Asian millionaires did not achieve the same financial asset gains as their European and United States counterparts last year, partly because of poor performances of regional securities, according to Merrill Lynch. In a world wealth report, the US investment house said the smaller gains occurred despite the fact that Asia's rich switched many of their assets into first-world investment products during the Asian financial crisis. The report, written by Merrill in conjunction with management consultant Gemini Consulting, estimated that the wealth of individuals worldwide with more than US$1 million in financial assets increased an annualised 12 per cent last year to $21.6 trillion. These people are identified in the report as high net worth individuals (HNWI). In the report, Merrill estimated that there were nearly six million people worldwide who could be classified under this category. The company attributed the financial asset growth of wealthy individuals last year to the European and US economies, which grew 2.8 per cent and 3.5 per cent respectively in the year. The report forecast financial asset wealth to grow 9 per cent a year and reach $32.7 trillion by 2003. 'Latin American and Asia-Pacific HNWIs did not achieve the same gains as their European and US counterparts because they invested a higher proportion of their portfolios in their domestic Latin American and Asia-Pacific markets,' the report said. 'So even though they had moved most of their financial assets offshore into US dollars, the domestic proportion of their portfolios performed less well in 1998.' Unlike in Asia, high net worth investors in Latin America moved money back onshore and invested in domestic fixed-income securities at the end of last year, the report said. A similar move in Asia would be slower to come, it said. 'The main message from HNWI is that a lot of [their] wealth will continue to stay offshore,' Merrill Lynch vice-president Roman Scott said. 'Asians are staying out of the market. 'Eventually, they will come back, but we're not expecting that until there's real economic confidence.' Despite showing smaller gains, Asian millionaires still performed well, Mr Scott said. Of the $21.6 trillion held by the world's millionaires, $4.4 trillion was from Asia's rich, compared with $4 trillion in 1997. In Hong Kong, the figures showed that the SAR's wealthy 'have a taste for local-currency Hang Seng Index equities', Mr Scott said. A successful high net worth investor last year stuck to three principals, one of which was currency diversification, he said. The others were geographic diversification and asset-class diversification. This strategy allowed the spreading of risk and the removal of funds away from high-risk emerging markets in economic slowdowns. A typical millionaire would have a large proportion of his money in Europe and the US and a small proportion in Japan and Southeast Asia.