Boom time: India sees a big rise in millionaires

Boom time: India sees a big rise in millionaires

Mumbai: The number of Indians with investible resources in excess of a million dollars rose 51% on the back of a smart recovery in asset prices in 2009, according to the 2010 World Wealth Report released on Wednesday by Capgemini and Merrill Lynch Global Wealth Management Ltd.

The number of high net worth individuals (HNIs) was 126,700 in 2009, or one for every 9,471 Indians.

“The strong rebound in HNWI (high net worth individuals) numbers is highly correlated to the strong recovery in stock market prices and strong outlook for India’s underlying economy", said Pradeep Dokania, chairman at Merrill Lynch’s local wealth management unit.

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Indeed, after losing over half its value in 2008, the Bombay Stock Exchange’s Sensex, the benchmark index on Asia’s oldest bourse, bounced back by 81% in 2009.

Values of other major assets such as real estate and gold also increased in India with prices returning to pre-crisis levels, and in some cases higher than that.

Additionally, wealth managers find the outlook for India optimistic with economic output projected to grow at least 8.5% this year.

“Investors and savers are looking at India positively, it being one of the greener pastures among emerging markets," said Atul Singh, head of wealth management at Merrill Lynch India.

He listed India’s strong fundamentals in terms of economic growth and industrial recovery as well as the demographic dividend, as India’s large young population is sometimes described.

These factors will drive inflows, said Singh.

India is among a group of Asia-Pacific countries and emerging economies that will lead the growth in the number of wealthy individuals in the coming years, the report added. In a testimony to the changing balance of wealth across the globe after the financial crisis, the size of the HNI population in Asia-Pacific at three million is as large as that of Europe.

More importantly, their collective wealth stood at $9.7 trillion (Rs449.1 trillion today) by the end of 2009, higher by 30.9%, and marginally more than the $9.5 trillion held by Europe’s well-heeled set.

The global population of HNIs at 10 million also went back to pre-crisis levels despite the contraction in the world’s gross domestic product over the year.

Ultra-HNI’s, or those with investable assets of $30 million or more, increased their wealth by 21.5%, higher than the 17% increase in wealth by HNIs overall.

Globally, fixed income instruments retained their position as the investment of choice among HNIs with a share of 31%, followed by equities.

Although the US, Japan and Germany still accounted for 53.5% of the world’s HNI population at the end of 2009, China remained in fourth place with 477,000 after clocking 31% growth, while Australia dislodged Brazil from 10th place.

Graphic by Ahmed Raza Khan/Mint