Report finds slower growth in number of wealthy

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Report finds slower growth in number of wealthy

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The number of Koreans with financial assets of more than 1 billion won ($890,234) was estimated to be 182,000, with an average of 2.2 billion won each, at the end of 2014, according to a report by KB Financial Group’s research institute.

The report, titled “2015 Korea’s Wealthy People” and released Monday, analyzes people who have more than 1 billion won in financial assets, such as installment savings, insurance, funds, stocks, bonds and other financial products. Real estate and other valuables were excluded.

Under the definition, the number of wealthy people rose 8.7 percent from 167,000 in 2013. However, that was lower than the average annual growth rate of 13.7 percent from 2008-14, the report said.

The recent slower growth in the number of wealthy people in Korea is partly due to record-low interest rates and sluggish domestic consumption.

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The fact that Korea’s stock market can’t “get out of the box,” which refers to the Kospi hovering around 2,000 points, also was a factor, the report added.

The total amount of financial assets was estimated at 406 trillion won, the report said, which means the top 0.35 percent of wealthy households accounted for 14.3 percent of the country’s financial assets.

About 45 percent of wealthy people live in Seoul, followed by Gyeonggi (19.8 percent) and Busan (7.1 percent). In the capital, 37 percent of the nation’s wealthy people live in the Seocho, Gangnam and Songpa districts in the southeast part of the city.

The report, however, noted that compared to the past, the concentration of wealth in the three districts has been shrinking. In 2009, 39.2 percent of the nation’s wealthy people resided in the three districts.

“This means the regional concentration of wealth has weakened,” said Noh Hyung-gon, analyst at KB Financial Group’s research institute.

In Gyeonggi, Seongnam has the highest number of wealthy people, about 7,000, followed by Yongin and Goyang. Seongnam includes Bundang District, where many former residents of Gangnam relocated since the new town was built in the early and mid-1990s. It is widely known as the wealthiest neighborhood in Gyeonggi.

Outside the greater Seoul area, Busan’s Haeundae District, near the tourist destination of Haeundae Beach, recorded the highest number of wealthy people in the city with 2,800, and Suseong District was at the top in Daegu with 3,500.

Asked about their expectations for Korea’s economy and domestic market, about 80 percent of the wealthy said they think economic growth will slow even more in the future. More than 80 percent agreed it will be difficult to generate high profits by investing in Korea’s financial market, and it is important to maintain liquidity rather than investing in new financial products.

Korean investors still prefer real estate to financial assets, the report showed.

In a separate poll of 400 wealthy people in the country, the report said 52.4 percent of their assets was in real estate, while 43.1 percent was in financial products.

However, nearly 70 percent said they did not expect to earn high profits from investing in real estate in the future.

Compared to 2013, the share of financial instruments rose from 39.2 percent to 43.1 percent, while that of real estate assets dropped from 55.7 percent to 52.4 percent.


BY KIM HEE-JIN [kim.heejin@joongang.co.kr]

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