Asia grabs spotlight in global wealth

Asia grabs spotlight in global wealth

BS Reporter / Mumbai June 29, 2007



India sees second highest rise in high net worth individuals.

Strong economic growth has made Asia home to some of the fastest-growing markets in terms of high net worth individuals (HNWI), occupying five of the top 10 spots globally.

India, with a 20.5 per cent increase in the number of HNWIs to 100,015, recorded the second-highest growth rate in HNWIs globally, said the annual World Wealth Report by Merrill Lynch and Capgemini.

India trailed only Singapore, where the increase in HNWIs grew by 21.2 per cent. Indonesia saw its HNWI population rise 16.0 per cent while those of South Korea and Hong Kong rose 14.1 per cent and 12.2 per cent, respectively.

Double-digit growth was also recorded in Russia, the UAE, South Africa, Israel and the Czech Republic and together, these emerging economies made up the top 10 fastest-growing markets globally for HNWI population.

China, with a gross domestic product growth of 10.5 per cent in 2006, saw a 7.8 per cent increase in HNWIs.

Driven by a strong global economy, the wealth of the world’s HNWIs increased 11.4 per cent to $37.2 trillion in 2006. The number of HNWIs in the world increased by 8.3 per cent in 2006 to 9.5 million and the number of ultra high net worth individuals grew 11.3 per cent to 94,970.

In the Asia-Pacific, HNWIs increased to 2.6 million in 2006, an 8.6 per cent gain from the year before. These HNWIs’ combined wealth increased 10.5 per cent to $8.4 trillion.

In 2006, HNWIs’ investment portfolios also saw a shift to real estate. Globally, HNWIs shifted more money into real estate, at times liquidating some of their alternative investments for this.

This trend was most dramatic in the Asia Pacific, where 29 per cent of HNWI assets was held in real estate, up from 16 per cent in 2005. Globally, HNWIs held 24 per cent of their assets in real estate compared with 16 per cent in 2005.

Asia Pacific HNWIs also had the lowest exposure to fixed income securities, with only 15 per cent of assets in this category compared with 21 per cent for HNWIs globally. Equities made up 24 per cent of Asian HNWI investments, below the 31 per cent global average.

In 2006, Europe regained its position as the second most popular destination, after North America, for HNWI investments, accounting for 25 per cent of total HNWI assets. Asia accounted for 21 per cent of HNWI assets.

The report expects the growth rates of Asia and Latin America to ease as global demand slows. It says the combined global HNWI wealth is expected to grow 6.8 per cent annually between 2006 and 2011 to $51.6 trillion.