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Rich hold onto wealth through crisis, Asian millionaires grow to match HNW population in Europe

Thursday, June 24, 2010
Opalesque Industry Update – The number of rich individuals, with investible assets of not less than $1m, grew 17% to 10 million in 2009, with their collective wealth totaling $39tln or a gain of 19%. Surprisingly, the rich regained their wealth while the rest of the world endured the worst economic recession in decades, according to the 14th annual Merrill Lynch Global Wealth Management and Capgemini.

The report was based on a survey of more than 1,100 wealthy investors who claimed they were able to generate positive results despite the crisis by holding a variety of investments, including commodities and real estate, said ABCnews.

It added that high-net worth individuals (HNWIs) invested their money into fixed income investments with the aim of getting their desired returns and cash flow. For their part, brokers had a hard time convincing investors to get back into investing and take riskier but productive investments.

Interestingly, those classified as ultra-rich individuals, or those with more than $30m in investible assets, saw their wealth grew by 21.5% last year, according to Asian Investor. This means that the wealthy individuals have almost recouped all their losses in 2008 and returned to their 2007 wealth levels.

"While in 2008 global HNWI wealth showed an unprecedented decline, a year later we are already seeing distinct signs of recovery, and in some areas a complete return to pre-crisis levels of wealth and growth," says Bertrand Lavayssière, managing director of global financial services at consulting firm Capgemini.

Most new millionaires from emerging markets
The fastest growth was noted in emerging markets. "Much of this rebound has been, and will continue to be, driven by emerging markets -- especially India and China, as well as Brazil,” added Lavayssière.

A report by Reuters indicate that the world’s wealthiest investors are forecasted to fix their eyes into emerging markets and look for high-yielding large company stocks.

“In the coming year and a half, funds are expected to slowly flow back into emerging markets and certain sectors of the stock market,” Reuters said. Unlike in 2009 when most investors prefer to invest onshore, the current trend is to look for investments in so-called hot markets like China, India and Brazil.

In 2011, global economic growth is seen to be driven by emerging markets.

Number of Asian millionaires equaled Europe
For the first time in history, the number of Asia-Pacific millionaires equaled Europe, the survey showed.

The report added that the number of HNWIs in Asia-Pacific grew 26% to 3 million in 2009, equaling Europe’s number of individuals with at least $1m in investible assets. The number of HNWI in North America was 3.1 million as of end 2009, said Businessweek. Assets of Asia-Pacific millionaires are projected to reach $9.7tln.

Ong Yeng Fang, market managing director for Indonesia, Philippines and Thailand at Merrill Lunch Wealth Management said that Asia “continues to lead the global economic recovery and this has benefited many of the markets in the region in terms of both growth and wealth creation.”

Asia is ‘center’ of economic growth
Asia’s emerging importance as a key economic growth center was capped Wednesday when Dr. Marc Faber, also known as Dr. Doom, advised investors to put their money into Asia and commodities. Speaking at the annual conference in London, Marc Faber, an investment advisor and fund manager based in Hong Kong and the author of the famed Gloom Boom and Doom monthly report and of several books, said the real crisis has yet to come, but Asia and commodities can offer safe havens (See Opalesque Exclusive: here).

Indeed, Asia is flexing its economic influence as a separate study made by Russell Investments, a Tacoma, Washington-based asset manager with $179.4bn in AuM, showed that Asian institutions are expanding their exposure to alternative assets, including hedge funds, private equity and real estate. This is an emerging trend among Asian HNWIs, sovereign wealth funds and other state agencies, Russell said.
- Komfie Manalo

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