Private wealth holders’ growth zooms in India

Global Wealth report says India is home to fourth largest ultra-high-net-worth households more than $100 million in private wealth

GN Bureau | June 16, 2015


#india   #private wealth   #stock market   #equities   #china   #asia   #pacific   #north America   #ultra high net worth  

China and India will catapult Asia-Pacific as the wealthiest region in the world and is expected to surpass North America by next year. The Boston Consulting Group's 'Global Wealth 2015: Winning the Growth Game' report said India is home to the fourth largest number of ultra-high-net-worth households that have more than $100 million (approx Rs 641.4 crore) in private wealth.

The US remains the country with the largest number of ultra-high-net-worth (UHNW) households at 5,201, followed by China (1,037), the UK (1,019), India (928) and Germany (679) in 2014. India's UHNW households grew manifold from 2013 when the number stood at 284, while China added a million to its millionaires list.

With a projected $57 trillion in 2016, Asia-Pacific (excluding Japan) is expected to surpass North America (a projected $56 trillion) as the wealthiest region in the world and will be the largest pool for client acquisition.

"At such a pace, the region is expected to overtake North America as the world's richest region in 2016, with $57 trillion in private wealth," the report released on Monday said.

Global private financial wealth rose almost 12% to reach a total of $164 trillion, with almost three-quarters of the growth driven by strong markets around the world.

The private wealth in the Asia-Pacific region expanded by a steep 29 per cent in 2014 to reach $47 trillion, enabling it to overtake Europe (Eastern and Western Europe combined) to become the world's second-wealthiest region, the report said.

The region is also projected to hold 34 per cent of global wealth in 2019. With a projected annual growth rate of almost 10 per cent, private wealth in Asia-Pacific will rise to an estimated $75 trillion in 2019.

What is driving this wealth creation? According to the report, growth in wealth in the Asia-Pacific region was driven heavily by the continued economic expansion of its two largest economies China and India.  According to BCG, 73 percent of the gains in private wealth in 2014 came from market gains on existing assets rather than newly created wealth.

Private wealth in China and India also showed solid market gains driven mainly by investments in local equities. Private wealth held in equities rose the most (48 percent) followed by wealth held in bonds (39 percent) and in cash and deposits (16 percent).

The market success created one million new millionaires last year in China. The US maintained the largest number of millionaires last year at about 6.9 million. China was in second place with 3.6 million, followed by Japan with 1.1 million.

"When it comes to wealth Asia is the place to be," said Federico Burgoni, a partner and leader of BCG's asset and wealth-management segment in the Asia-Pacific region. "China and India are speed driving the growth in Asia Pacific, but Indonesia and Thailand are also producing growth."

"More than two thirds of the new wealthy (in Asia Pacific) were entrepreneurs," noted Burgoni.

Globally, the total number of millionaire households reached 17 million in 2014, up from 15 million in 2013. BCG defines millionaires as those with $1 million or more in monetized wealth - cash, stock, bonds and other financial assets. Their wealth measurement doesn't include real estate or business ownership.

The report said current political and economic tensions, such as those in the Middle East and Latin America, continue to spur the wealthy to seek offshore locations to manage their wealth. As for offshore wealth booked in Asia-Pacific, Singapore (31 percent) and Hong Kong (15 percent) remained the top destinations.

BCG said Switzerland will need to reinvent itself to turn back the threat from fast-developing Asian booking centers as preferred global locations for offshore wealth. Currently, offshore hubs in Hong Kong and Singapore represent the most significant challenge to Switzerland's position. These two locations, accounting for 16 percent of global offshore assets in 2014, are expected to grow, with projected annual increase of 9 percent in offshore bookings in both centers over the next five years. They are projected to hold 19 percent of global offshore assets in 2019, owing mainly to the creation of new wealth in the Asia-Pacific region.

One takeaway worth noting is the still-growing divided between the ultra-rich and just the regular rich. The number of households with at least $100 million is expected to rise 19% globally by 2019. That's the fastest growing segment both in terms of number of households and overall wealth.

The report: Click Here

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