Report: China replaces UK as home to world’s fourth-largest HNWI population
China’s population of high net worth individuals (HNWIs) last year surpassed that of the UK to become the fourth largest in the world, after the US, Japan and Germany, a new report on Asia-Pacific wealth trends released by Merrill Lynch Global Wealth Management and Capegemini reveals.
China’s move up the global HNWI rankings occurred as part of an inexorable shift of wealth from North America and Europe to Asia, and in spite of the massive hit Asia’s wealthy took during last year’s financial crisis, according to the findings, which were contained in a regional breakdown that follows the release in June of the Merrill Lynch/Capegemini’s 13th annual global wealth report.
The biggest decline in the ranks of HNWI’s occurred in Hong Kong, where the number of resident HNWIs tumbled by 61.3% to 37,000.
Nonetheless, despite last year’s decline, the average net worth of Hong Kong HNWIs remained at $4.9m, considerably higher than the regional average net worth of Asia Pacific HNWIs, which stood at $3.1m.
Asia Pacific’s total population of HNWI’s fell 14.2% to 2.4 million in 2008, while their combined wealth dropped 22.3% to $7.4trn, according to the report, which is available online at www.capgemini.com/worldwealthreport.
“While Asia Pacific saw a decline in HNWI numbers and wealth across the board, diverse economies and a shifting HNWI activity are signs that the region is poised to surpass North America and Europe to have the highest levels of wealth in the world,” said Bertrand Lavayssière, Managing Director Global Financial Services at Capgemini.
China, India to take lead
The region’s economies are forecast to grow at a faster pace than the global economy as a whole by 2010, with the combined wealth of its HNWIs predicted to increase by 8.8% annually until 2018 – faster than the global average of 7.1%, the report says.
“We expect Asia Pacific to be a significant driver of global HNWI wealth, with China and India at the forefront of growth, and Japan remaining an important high net worth market,” Antony Hung, Head of Asia Pacific Wealth Management at Merrill Lynch Global Wealth Management, said in a statement accompanying the report.
He noted that the region’s “diverse economic landscape” presents “tremendous growth opportunities" for wealth management firms.
Other findings:
• Asia’s Ultra-HNWIs, or individuals with investable assets of at least $30m, witnessed a steeper erosion of their wealth in 2008 than their less rich HNWI counterparts. The number of ultra-HNWIs in Asia Pacific fell 29.6% to 14,300 and their total wealth shrank 35.1%.
• India’s HNWI population fell 31.6% to 84,000 in 2008.
• Japan, which was already witnessing slower economic growth in 2007 than other parts of the world, and whose investors are also traditionally more risk averse, saw its ranks of HNWIs decline less dramatically than some other regions, or by 9.9% to 1.37m. The combined holdings of Japan’s HNWIs fell “only” 16.7% to $3.2 trn.
• China’s combination of robust macroeconomic growth and the closed nature of its markets helped it to avoid the larger losses in HNWI numbers seen in other markets, in spite of the steep market capitalisation losses that occurred there in 2008. The number of HNWIs in China fell 11.8% to 364,000 and their combined wealth dropped 20.7% to $1.7trn, according to the Merrill Lynch/Capegemini report.
