Household Debt Malaysia vs Assets, as per Allianz Global Wealth Report

Remember just days ago, Bank Negara Malaysia revealed that 75 percent of borrowers for home loans are for one property? Well, since they have just one property, it should be quite safe to assume that they will be able to pay for it, versus if they have a few. There’s another piece of news. I would not say it’s all bad or good. The article was in Starbiz that everyone should read, for both the good and the bad sides. Here. Do read it for a better understanding of where the household debts Malaysia is today.
In the article, Allianz Global Wealth Report revealed that in 2015, the loans to the households grew 7.2 percent and this is higher than the GDP growth of 4.6 percent and the financial assets grew 4.9 percent. In brief it shared, “Household debt climbed to 89.1% of GDP, while the financial assets to GDP ratio edged up only marginally to 182.9% from 182.4% in 2014.” In terms of debt per Malaysian, it is now at an average of RM33,500 versus the average financial assets at RM68,810. More importantly, the region Asia (excluding Japan) nearly trebled in financial assets growth since the year 2000 and is now ahead of even the eurozone. Out of total global financial assets of Euros 155 trillion, Asia (excluding Japan) accounted for 18.5 percent in 2015 versus eurozone at 14.2 percent.
Where household debts are concerned, are we on the tipping point of falling over or at this moment still comfortable? In brief, the fundamentals are weakening slightly though we are nowhere near crisis because assets remain above debts. 2 times more to be exact. Be reminded, these are average numbers. Some Malaysians may have a stronger foundation than others. It tells us also that ASIA will now be the centre of growth. Just looking at the typical GDP growth in Asia versus Eurozone would reveal that Asia is not leading only currently. It should continue to lead Eurozone. Yes, I am a proud Asian too. Happy investing and believing.
written on 22 Sept 2016
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