Slower growth seen in millionaires ranks
Growth in the number of millionaires in Hong Kong, the mainland and Asia-Pacific as a whole is expected to cool next year as the global economic slowdown takes its toll on stock and property prices.
Merrill Lynch Wealth Management and Capgemini yesterday released their Asia-Pacific wealth report, a regional version of the world report it released in June.
Hong Kong posted the fastest growth globally in the number of millionaires last year for the second consecutive year. The number of high net-worth individuals rose 33 per cent to 101,300, while their wealth expanded 35 per cent to US$511 billion.
High net-worth individuals are those with US$1 million or more investable assets, while those with US$30 million or more are classified as ultra-high net-worth.
The number of such wealthy people in the region and their total asset value grew the fastest in the world, by 14.9 per cent and 16.8 per cent, respectively. There were 23,000 ultra-rich holding assets of US$2.7 trillion.
The mainland's wealthy population rose 12 per cent to 535,000 last year, thanks to robust macroeconomic growth and the strong performance of equities and real estate. They were the second-largest group after Japan, which had 1.74 million.
But the region may already be losing its lustre as a wealth generator. In 2009, it boasted 14 of the fastest growing wealthy populations. Last year, only eight were from the region.
The property bubble, global slowdown and declining exports were eroding the high-growth economies of the mainland, Singapore and South Korea. The report said these countries would experience slower growth this year and next, compared with last year.
Alistair Scarff, the head of financial institutions equity research at Bank of America Merrill Lynch in Asia-Pacific, said growth in Hong Kong, the mainland and the rest of the region would slow, although he ruled out a possible contraction in the wealthy population.
'Much wealth creation was attained through initial public offerings and business valuation,' Scarff said.
However, the turmoil in markets 'could impact [high net-worth individuals] who are linked to equity activities'.
Last year, 57 per cent of such individuals in the region obtained their wealth from business ownership, against 48 per cent in 2009 and the global average of 46 per cent last year.
Stocks and property were the most popular assets in the region, except for Japan, where 29 per cent of wealth was in cash deposits. On average, Asia's rich invested 27 per cent in real estate, 26 per cent in equities, 22 per cent in fixed income and 22 per cent in cash.
The region was expected to cut investment in real estate and cash holdings in favour of fixed income and equities, the wealth report said, because of high inflation and the looming threat of a property bubble.
Alternative investments - art, jewellery, luxury cars and yachts - were expected to double to 6 per cent next year.
In Hong Kong, the rich invested 31 per cent of their wealth in equities and 21 per cent in real estate, which may be revised respectively to 39 per cent and 20 per cent next year. On the mainland, 42 per cent went into equities, 27 per cent real estate and 15 per cent cash or deposits.
The number of high net-worth individuals in the world last year after a growth of 8.3 per cent