Finally, Asia Has More Millionaires than North America
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Weakening economies that roiled markets last year also took their toll on the world's rich, though faster-growing Asia for the first time had more millionaires than North America, according to a study released on Tuesday.
A new report by CapGemini and RBS's Wealth Management said the global personal wealth of people with $1 million and more to invest fell in 2011 for the second time in four years, reflecting the euro zone crisis and economic sluggishness in developed markets. But several emerging markets also felt pain, as the number of millionaires in India and Hong Kong fell by almost one-fifth.
Economic Crisis Repercussions
The world's population of millionaires grew by 0.8 percent to a record 11 million, according to the report, yet their collective wealth fell by 1.7 percent 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 percent and their wealth contracted by 20 percent.
Last year was the first time India's wealthy declined in population since 2008, when their ranks fell by 32 percent 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.
Lewis noted the number of high net worth individuals rose even as overall wealth decreased.
Growth Surge in China
China's population of those with at least $1 million to invest rose by 5.2 percent to 562,400 last year. Japan's millionaires increased by 4.8 percent.
In 2009 and 2010, people worldwide with at least $1 million to invest saw their combined wealth surge by double digits.
Asia’s Growing Millionaires
Strong economic growth in China and other markets increased the ranks of millionaires across the Asia-Pacific region by 1.6 percent 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 percent to $10.7 trillion, as key markets such as Hong Kong and India lost ground.
"The economic slowdown, some debt challenges and indices that dropped 30 percent in 2011 were major factors that drove the decline in India," William Sullivan, global head of market intelligence at Capgemini, said at a New York press briefing Tuesday.
On the other hand, he said, India's wealth has the potential for rebounding quickly, just as it did in 2009.
Europe and Middle East
Surprisingly, Europe increased its millionaire ranks by 1.1 percent last year, for a total of 3.2 million, while combined wealth fell 1.1 percent 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 wealth was the Middle East, where civil unrest that shook up equity markets worldwide led to surging oil prices and 3.1 percent economic growth. The region's millionaire ranks rose 2.7 percent to 450,000, and that group increased its wealth by 0.7 percent to $1.7 trillion.
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.
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