Singapore is millionaireville

2011-06-04 11:29

The rank of millionaires expanded by 12% in 2010, led by Singapore, as gains in financial markets lifted global wealth for a second consecutive year, according to the Boston Consulting Group.

The number of millionaire households increased to about 12.5 million, the Boston-based firm said in a study released this week. Singapore millionaires rose by almost 33% after jumping about 40% a year earlier.

The US had the most $1 million-plus households, with 5.2 million, followed by Japan and China.

Peter Damisch, a partner based in the firm’s Zurich office and head of the wealth management practice in
Europe, said: “We have seen a growth from 2008 to 2010 that matches the growth from 2005 to 2007.

“But the growth from 2008 to 2010 was driven by the recovery of equity markets and much less by the generation of new wealth.”

Global assets under management rose by 8% to $121.8 trillion (R824 trillion) last year, beating the study’s previous peak of $111.8 trillion in 2007. The US and Canada had the greatest absolute gain, climbing $3.6 trillion to $38.2 trillion and replacing Europe as the richest region.

Assets in Asia-Pacific, excluding Japan, rose 17%, the fastest among regions.

The study looked at 62 countries, representing more than 98% of global gross domestic product.

Some numbers may differ from those in last year’s report because of currency fluctuations and the availability of newer data, said Damisch, a co-author of the report.

The increase in wealth last year was mostly a result of strong performance by financial markets, the report said.

The MSCI AC World Index, which tracks stocks in developed and emerging markets, returned 13% last year, including dividends. North America continued to have the highest proportion of wealth held in stocks – at 44%.

Less than 1% of households globally were considered millionaires, which is defined as investable assets of more than $1 million, excluding property and art.

Wealth became more concentrated, with millionaire households controlling 39% of the world’s assets, up from 37% a year earlier, the study said.

Singapore also had the highest proportion of millionaire households at 15.5%, followed by Switzerland and Qatar.
Saudi Arabia had the highest concentration of ultra-wealthy households, which are those with more than $100 million in assets, at 18 per 100 000. Switzerland was second and Hong Kong was third.

The amount of offshore wealth, defined as assets housed in a country other than the investor’s legal residence or tax domicile, increased by $300 billion to $7.8 trillion because of market performance and asset inflows, primarily from emerging markets.

The proportion of wealth held offshore declined to 6.4% from 6.6%, in part because of stricter regulations in Europe and North America.

Global wealth would increase at a compound yearly rate of almost 6% from the end of last year through 2015 to about $162 trillion, the study said.

Wealth in the Asia-Pacific region, excluding Japan, is expected to rise at almost double the global rate, which will result in the region’s share of global wealth increasing to 23% in 2015.

The report’s authors also looked at the performance of 120 wealth management firms worldwide. Revenue increased by an average of 8.5%, and assets under management increased by 7.5%, down from 12.8% a year earlier.

Net new assets, which is the difference between asset inflows and outflows, increased to 2.3% of overall assets managed at the end of the previous year in 2010 from 1.3% in 2009, yet remained below pre-crisis levels, the study said.

The 2009 number was reduced from 1.5% after the firm received more samples.

There will continue to be “stronger flows” back to wealth management firms, according to Monish Kumar, a senior partner in the firm’s New York office.

The consulting firm’s Damisch said: “Wealth management has been a fabulous business and, going forward, it’s still going to be a very good business but a little less attractive because of more demanding clients, pricing pressure and increased regulatory costs.”

– Bloomberg 

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