‘Financialization’ of savings rising

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Asians, including Filipinos, are starting to put more savings into financial products such as mutual funds, banking giant HSBC said on Friday, with financial inclusion playing a big role in this development.

Growing financial inclusion across the region means that ever-increasing numbers of Asians are going for time deposits, mutual funds, insurance policies and similar products rather than putting their money into hard assets such as jewelry and real estate.

This “financialization” of savings, HSBC said, “is one of the strongest long-term investment themes in Asia and one that is largely insensitive to fluctuations in economic cycles.”

For the Philippines in particular, the bank noted that back in 2006, 87.7 percent of households fully owned their houses but only 11.5 percent had a deposit account.


“However, better financial knowledge and access to financial services is slowly turning the tide,” HSBC said.

Citing the World Bank’s Global Financial Inclusion Index, it said 28 percent of Filipinos now have a bank account now, up from around 25 percent in 2010.

“While we acknowledge that the number is low, it is pointing in the right direction,” HSBC added.

It noted that in low-income countries, people preferred to put their money in hard assets such as land or houses, unlike in wealthier states where assets are more diversified.

HSBC cited a Bangko Sentral ng Pilipinas survey that found out, among others, that 8 in ten households do not have a deposit account but 87 percent fully-owned their houses.

Citing the country along with Indonesia, the bank said income growth would likely lead to a rapid rise in deposits and later an increase in equity investments or other financial products.

In the Philippines, HSBC said increasing appetite for financial products was also reflected in a gradual rise in the domestic asset base.

Total mutual fund assets in the Philippines rose by 10 percent year-on-year to $4.7 billion as of December 2014. Risk appetite has increased as well, with the share of equity funds rising from 32 percent in 2013 to 38 percent by the end of 2014.

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