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Thursday , March 23 2023

Kuwait financial wealth grows to $266 bln despite pandemic challenges

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50% of country’s wealth owned by individuals whose net worth is more than $5 million

KUWAIT CITY, Aug 3: Kuwait’s financial wealth grew by a Compound Annual Growth Rate (CAGR) of 3.3% annually from 2015 to reach a high of $266 billion in 2020 – 82% of which is investable wealth – as the Kuwaiti market showed resilience in the face of the protracted COVID-19 pandemic, according to a new report by Boston Consulting Group (BCG). The report, titled ‘Global Wealth 2021: When Clients Take the Lead’, reveals that despite the pandemic’s enduring financial impact, global prosperity and wealth grew significantly throughout the crisis and are likely to continue to expand significantly over the next five years, in line with the emerging economic recovery.

“The COVID-19 pandemic indeed resulted in an array of complex challenges, yet what’s also beyond any doubt is the resiliency of Kuwait’s wealth segment, which has been instrumental behind the growth recently recorded. Vision 2035 has helped to ensure sustained growth, supporting economic activity and inspiring residents to become involved in the increasingly global economy. Therefore, growth in wealth has been achievable, positioning Kuwait to attain further wealth segment development moving forward,” said Harold Haddad, Managing Director and Partner at BCG.

Kuwait, which represented 12% of the Gulf Cooperation Council’s (GCC) financial wealth in 2020, is expected to witness strong growth of 2.9% CAGR to reach $307 billion by 2025, a $41 billion increase from 2020. Meanwhile, the region’s financial wealth is forecast to reach $2.7 trillion in 2025 from $2.2 trillion in 2020. A spotlight on onshore asset allocation shows that currency and deposits (49%) accounted for the largest proportion of assets in 2020. Looking ahead, the allocation of onshore assets by 2025 is expected to be similar. The Changing Landscape of the Wealthy in Kuwait BCG’s report also shows Kuwait’s changing landscape of the wealthy in the coming years, with the rise of the next-generation affluent and highnet- worth clients. These individuals, between 20 and 50 years of age, have longer investment horizons, a greater appetite for risk, and often a desire to use their wealth to create positive societal impact as well as earn solid returns.

Many wealth managers are not yet ready to serve these new clients. “New entrants to Kuwait’s wealth segment stems from impressive economic achievements over the past five years. At the national level, wealth has been dispensed to more members of the Kuwait population, which has also laid the foundations for a shift in client demands and expectations in due course as wealth demographics change or, at the very least, remain stable. With this in mind, local wealth managers will be obligated to tailor their offerings to local needs or younger wealth segments with heightened proactivity over the coming five-year period,” concluded Haddad. To win the new segment of the nextgeneration segment, wealth managers must bring a bold and new digital business model to life.

The five pillars of the new digital model include:
■ Supercharged Relationship Management: All of the legwork is done with the use of technology and relationship management to become the key support in the digital conversion funnel
■ Contextual and Consumable Learning: Streamlined, gamified, 100% digital content, placed strategically to nudge conversion
■ Smarter User And Experience Design: Simple to use platforms, enriched with tools and simulators that clients can play with
■ Simplified Pricing: Hybrid model combining asset-based pricing with flat subscription fees
■ Democratized Access To “Haute” Investments: Customizable discretionary mandates, and scale-down of (U) HNWI products

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