Beating the inflation blues is the story of rising millionaires. The India growth story just got better…India has emerged as the home to fastest growing millionaire population. Millionaires in India grew by a record 23,000 in 2007.
According to the annual World Wealth Report released by Merrill Lynch and Capgemini, India saw its millionaire population surging in 2007 by 22.6 per cent — which is higher than any other country in the world.
In the previous year’s report, India had the second fastest growth rate of 20.5 per cent after Singapore’s 21.2 per cent.
The number of high-net worth individuals (HNWIs) in India grew to about 1,23,000 at the end of 2007, up from 100,015 a year ago, the report said.
India is followed by China in terms of growth in the millionaire population. Brazil recorded the third-highest HNWI growth rate in 2007. Russia comes next in the list of fastest-growing HNWI populated nations, reflecting the dominance of BRIC nations.
HNWI: Individuals with net assets of at least US$1 million, excluding their primary residence and consumables.
Ultra -HNWI :Individuals with net assets of at least US$30 million, excluding their primary residence and consumables.
India saw a boom in market capitalisation growth of 118 per cent and a GDP growth of 7.9 per cent, which boosted the HNWI sector gains.
“Although the country’s real GDP growth decelerated from 9.4 per cent in 2006, current growth levels are considered more stable and sustainable. Market capitalisation growth more than doubled from roughly 50%, accounting for greater HNWI gains,” says the World Wealth Report.
India’s recent growth has been driven by the technology, financial services, property, construction and infrastructure sectors. The Bombay Stock Exchange and the National Stock Exchange were ranked among the world’s top 12 exchanges by the end of 2007, boosted by initial public offering markets and heightened international interest, the report said.
China: No 2 millionaire nation
China is ranked second in the growth of millionaires. The millionaire population has advanced by 20.3 per cent in 2007, more than two-and-a-half times greater than its 2006 pace, says the World Wealth Report.
China saw market capitalisation and GDP growth rates zoom last year, at 291 per cent and 11.4 per cent respectively. The Shanghai Exchange grew to be the sixth largest exchange in the world in terms of total market capitalisation.
China’s economy still owes its growth to its manufacturing capacity. “This is why its HNWI population growth is slower than that of India – and why the gap continues to widen between China’s richest citizens, a group with a particularly high concentration of wealth, and the middle-class, which continues to grow in size but remains largely unable to cross the HNWI threshold,” says the Capgemini report.
In 2007, the HNWI growth in China performed better than in 2006 where it saw a 7.8% growth, reflecting strong economic activity and potential for growth.
Brazil: Millionaire boom
Brazil is home to the third largest HNWI population. In Brazil, the number of millionaires zoomed by an impressive 19.1 per cent in 2007, up from 10.1 per cent growth in 2006.
Brazil saw a market capitalization growth of 93 per cent and GDP growth of 5.1 per cent. “At the same time, net private capital flows to Latin America doubled in 2007, contributing to the Bovespa Stock Exchange’s fourth-place ranking among the world’s largest IPO markets and 7.2 per cent market-share gain,” the World Wealth report said. Brazil’s economy has grown on the back of a strong agricultural, mining, manufacturing and service sectors.
Brazil reaped the benefits of sharp increases in food and energy prices throughout last year. Brazil is the world’s largest exporter of ethanol, giving it an important stake in the alternative energy market, which is gaining popularity as oil and conventional energy prices continue to rise around the world, says the report.
Russia: A millionaire’s paradise
Russia ranks fourth in terms of fastest-growing HNWI populations, despite growth decelerating from 15.5 per cent in 2006 to 14.4 per cent in 2007.
The market capitalisation gains to the tune of 37.6 per cent and 7.4 per cent in real GDP growth were the highlights of the economy. There is a growing international interest in the country as a global player.
Moscow is emerging as a respected and global financial centre, highlighted by its playing host to the world?s top-two IPOs in 2007. Notably, Russia is currently the world’s largest exporter of gas and its second-largest producer of oil,28 which allowed it to capitalize on sharp increases in energy prices through its exports of natural resources, the report said.
The rich get richer
For the first time in the history of the report, the average assets held by millionaires has exceeded $4 million, Merrill Lynch and Capgemini said.
The number of HNWIs in the world increased 6 percent in 2007 to cross the 10 million mark while the number of ultra high net worth individuals (Ultra-HNWIs) increased by 8.8 percent.
The wealth of the world’s high net worth individuals (HNWIs1) increased 9.4 percent to US$40.7 trillion in 2007, according to the 12th annual World Wealth Report.
Global growth remained solid in 2007, in terms of both real GDP and market capitalization? the two primary drivers of wealth generation. Strong worldwide gains in the first half of 2007 boosted HNWI growth, the report said.
In 2007, most European nations saw domestic savings rise, a likely result of high and rising interest rates throughout 2006 and much of 2007, the report said.
The countries which saw a drop in savings, recorded greater fall in GDP growth than fluctuations in consumption behavior, underscoring the impact slowdowns had on mature markets, the report added. While traditional United States, European and Asian stock market indexes experienced moderate growth, many emerging markets performed well.
Millionaires’ wealth to rise
The United States had one of the world’s lowest savings rates in 2007, at 10.9 per cent of GDP, down from 11.4 per cent in 2006. This was due to slowed GDP growth and increases in consumer and public spending.
Indications of a slowing economy led to several sharp rate cuts during 2007 and 2008, which led to a further fall in savings. In 2007, the savings rates of most emerging economies surpassed the benchmark average of the Group of Seven (G7) nations: 20.2 per cent of GDP – a trend representative of the differences between emerging and mature economies.
The Capgemini world wealth report has projected that global HNWI wealth will grow to US$59.1 trillion by 2012, advancing at a rate of 7.7 per cent per year.
Courtesy :- Rediff