Aging workers savings excess

SINGAPORE – Asia’s workforce, dominated by adults planning for retirement, has amassed a savings surplus of more than US$300 billion invested in the global financial markets, US investment bank Morgan Stanley said.

“Asia has a high savings rate as its population is dominated by working adults saving in anticipation of retirement,” it said in the report received here yesterday. “Asia’s excess savings have provided global capital markets with large amounts of funds, giving better-than-expected support to financial asset prices.”Including Japan, the world’s second biggest economy which is struggling with a fast greying population and falling birth rates, Asia’s savings surplus “exceeded US$300 billion” in 2004.But as Asia’s population grows older, people are taking less risks with their investments.”Asia’s surplus savings are parked in bank deposits or American and European income assets, while local equity markets become increasingly dependent on foreign funds,” it noted.This aversion to risk in Asia can be attributed to the immature market for institutionalised investment.Institutionalisation allows for savings to be professionally managed by institutional investors such as insurance companies, investment firms and pension funds.A projected fall in Japan’s savings surplus as its population ages further should be compensated by bigger expected surpluses from Asia’s ‘tiger’ economies – Hong Kong, South Korea, Singapore and Taiwan – as well as China.Using demographic projections by the United Nations, the bank said Hong Kong, South Korea, Singapore and Taiwan, which have the lowest birth rates, “will be the fastest aging economies in the world” over the next 25 years.-Nampa-AFP”Asia’s excess savings have provided global capital markets with large amounts of funds, giving better-than-expected support to financial asset prices.”Including Japan, the world’s second biggest economy which is struggling with a fast greying population and falling birth rates, Asia’s savings surplus “exceeded US$300 billion” in 2004.But as Asia’s population grows older, people are taking less risks with their investments.”Asia’s surplus savings are parked in bank deposits or American and European income assets, while local equity markets become increasingly dependent on foreign funds,” it noted.This aversion to risk in Asia can be attributed to the immature market for institutionalised investment.Institutionalisation allows for savings to be professionally managed by institutional investors such as insurance companies, investment firms and pension funds.A projected fall in Japan’s savings surplus as its population ages further should be compensated by bigger expected surpluses from Asia’s ‘tiger’ economies – Hong Kong, South Korea, Singapore and Taiwan – as well as China.Using demographic projections by the United Nations, the bank said Hong Kong, South Korea, Singapore and Taiwan, which have the lowest birth rates, “will be the fastest aging economies in the world” over the next 25 years.-Nampa-AFP