Chindia to lead emerging markets in HNI growth story

MUMBAI: Asia-pacific and BRIC nations would likely be the powerhouses of high net worth individuals (HNIs) growth, according to a Merrill Lynch Global Wealth Management and Capgemini report. China and India will continue to lead the way in Asia-Pacific, with economic expansion and HNI growth likely to keep outpacing developed economies.

After falling 14.2% in 2008 to 2.4 million, Asia-Pacific’s HNI population rebounded in 2009 to reach 3 million, matching that of Europe’s HNI population for the first time, the report said.

The Asia-Pacific region’s wealth also surged 30.9% to $9.7 trillion, more than erasing 2008 losses and surpassing the $9.5 trillion in wealth held by Europe’s HNIs. This shift in rankings occurred because HNI gains in Europe, while numbers were far less than those in Asia-Pacific, which saw a continued robust growth in both economic and market drivers of wealth. Hong Kong and India led the growth in Asia-Pacific, after experiencing massive declines in their HNI bases and wealth in 2008, amid an outsized resurgence in their stock markets. While Hong Kong witnessed the highest growth of 104.4% in the HNI population, India was the second-largest contributor with a growth of 50.9% in the HNI population.

“The Asian story continues to lead the global economic recovery and this has benefited many markets in the region, in terms of both growth and wealth creation,” said Pradeep Dokania, chairman, Merrill Lynch Global Wealth Management, India.

“In the case of India, the strong rebound in HNI numbers is highly correlated to the strong recovery in stock market prices and strong outlook for India’s underlying economy,” he added.

Elsewhere in the Asia-Pacific region, the trend was similar. In fact, the region was home to eight of the world’s 10 fastest-growing HNI populations. China rose 31% to 4,77,000 amid the Chinese stock market capitalisation growing more than 100% in 2009, as the economy grew at a rapid 8.7% pace.

In terms of asset allocation, HNIs in the Asia-Pacific region, ex-Japan, continued to have the highest allocation to real estate investment and to residential real estate, in particular. As at the end of 2009, 28% of the assets held by the region’s HNIs were in real estate. The region also had the lowest allocation to fixed income, with only 16% of assets invested in this class compared with the global average of 31%.