Mumbai, Jun 24: There is more good news on the rise and rise of the richie rich, with the country for the first time entering the league of top 12 nations with the largest number of high networth individuals (HNIs) at a staggering 1,53,000 in 2010--a growth of 20.8 percent over 2009.
“India became the world's 12th largest country in terms of number of HNIs in 2010, replacing Spain that dropped to the 14th slot. The HNI population grew at 20.8 percent to 1,53,000 compared to 1,26,700 in 2009,” the 15th Annual World Wealth Report, prepared by Merrill Lynch Global Wealth Management and
Capgemini,said here on Thursday.
This is the second straight year when the growth rate of the country's ultra rich has been among the top in the world,as it continues to benefit from a robust economy and strength in other key wealth drivers such as equity market performance, the report adds.
“With a real GDP growth rate of 9.1 percent in 2010 and an increase in market capitalisation by 24.9 percent,India presents a great opportunity and continues to remain an important market for wealth management providers worldwide,”said Merrill Lynch Global Wealth Management India managing director and head Atul Singh.
While overall, number of HNIs globally topped the pre-crisis levels of 2007, growing by 8.3 percent, for Europe,it was a year of bad news as it was toppled by Asia-Pacific,excluding Japan. The Asia-Pacific region had the strongest regional growth expanding by 9.7 percent to 3.3 million, while Europe grew 6.3 percent to 3.1 million.
“The global HNI population and wealth growth reached more stable levels in 2010, with the population of HNIs rising 8.3 percent to 10.9 million and their wealth growing 9.7 percent to reach USD 42.7 trillion in 2010. The global HNI population grew by 10.2 percent in the reporting year while their wealth clipped by 11.5 percent,” Merrill Lynch Global Wealth Management India chairman Pradeep Dokania said.
“The continued strong performance of Asia-Pacific cements the region's strategic importance to every wealth management firm with global aspirations,” he said, adding
that if the global economy does not fall into a double dip,the region will continue to grow higher in the next two years.
The wealth of the HNIs in the Asia-Pacific region grew by 12.1 percent to $ 10.8 trillion in 2010, exceeding their Europeans peers' $ 10.2 trillion, which rose only 7.2 percent. Asia-Pacific is now the second largest region for both HNI wealth and HNIs, second only to North America, the report says.
While in 2009, the wealth of Asian HNIs crossed that of their European peers, Asia-Pacific has now surpassed Europe in terms of HNI population too for the first time, expanding 9.7 percent to 3.3 million, while Europe grew 6.3 percent to 3.1 million.
On the need for better and more qualified wealth managers, Capgemini India principal for global capital markets practices R Vaidyanath said that “with stable growth in both the economy and market capitalisation, India will be an important market for any wealth management service provider to ignore.”
However, despite the rapid rise of Asia in the league of the richie rich, the global HNI population is concentrated in three markets-the US, Japan and Germany—together
accounting for 53.0 percent of the world's HNI brigade.The US has the largest number of HNIs in the world at 3.1 million accounting for 28.6 percent of the global HNIs.
“While over half of the global HNI population still resides in the top three countries, the concentration of HNIs is fragmenting very gradually over time,” said Capgemini Global Financial Services global head of sales and marketing Jean Lassignardie.
“The HNI concentration among these countries will continue to erode if HNIs of the emerging and developing markets continue to grow faster than those of the developed
world,” Lassignardie added.
From where did they raked in more moolah? According to the report, the HNIs increased their exposure in equities and commodities markets, as well as real-estate especially in the Asia-Pacific region, says the report.
By end-2010, HNIs held 33 percent of all their investments in equities, up from 29 percent in 2009 as their holdings in cash/deposits dropped to 14 percent in 2010 from 17 percent in 2009 while those in fixed-income investments dipped to 29 percent from 31 percent.
Among the alternative investments, many HNIs favoured commodities. Their investments in commodities accounted for 22 percent of all alternative investments in 2010, up from 16 percent in 2009.
The ultr-rich in the Asia-Pacific region, excluding Japan, also continued to pursue returns in real estate, which accounted for 31 percent of their aggregate portfolio in 2010,up from 28 percent in the previous year and far above the 19 percent global average.
Looking forward, HNIs are expected to increase their equity and commodities allocations more in 2012 while reducing the allocations to real estate and cash/deposits. PTI