Indians and Chinese are fastest growing millionaires

Asia-Pacific’s population of high net worth individuals (HNWIs) rose 25.8 per cent to 3 million last year, catching up with Europe’s HWNI population for the first time, according to the 2010 Asia-Pacific Wealth Report by Merrill Lynch Global Wealth Management and Capgemini.

Going forward, China and India are likely to remain the fastest-growing HNWI segments in the world, based on the positive outlook for market and macroeconomic drivers of wealth for those economies and the Asia-Pacific region as a whole, the report released on Tuesday said.

Asia-Pacific HWNI wealth also surged 30.9 per cent to $9.7 trillion last year, erasing losses seen in 2008 and surpassing that of Europe’s HWNI wealth in 2009.

HNWIs are defined as those having investable assets of $1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.

“Asia-Pacific’s HNWI population matching Europe’s for the first time highlights the region’s growth potential, with China and India at the forefront and Japan remaining an important market,” said Wilson So, interim Head of Asia-Pacific Wealth Management at Merrill Lynch Global Wealth Management.

The top three countries—Japan, China and Australia— accounted for 76.1 per cent of the Asia-Pacific HNWI population and 70.0 per cent of its HNWI wealth in 2009. Japan and China together were home to 70.4 per cent of HNWIs in the region and 64.6 per cent of regional HNWI wealth, up from 51.8 per cent and 62.8 per cent respectively a year before.

Japan is by far the single largest HNWI market in Asia-Pacific. Alone it accounted for 54.6 per cent of the Asia-Pacific HNWI population and 40.3 per cent of its wealth at the end of 2009, the report said.

China remained the second-largest HNWI base in the region, and fourth largest in the world, with 477,000 HNWIs, up 31 per cent from the previous year.

Hong Kong and India, which experienced the world’s largest declines in HNWI population and wealth in 2008, experienced the strongest resurgence in 2009. The population of HNWIs grew 104.4 per cent in Hong Kong, almost reaching pre-crisis levels, and 50.9 per cent in India.

HNWI wealth in Hong Kong and India jumped 108.9 per cent and 53.8 per cent respectively amid strong growth in both market and macroeconomic drivers of wealth.

Helping drive this recovery in India were resurgent stock markets, as well as strength in the underlying economy, allowing the country to fully recover its HNWI wealth and population to pre-crisis levels, the report said.

Moving forward, China and India will lead the way in the Asia-Pacific region with economic expansion and HNWI growth likely to keep outpacing more developed economies, the report said.

Asia-Pacific economic growth is likely to outpace world GDP expansion in 2010 and 2011, as fairly resilient domestic demand and intra-regional trade help to offset ongoing weakness in exports to developed economies that are still recovering after the crisis.

Faster economic growth, coupled with improving business conditions, should fuel expansion in the HNWI segment as business ownership and income account for 73 per cent of all HNWI wealth in Asia-Pacific, excluding Japan.

Last year, Asia-Pacific market’s drivers of wealth, particularly equities and real estate, regained significant ground after hefty losses in 2008. Asia-Pacific HNWI investors ended 2009 with 27 per cent of their assets held in equities, up from 23 per cent a year earlier, as they headed back into the equity markets and equity-asset values rose, especially in emerging markets.
 
The share of Asia-Pacific HNWI assets dedicated to real estate rivaled that of equities – rising to 26 per cent from 22 per cent, as real estate prices recovered across major markets in the region. This brought allocations back to pre-crisis levels and reversed the crisis-driven flight to cash-based instruments, the report added.

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