Allianz research shows “surprising relief” in global wealth

Allianz recently unveiled its 'Global Wealth Report', which provides an in-depth analysis of the asset and debt situation of households in nearly 60 countries. Despite the challenges posed by sharp monetary tightening in the previous year, economies remained resilient and markets thrived. Arne Holzhausen, Head of Insurance, Wealth and Trend Research at Allianz, shed light on the surprising findings of the report in a recent interview with CNBC Africa. Holzhausen highlighted the unexpected strength of global economies in the face of multiple interest rate hikes by central banks. Contrary to expectations of a looming recession, many economies, including the US and even Germany, demonstrated resilience and witnessed a surge in stock markets. This benefited savers worldwide, with an overall increase of 7.6 percent in financial assets across most countries, signaling a healthy growth trend. The report delved into the performance of various asset classes, revealing uneven growth rates. Notably, insurance and pensions saw a solid recovery with a 7 percent increase, while securities experienced double-digit growth, buoyed by robust stock markets. Conversely, bank deposits saw a modest 4 percent growth as savers shifted towards higher-return assets like stocks and bonds. Real estate, on the other hand, faced setbacks due to rising interest rates, lagging behind financial assets in most markets. Holzhausen explained that while real estate offers stable yields, equities tend to yield higher capital gains in the long run, making them more attractive for investors. South Africa mirrored the global trend of positive savings growth despite economic challenges, with an 8.3 percent increase in financial assets, surpassing the global average. However, wealth distribution remained a persistent issue, showing minimal improvement over the past two decades. The concentration of wealth at the top of the income pyramid has not significantly changed, indicating a need for sustained efforts to address inequality. In the realm of savings vehicles, insurance and pensions have lost appeal among savers, particularly the older demographic, attributed to the 'yield winter' post-financial crisis. The low-yield environment made guarantees costly for insurers and pension funds, prompting the need for more flexible and tailored products to suit evolving market demands. Holzhausen affirmed the status of baby boomers as the wealthiest generation, benefitting from favorable market conditions over the past four decades. In contrast, millennials and Gen Y faced more challenging economic environments, starting with the global financial crisis. Moving forward, Gen Z stands to potentially match the wealth accumulation of baby boomers, driven by advancements in technology and market trends. As the landscape of financial assets continues to evolve, the report underscores the importance of adaptability and innovation in the wealth management sector to navigate changing market dynamics and meet the diverse needs of savers worldwide.