By Joseph A. Giannone
NEW YORK, June 19 Weakening economies that
roiled markets last year also took their toll on the world's
rich, th ough faster-growing As ia for the first time had more
millionaires than North America, according to a study released
A new report 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.
And with Europe's debt crisis still in full throttle, the
outlook for wealth creation in 2012 remains dim, according to
Capgemini and RBC Wealth Management's latest world
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.
Families with $30 million or more to invest saw their
combined wealth fall 4.9 percent and their ranks shrink by 2.5
percent to 100,000 people. This decrease reflects their holdings
in higher-risk and less liquid investments like hedge funds,
private equity and real estate.
Sinking stocks, slowing exports and slumping currencies hit
some countries especially hard. India saw its ranks of
millionaires fall by 27,500, or 18 percent to 125,500 last year,
reflecting a one-third decline in stock market values and a
weakening rupee. Hong Kong's millionaire population fell by 17.4
percent as euro zone woes weighed on its own growth.
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.
The Toronto banking giant, one of the world's 10 largest
wealth managers, took over sponsorship of the widely watched
report last month from Bank of America's U.S. brokerage
unit Merrill Lynch.
Lewis noted the number of high net worth individuals rose
even as overall wealth decreased.
"It at least suggests there continues to be upward mobility
and the ability to generate wealth around the world," he said.
CHINA'S GROWING WEALTH
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.
Last year was tough on investors, who were buffeted by a
tsunami in Japan, a downgrade of U.S. sovereign debt, political
unrest in the Middle East and North Africa, and waning
confidence in governments struggling to stimulate growth. And
weakness in developed markets slowed growth in export economies
in Asia and Latin America.
Poland and Singapore, though far apart on the globe, both
suffered from the euro zone crisis. Poland, as foreign
investment fell, saw its number of millionaires fall 7.8 percent
while those in Singapore dropped 7.3 percent, reflecting lower
demand for exports.
In 2009 and 2010, people worldwide with at least $1 million
to invest saw their combined wealth surge by double digits.
Capgemini's report tracks financial assets but excludes an
individual's primary residence, collectibles, consumables and
Millionaire wealth in the United States and Canada in 2011
fell 2.3 percent to $11.4 trillion - still the wealthiest region
by this measure - though it had 1.1 percent fewer millionaires,
slipping by about 39,000 to a total of 3.35 million.
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
On the other hand, he said, India's wealth has the potential
for rebounding quickly, just as it did in 2009.
"We are expecting that if not in 2012, that certainly by
2013 India combined with China will continue to drive that
strong growth from the Asia-Pacific region," he said.
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 cautioned that 2012 so far has remained
challenging for investors. Concerns about China's growth rate,
signs of further contraction in mature markets and the
uncertainty stemming from elections and financial policy
decisions also may weigh on 2012 performance, he said.
"Repeated flare-ups are likely to keep markets on edge,"
said Jean Lassignardie, a vice president at Capgemini Global
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.
Merrill Lynch, the original bank sponsor of the survey, is
in talks to sell its non-U.S. wealth management business with
Geneva's Julius Baer Gruppe AG, people familiar with
the situation told Reuters Tuesday. [ID :nL5E8HJ0MN]