (40%) held in non-investable or low-liquidity assets such as life insurance, pensions funds, and equity in unquoted companies.

Residents of North America held over 40% of global personal wealth, followed by residents of Western Europe, with 22%. The strongest region of growth was Asia, which posted a 19% increase. All wealth segments grew robustly, but high growth rates were especially prevalent in the uppermost wealth segments.

The market sizing review encompasses 97 countries that collectively account for 98% of the world’s gross domestic product.

The personal wealth bands are generally measured as such:

1. Retail: below US$250,000

2. Affluent: between US$250,000 to US$1mil

3. Lower High Net Worth (HNW): between US$1mil and US$20mil

4. Upper HNW: between US$20mil and US$100mil

5. Ultra HNW: above US$100mil

Everybody is getting richer

The US is home to the largest number of people with more than US$20mil. Globally, the classes of the ultra-rich are expected to reach 671,000 by 2022.

Meanwhile, the Middle East is the region with the greatest share of wealth held in investable assets US$3.1 trillion of a total US$3.8 trillion. Western European residents held 56% in currency and deposits, while in North America the attention was on equities and investment funds, with 62% of US$47 trillion of investable wealth parked in those assets.

Should personal wealth creation continues at the rate of the past few years, BCG forecasts a compounded annual growth rate of about 7% from 2017 to 2022, in US dollar.

Events like stock market corrections and geopolitical uncertainties could knock that down to 4%.

In a worse-case scenario, such as a major economic crisis, global wealth might produce a compound growth rate of only 1% over five years, the study found.

BCG says opportunities abound for wealth managers seeking to increase their focus on different client segments.

For example, despite being far apart on the wealth spectrum, both the above US$20mil segment (upper HNW and ultra HNW) and the affluent segment are attractive because they represent very large wealth pools with high growth rates.

In 2017, the upper HNW and ultra HNW segments held more than US$26 trillion in investable wealth.

US residents held over 30% of this wealth, making the US easily the largest country of origin.

Other economic areas with large pools of ultra HNW investable assets include developing markets such as China (in second place), Hong Kong, India, Russia and Brazil, and developed markets such as Germany (in third place), France and Italy.

The share of wealth held by upper HNW and ultra HNW individuals varies widely aong the top 15 countries, ranging from 47% in Hong Kong to 8% in Japan.

Over the next five years, the upper HNW and ultra HNW segments wealth is likely to post the highest growth across all regions.

“Financial institutions looking to acquire and serve these segments will need to bring a broad international skill set to the table,” said BCG.

Affluent individuals

Afluent individuals is a segment whose population is burgeoning, hold a large and increasing amount of the world’s personal wealth at US$17.3 trillion or 14% of investable assets in 2017. (see chart)

This group of about 72 million people represents the growing middle class and many of its members will become the millionaires of tomorrow.

“We expect the wealth of this segment to post a compound annual growth rate (CAGR) of around 7% over the next five years, increasing its pool of wealth to nearly US$25 trillion. To successfully tap into this segment, wealth managers must have at their disposal an efficient service model and significant skill in and innovative digital technologies,” said BCG.

Entrepreneurs

The entrepreneur segment represents another attractive opportunity for wealth managers to tap into money in motion and provide needed services.

“We expect these individuals, who have equity in their own companies – recorded as unquoted equities (non-investable wealth) – to significantly increase their pool of investable assets, by liquidating some or all of their equity through sales and by earning new wealth through their entrepreneurial activities. The largest pools of entrepreneurial wealth are in the US, France, Italy and Japan.  

Asia

Personal wealth in Asia grew by 19% to US$36.5 trillion, with residents of China holding nearly 57% of that amount, and the region registered per capita wealth of US$13,000. Although the asset allocation share of equities ad investment funds has grown over the past five years (from 22% in 2012 to 31% in 2017), Asia remains a cash-and-deposit-heavy region, with 44% of personal wealth held in this asset class. We project regional wealth to grow over the next five years at a CAGR of 12%.

Meanwhile Switzerland remains the largest offshore centre, domiciling US$2.3 trillion in personal wealth in the country. The next largest booking centres are Hong Kong (US$1.1 trillion) and Singapore (US$0.9 trillion) which have grown at yearly rates of 11% and 10% respectively – more than three times the rate (3%) of Switzerland over the past five years.

Over the next five years, BCG feels off

By Tee Lin Say, Starbiz

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Judged on merit and nothing less

Edit

It’s official: The Yang di-Pertuan Agong Sultan Muhammad V presenting the letter of appointment to Malanjum at Istana Negara. Looking on is Prime Minister Tun Dr Mahathir Mohamad. — Bernama

Judicial diversity and meritocracy are inseparable in order to win the faith of society. The appointment of Tan Sri Richard Malanjum, a Sabah-born Kadazandusun, as the top judge is a first for a non-Malay Malaysian and is welcomed as a major step towards winning greater confidence in the Judiciary, CHELSEA L.Y. NG writes.

IT’S a fairy tale come true for some Malaysians banking on a better Judiciary grounded on merits when news of Tan Sri Richard Malanjum having been sworn in as the ninth Chief Justice of Malaysia started to trickle down to the media late Wednesday evening.

Just several hours before that, the witty Malanjum had brushed off talk of him being selected as the next top judge.

“Itu cerita dongeng (It’s a fairy tale),” he told reporters in Kuching before walking off quickly.

But by then there were already some pictures of him attending an alleged rehearsal session being circulated among a few privileged ones.

Well, going by some of the not-so-welcoming responses from those who thought that the position was reserved for only Malay judges, the initial hush-hush circumstances were understandable.

But we cannot really fault those who think the positions are reserved purely for Malays. If you have only been exposed to Chief Justices (CJ, top post) and Chief Judges of Malaya (CJM, top three) after 1994, then you might be forgiven for thinking that the posts are for Malaysians of Malay origin only (see lists of LPs and CJs).

In the last two decades, top posts had been taken by Malay judges but if we look further back, the situation was much different prior to 1994. There used to be a good mix of judges from different races at least for the CJM post, which was then known as the Chief Justice of Malaya (a No.2 post then and not to be confused with the current CJ post, which is a top post). The top judge was known as the Lord President (LP) then or Lord President of the Supreme Court in full.

The LP position was created after the abolition of appeals to the Judicial Committee of the Privy Council in 1985.

Below the LP were the Chief Justices of the High Courts of Malaya and Borneo.

In 1994, the LP was renamed CJ when the Supreme Court reverted to the name of Federal Court, which was the name used prior to 1985 but with the Privy Council as the highest authority.

In 1994, Parliament amended the Federal Constitution and approved a reorganisation of the court system and significantly set up the Court of Appeal as the second highest court and renamed the highest court Federal Court (previously Supreme Court). After 1994, there was a new No.2 position created called the President of the Court of Appeal. The CJM hence moved to the third position.

For senior lawyer Datuk Roger Tan, judicial diversity is an essential element.

“It is pivotal in creating confidence in a multi-racial society. Diversity can be on the grounds of race, religion and gender.

“In Britain, they just had the first female President of the Supreme Court in hundreds of years,” said Tan.

Lawyer Fahri Azzat said there is nothing in the Constitution that demands that a Chief Justice, President of the Court of Appeal or the Chief Judge of Malaya must be of Malay heritage, or dictates that the racial composition of the Federal Court or even the Court of Appeal contain a majority of citizens of Malay heritage.

In fact, Article 123 of the Federal Constitution which deals with the qualifications to be a High Court judge and above provides the following:

A person is qualified for appointment und

er Article 122B as a judge of the Federal Court, as a judge of the Court of Appeal or as a judge of any of the High Courts if – (a) he is a citizen; and

(b) for the 10 years preceding his appointment he has been an advocate of those courts or any of them or a member of the judicial and legal service of the Federation or of the legal service of a State, or sometimes one and sometimes another.

For Fahri, that a persistent racial pattern at the appellate courts continues in the Judiciary suggests that race is a more influential factor than abilities or merits when it comes to the appointment and promotion of a judge.

Fahri even wrote about it in 2010 on the LoyarBurok website about the racial composition of the Judiciary.

“Any litigator who is in the thick of litigation practice in our civil courts will acknowledge that at the level of top senior counsel, the composition is the opposite of the nation’s racial population.

“Where top senior legal counsel are concerned, the ratio of Malaysians of Indian heritage are highest as compared to those of Chinese heritage who come in second as compared to those of Malay heritage who have the lowest numbers. That is how I know it to be from experience and conversation,” Fahri wrote then.

However, on Malanjum’s appointment, Fahri has this to say: “I think it is a step or start in the right direction. Whether it closes the gap in terms of judicial diversity and meritocracy remains to be seen with subsequent appointments of both the top judges and the High Court judges.

“I think it will be the starting point for the public to renew its faith in the Judiciary but that again remains to be seen from their judgments, judicial statements and the Judiciary’s actions collectively.

“Just as a swallow does not a summer make, a few judicial appointments do not guarantee rejuvenation of the Judiciary,” he said, adding that these positive developments if seen through over the long term will help foster faith and trust in the Judiciary and the administration of the justice system as a whole.

Retired Federal Court judge Datuk Seri Gopal Sri Ram said the appointment is definitely a welcome move and expected to improve the Judiciary.

“This is the first time we have a non-Malay being made a top judge. Prior to this we had non-Malay judges being appointed to the second highest positions. But that was before 1994.

“From the time of independence until then, no one had looked at the appointments on racial or religious angle. Only in recent times did people start to do so.”

He named a few prominent top judges then such as Tan Sri H.T. Ong, Tan Sri S.S. Gill and Tan Sri Gunn Chit Tuan.

“Richard’s appointment verifies the oneness of Malaysia. That there is only one Malaysia. That there is no East Malaysia or a West Malaysia,” said Sri Ram.

Sultan of Perak Sultan Nazrin Shah had in his special address at the book launch of Tun Arifin Zakaria last year mentioned a valuable quote by his father Sultan Azlan Shah, who was also a respectable Lord President.

“I quote, ‘The rules concerning the independence of the judiciary ... are designed to guarantee that they will be free from extraneous pressures and independent of all authority, save that of the law. They are, therefore, essential for the preservation of the Rule of Law,” he said.

The Sultan hit the nail on the head. Justice and judges should be free from any extraneous pressures and everything has to be based on the merits of the law.

The Ruler had on the same occasion called on Federal Court and Court of Appeal judges to write dissenting judgments if they do not agree with the majority of the Bench.

“Sometimes, the brave dissenting voice is transformed into law. A classic case is that of Brown v. Board of Education 347 US 483 (1954) when the US Supreme Court gave weight to the spirit of Justice Harlan’s dissenting voice in Plessy v. Ferguson 163 US 537 (1896).

“As a result, and in a historic judgment, then-chief justice Warren held that racial segregation in public schools constituted a violation of the US constitutional guarantee of equality of rights,” he said.

The Sultan added that judges should be free to express reasons in their judgments as they thought fit, and in other words, for the Rule of Law to flourish, courts and their participants should be allowed to express a variety of ideas and principles.

In the case of Malanjum, some critics even brought up the point that he was not qualified to be made the Chief Justice because of his dissenting judgments in the case of Lina Joy and the use of the Allah word in the Bible.

In Lina Joy, she lost a six-year battle in 2007 to have the word Islam removed from her identity card after the Federal Court dismissed her appeal in a majority decision.

In his dissenting judgment, Malanjum said the department responsible for issuing identity cards should have just complied with Lina Joy’s request to remove the word from her IC. He accused the National Registration Depart­ment of abusing its powers.

“In my view, this is tantamount to unequal treatment under the law. She is entitled to an IC where the word Islam does not appear,” Malanjum said.

In the second case, the Federal Court was divided again with Malanjum dissenting and arguing that the Constitution must remain the supreme law of the land.

In his column, constitutional law expert Prof Dr Shad Saleem Faruqi had also written about Malanjum’s boldness in voicing out his stand and daring to dissent.

According to Dr Shad, in PP v Kok Wah Kuan in 2008, the Federal Court had in a majority judgment “mocked the doctrine of separation of powers as having no legal basis” in the Constitution.

The judgment went further to say that the power of the courts was limited to whatever Parliament bequeathed.

“Fortunately, there was a bold dissent from Malanjum, our Sabah and Sarawak Chief Judge, who insisted that separation of powers and judicial independence are firm pillars of our constitutional edifice.

“He rejected the view that ‘our courts have now become servile agents of a federal Act of Parliament and that the courts are now only to perform mechanically any command or bidding of a federal law’.

“Justice Malanjum was eminently correct on both scores. A Consti­tution is not mere words written on paper,” Dr Shad wrote in his column.

These words by the eminent professor were enough to back Malanjum as a strong guardian of the rule of law and is definitely fitting for the grand position of a Chief Justice.

Enough said, time will tell if we have taken the right path.

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Malaysian policy changes and new initiatives soon

Putting our house in order

WITH the announcement of the new Housing and Local Government Minister, Zuraida Kamaruddin, there have been a lot of news and interviews on her proposals to put our housing industry in order.

Her new plans will help create a new housing environment in our country if well executed. I particularly like the minister’s assurance that there won’t be any political intervention in decision-making, especially in housing development matters.

The key objective of the ministry is to synchronise all affordable housing schemes under one roof with the establishment of the National Affordable Housing Council, which is expected to be announced in August.

The streamlining will involve four agencies, Syarikat Perumahan Negara Bhd, 1Malaysia Civil Servants Housing Programme (PPA1M), Rumah Mampu Milik Wilayah Persekutuan (RumaWIP), and 1Malaysia People’s Housing Scheme (PR1MA).


With this prompt move, the housing ministry will have better control over the construction of affordable houses, and will attempt to resolve the mismatch between market supply and demand in certain housing segments.

Apart from the new supply, we should also look at our current housing supply. As at end-2017, we have 5.4 million houses, of which 21% or 1.15 million were low-cost houses and flats. This should be sufficient to accommodate the critical housing needs of our Rakyat if they were allocated to the right group of people.

In my last article, I mentioned that there were potential leakages in our previous distribution system that had caused the failure of qualified applicants to buy or rent a low-cost home.

In early June 2018, the new Housing Minister requested owners of People’s Housing Projects (PPR units) who were renting out their units to foreigners to evict their tenants within 90 days.

It is important for the authorities to carry out surveys on residents of low-cost housing after certain grace period to ensure the ownership and tenancy of government housing fall into the right hands.

By addressing the current leakages and with the identification of the right target audience, the issue can be quickly resolved.

Our new government plans to set up an online platform for application of affordable housing in the future. This would be an effective way to gather market demand based on the actual requirement and ensure greater transparency in the allocation process.

In addition, the government promises to build one million affordable homes within 10 years. It also suggests the housing price for the B40 group (with a median monthly household income of RM3,000) to be around RM60,000, and equipped with basic facilities such as a park and a community hall.

Based on the contributing factors of housing development which include land, the approval process and resources, only the government can build houses at the price of around RM60,000.

Only the government can gather land bank through compulsory land acquisition of agriculture land, then to convert the land for housing development, and increase housing projects with public funds.

As taxpayers, I believe we are more than happy to help elevate the living standards of the B40 group knowing very well that our money is well-spent in making a difference for the future of our nation.

I applaud the new government for taking the bold measures in putting things in order, and walking the talk by planning for more affordable housing.

Offering affordable housing and a comfortable living environment are essential criteria in building a sustainable future for our country. Whenever the government announces more constructive measures and makes things more transparent, the market environment becomes more optimistic. With this confidence, the Rakyat will be more than willing to do our part as taxpayers to achieve the common goals for the benefit of all.

Food for thought Alan Tong

Datuk Alan Tong has over 50 years of experience in property development. He was the World President of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.

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China hits back after US imposes tariffs worth $34bn

https://youtu.be/5p5sA5i6XYs


US tariffs on $34bn (£25.7bn) of Chinese goods have come into effect, signalling the start of a trade war between the world's two largest economies.

The 25% levy came into effect at midnight Washington time.

China has retaliated by imposing a similar 25% tariff on 545 US products, also worth a total of $34bn.

Beijing accused the US of starting the "largest trade war in economic history".

"After the US activated its tariff measures against China, China's measures against the US took effect immediately," said Lu Kang, a foreign ministry spokesman.

Two companies in Shanghai told the BBC that customs authorities were delaying clearance processes for US imports on Friday.

The American tariffs are the result of President Donald Trump's bid to protect US jobs and stop "unfair transfers of American technology and intellectual property to China".

The White House said it would consult on tariffs on another $16bn of products, which Mr Trump has suggested could come into effect later this month.

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The imposition of the tariffs had little impact on Asian stock markets. The Shanghai Composite closed 0.5% higher, but ended the week 3.5% lower - its seventh consecutive week of losses.

Tokyo closed 1.1% higher, but Hong Kong fell 0.5% in late trading.

Hikaru Sato at Daiwa Securities said markets had already factored in the impact of the first round of tariffs.



Mr Trump has already imposed tariffs on imported washing machines and solar panels, and started charging levies on the imports of steel and aluminium from the European Union, Mexico and Canada.

He has also threatened a 10% levy on an additional $200bn of Chinese goods if Beijng "refuses to change its practices".

The president upped the stakes on Thursday, saying the amount of goods subject to tariffs could rise to more than $500bn.

"You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. OK? So we have 50 plus 200 plus almost 300," he said.

The US tariffs imposed so far would affect the equivalent of 0.6% of global trade and account for 0.1% of global GDP, according to Morgan Stanley in a research note issued before Mr Trump's comments on Thursday.

Analysts are also concerned about the impact on others in the supply chain and about an escalation of tensions between the US and China in general.

Timeline

US-China trade war

16 February, 2018

US Commerce Department recommends a 24% tariff on all steel imports and 7.7% on aluminium. It's seen as a policy directed at China, which is the world's largest maker of steel.

22 March, 2018

China says it will impose tariffs on US goods worth $3bn. 

22 March, 2018

President Trump announces a plan to impose further tariffs on Chinese imports worth $60bn but grants temporary exemptions from aluminium and steel tariffs to the EU, South Korea and other countries.

2 April, 2018

China imposes 25% tariffs on 128 US products including wine and pork.

3 April, 2018

The US Government proposes new additional tariffs on Chinese imports worth $50bn. These include: televisions, medical equipment, aircraft parts and batteries.

4 April, 2018

China proposes tariffs on US goods worth $50bn.

5 April, 2018

President Trump announces he's considering additional tariffs on Chinese products worth $100bn.

15 June, 2018

President Donald Trump announces new tariffs on goods worth $34bn will come into force on 6 July 2018. He also proposes a new list of tariffs for imported goods worth $16bn.

15 June, 2018

China says it will respond to these new US impositions with it's own new tariffs on agricultural products and manufactured goods.

6 July, 2018

New tariffs announced by both countries in June come into effect.

Source:  bbc.com/news


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Najib arrested, charged and pleaded not guilty

https://youtu.be/CkmYbnVaO_s

Former premier Najib Abdul Razak was arrested at his residence in Jalan Duta, Kuala Lumpur, this afternoon, according to MACC chief commissioner Mohd Shukri Abdull.

The arrest was carried out in relation to the commission's investigation into the SRC International issue.

Speculation is also rife that the former premier could be charged tomorrow.

Shukri Abdul told the media that the arrest took place at 3pm and the former premier has been taken to the commission's headquarters in Putrajaya for further questioning.

Previously, MACC had recorded Najib's statement twice with regard to the SRC International issue.

Last Friday, Malaysiakini had reported that there is a strong likelihood the former premier would be arrested this week.

[More to follow]

LIVE: Najib arrives in court

https://youtu.be/IFZhcT6t1Pw