Middle East millionaires get wealthier: $1 trillion and counting

The size of the millionaire population in the Middle East rose 2.7 per cent to 450,000, and wealth edged up 0.7 per cent to $1.7 trillion, according to the just published World Wealth Report 2012.

The report, compiled by Capgemini and RBC Wealth Management, suggests that that the investable wealth of the region’s high net worth individuals (HNWIs), defined by the report as those with $1 million or more at their disposal for investing, grew despite the Middle East being vulnerable to protests and demonstrations after the so-called ‘Arab Spring’

“Geopolitical tension in the region has helped to keep oil prices high, despite the slowdown in global economic growth,” the report states.

“Numerous countries in the region have been hit by political turmoil, and their economies remain vulnerable to both domestic stresses and global headwinds,” says the report, adding that “Egypt is just one example of a nation facing a messy political transition and economic challenges.”

Overall, the report states that while the world’s population of HNWIs edged up in 2011, aggregate investable wealth as measured by asset values declined by 1.7 per cent to $42 trillion.

“The overall decline in investable wealth largely reflected the disproportionate impact of losses among higher wealth brackets [the ultra wealthy, or those with an investable net worth of more than $30 million], in which investors are often more likely to be invested in less liquid and more risky assets,” the report states.

Asia-Pac Rules

Asia-Pacific is now home to slightly more HNWIs than any other region, though North American HNWIs still account for the largest regional share of HNWI wealth, the report said.

The number of Asia-Pacific HNWIs hit 3.37 million in 2011, compared to 3.35 million in North America, and 3.17 million in Europe. In terms of assets, HNWIs’ investable wealth totalled $11.4 trillion in North America, down 2.3 per cent from 2010, and was $10.7 trillion in Asia-Pacific, down 1.1 per cent.

Among Europe’s HNWIs, wealth was down 1.1 per cent in 2011 at $10.1 trillion. In Latin America, HNWI wealth declined 2.9 per cent, though the HNWI population grew modestly, by 5.4 per cent.

India and Hong Kong topped the list of countries losing HNWIs in 2011.

Equity-market capitalisation plunged in India in 2011, wiping out asset values and levels of investable wealth. This helped to reduce the size of the country’s HNWI population by 18 per cent. A similar stock-market decline in Hong Kong (where HNWIs are traditionally highly exposed to equities) helped to reduce that HNWI population by 17.4 per cent.

According to the report, the bulk of the world’s HNWI population remains concentrated in the US, Japan, and Germany. Together, the three countries accounted for 53.3 per cent of the world’s HNWIs in 2011, up slightly from 53.1 per cent in 2010.Beyond the top three, there was little change in the geographic distribution of the world’s HNWIs, though the loss of HNWIs in India was enough to push it from the Top 12, and it was replaced by South Korea.

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