BackAsia, not North America, now has most millionaires
Asia, not North America, now has most millionaires
Premium
Weakening economies that roiled markets last year also took their toll on the world’s rich, while Asia for the first time had more millionaires than North America, according to a study released on Tuesday.
And with Europe’s debt crisis still in full throttle, the outlook for wealth creation in 2012 remains dim, according to Capgemini and RBC Wealth Management’s latest world wealth report.
The world’s population of millionaires grew by 0.8% to a record 11 million, according to the report, yet their collective wealth fell by 1.7% to $42 trillion. Every region except the Middle East saw declines in wealth. It was the first global drop in millionaire wealth since the 2008 financial crisis, when the ranks of the wealthy fell by 15% and their wealth contracted by 20%.
Families with $30 million or more to invest saw their combined wealth fall 4.9% and their ranks shrink by 2.5% to 100,000 people. This decrease reflects their holdings in higher-risk and less liquid investments like hedge funds, private equity and real estate.
Sinking stocks, slowing exports and slumping currencies hit some countries especially hard. India saw its ranks of millionaires fall by 27,500, or 18% to 125,500 last year, reflecting a one-third decline in stock market values and a weakening rupee. Hong Kong’s millionaire population fell by 17.4% as euro zone woes weighed on its own growth.
Last year was the first time India’s wealthy declined in population since 2008, when their ranks fell by 32% amid falling stock prices and lower global demand for goods and services, according to Capgemini.
“It was a challenging environment for our clients," George Lewis, global head of wealth management at Royal Bank of Canada, said in an interview.
The Toronto banking giant, one of the world’s ten largest wealth managers, took over sponsorship of the widely watched report last month from Bank of America’s US brokerage unit Merrill Lynch.
Lewis noted the number of high net worth individuals rose even as overall wealth decreased.
“It at least suggests there continues to be upward mobility and the ability to generate wealth around the world," he said.
China’s Growing Wealth
China’s population of those with at least $1 million to invest rose by 5.2% to 562,400 last year. Japan’s millionaires increased by 4.8%.
Last year was tough on investors, who were buffeted by a tsunami in Japan, a downgrade of US sovereign debt, political unrest in the Middle East and North Africa and waning confidence in governments struggling to stimulate growth. And weakness in developed markets slowed growth in export economies in Asia and Latin America.
Poland and Singapore, though far apart on the globe, both suffered from the euro zone crisis. Poland, as foreign investment fell, saw its number of millionaires fall 7.8% while those in Singapore dropped 7.3%, reflecting lower demand for exports.
In 2009 and 2010, people worldwide with at least $1 million to invest saw their combined wealth surge by double digits.
Capgemini’s report tracks financial assets but excludes an individual’s primary residence, collectibles, consumables and consumer durables.
Millionaire wealth in the United States and Canada in 2011 fell 2.3% to $11.4 trillion - still the wealthiest region by this measure - though it had 1.1% fewer millionaires, slipping by about 39,000 to a total of 3.35 million.
Strong economic growth in China and other markets increased the ranks of millionaires across the Asia-Pacific region by 1.6% to a total of 3.37 million, as Asia vaulted past North America as home to the most millionaires.
Even so, overall wealth in the Asia-Pacific region slipped 1.1% to $10.7 trillion, as key markets such as Hong Kong and India lost ground.
Surprisingly, Europe increased its millionaire ranks by 1.1% last year, for a total of 3.2 million, while combined wealth fell 1.1% to $10.1 trillion. The report also said Europeans invest more of their wealth overseas, reducing their exposure to domestic markets.
The outlier in terms of shrinking wealth was the Middle East, where civil unrest that shook up equity markets worldwide led to surging oil prices and 3.1% economic growth. The region’s millionaire ranks rose 2.7% to 450,000, and that group increased their wealth by 0.7% to $1.7 trillion.
The report cautioned that 2012 so far has remained challenging for investors. Concerns about China’s growth rate, signs of further contraction in mature markets and the uncertainty stemming from elections and financial policy decisions also may weigh on 2012 performance, he said.
“Repeated flare-ups are likely to keep markets on edge," said Jean Lassignardie, a vice president at Capgemini Global Financial Services.
The report, now in its 16th year, does not delve into asset-allocation decisions made by wealthy investors as it has in the past, because that data was based on interviews with Merrill Lynch advisers. Merrill was the original bank sponsor of the survey.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
