Millionaires' Riches Return to Pre-Crisis Levels, Study Finds
The number of individuals with at least $1 million of investable assets in Asia-Pacific rose 26 percent to 3 million in 2009, matching Europe and almost overhauling North America’s 3.1 million, according to the 14th annual World Wealth Report published yesterday.
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,” Ong Yeng Fang, market managing director for Indonesia, Philippines and Thailand at Merrill Lynch Wealth Management, said at a conference in Singapore today. Given Europe’s debt crisis, “there is a very high possibility that their numbers will be surpassed.”
Millionaires in Asia-Pacific -- home to 60 percent of the world’s population and the two fastest-growing major economies - - boosted combined assets 31 percent to $9.7 trillion, the fastest regional increase, according to the survey. The MSCI Asia-Pacific Index posted its biggest annual gain in six years as stimulus spending in China reignited economic growth.
Barclays Plc, Morgan Stanley and UBS AG are rushing to expand their private banks in Asia-Pacific as rich people from Indonesia to China invest more money. Wealth in the region, excluding Japan, is expected to rise at almost double the global pace, the Boston Consulting Group said this month.
“This region has the best economic growth, the highest levels of wealth creation, and many players are coming to this part of the world, or are expanding,” Charles Mak, Morgan Stanley’s head of private wealth management, said in an interview this month.
The number of millionaire households, or those with at least $1 million in investable assets excluding primary residences, expanded to 10 million globally from 8.6 million a year earlier, according to Merrill Lynch and Capgemini. North America’s number of millionaires grew 17 percent, the second- biggest regional increase.
Worldwide, global wealth held by millionaires rose by 19 percent to $39 trillion after falling more than 19 percent in 2008 following the credit crisis that sent stock indexes to their worst annual losses since the Great Depression and slashed the value of real-estate holdings, hedge-fund and private-equity investments.
Assets in North America advanced 18 percent in 2009 to $10.7 trillion. The U.S. had 2.87 million millionaires, followed by 1.65 million in Japan and 861,500 in Germany, the report said. The three countries accounted for 53.5 percent of the world’s millionaires in 2009. The number of millionaires in Hong Kong soared 104 percent and in India, 51 percent to 126,700.
“High-net-worth investors have emerged more cautious and conservative, but they have emerged,” Lyle LaMothe, head of U.S. wealth management for Merrill Lynch global wealth management, said in New York.
Last year’s gains were driven by market recovery and government stimulus efforts, the survey said. The Standard & Poor’s 500 Index rose more than 20 percent in 2009 after falling 38 percent in 2008, its steepest annual drop since 1937.
Ultra-high-net-worth individuals with more than $30 million to invest saw their wealth rise by almost 22 percent in 2009, faster than other millionaires, according to the report, which attributed the gain to a “more effective re-allocation of assets.”
Millionaire investors “warily returned to markets in cautious pursuit of returns,” LaMothe said. Equity holdings worldwide rose to 29 percent from 25 percent and fixed-income investments increased to 31 percent from 29 percent as cash and deposits dipped to 17 percent from 21 percent.
Portfolio allocations to real estate stayed the same at 18 percent as residential real estate assets’ increase balanced out commercial real estate holdings’ decrease.
Wealthy investors in all regions except Latin America increased their relative share of holdings in markets outside their home regions, reversing a trend that began in 2006 of increasing investments in home countries.
“What the markets and economy destroyed in 2008 was reconstructed in 2009,” Patrick Ramsey, chief executive officer of Merrill Lynch Bank (Suisse) SA, told reporters in Zurich. “Volatility is now part of our world, and we have to learn to live with it.”