India's super-rich club grows second fastest in world

Indian economy may be facing a downturn, but all is not doom and gloom. A global wealth and investment report says India has recorded the second highest increase in the number of high net worth individuals (HNWI) - those having investable assets worth over $1 million.

India saw a steep decline in the number of HNWIs in 2011, but in 2012, it saw an increase by 22.2% and their wealth by 23.4%. As against 84,000 HNWIs in 2008 and 1,25000 in 2011, India was home to 1,53,000 such individuals in 2012. Altogether, these Indians were worth $589 billion. However, it was Hong Kong that experienced the most significant gains as its HNWI population grew by 35.7% and their wealth by 37.2%.

A further look at how they were investing will bring cheer to the real estate sector. In line with the investing behaviour in the Asia-Pacific region, excluding Japan, Indian HNWIs invested most in real estate (26.5%). The balance of portfolios was allocated to cash and deposits (22.7%), fixed income (17.7%), equities (17.4%) and alternative investments (15.8%). Allocation to alternative investments at 15.8% was the highest in Asia-Pacific.

Capgemini and RBC Wealth Management's 2013 World Wealth Report (WWR) said the Global MSCI Benchmark Index increased 13.2%, with robust performances by Germany (27.2%), Mexico (27.1%) and India (23.9%). It said in India, reform measures and monetary easing helped equity markets gain by 23.9%.

Wealth growth was strongest in Asia-Pacific at 12.2%, followed by North America at 11.7%. The report said, "The fastest-growing HNWI markets are located in Asia-Pacific. Hong Kong experienced a 35.7% increase in its population of HNWIs, propelled by a combination of relatively less conservative investing behaviour among many HNWIs and strong equity markets. India, with 22.2% growth, benefitted from positive trends in equity market capitalization, gross national income, consumption and real estate. Both Hong Kong and India, which are notoriously volatile, overcame their poor performance in HNWI population growth in 2011 - Hong Kong lost 17.4%, while India lost 18.0%."

More than half the global population of HNWIs continued to be concentrated in the US, Japan and Germany. For the past three years, individuals in these countries accounted for roughly 53% of all HNWIs, down from 54.7% in 2006. However, the market share of these countries is expected to erode over time as emerging markets increase in prominence.

And this is expected soon. The WWR report added, "Asia-Pacific is expected to become the largest HNWI wealth market as early as 2014. Asia Markets are expected to expand annually by 10.9% and 9.7% respectively through 2015. HNWI population and wealth reached record levels in Asia-Pacific in 2012, propelling global growth. Since 2007, Asia-Pacific has increased its HNWI population by 31% and its wealth by 27%, well in excess of the rest of the world increases of 14% for HNWI population and 9% for wealth".

Asia-Pacific built on this trend of strong performance in 2012, its HNWI population expanding by 9.4% to reach 3.68 million and their wealth by 12.2% to reach $12 trillion.

Jean Lassignardie from Capgemini Global Financial Services said, "GDP growth of 5.5% which is more than double the global average, combined with strong equity market performance across the region and strong real estate market performance in some markets, drove robust growth in Asia-Pacific's HNWI population and wealth in 2012".

How rich are we?

Percentage increase in number of super rich between 2011 and 2012

Hong Kong - 35.7%

India - 22.2%

Indonesia - 16.8%

Australia - 15%

China - 14.3%

Thailand - 12.7%

Singapore - 10.3%

Japan - 4.4%

In absolute terms, number of super-rich in India

2008 - 84,000

2009 - 1,26000

2010 - 1,53000

2011 - 1,25000

2012 - 1,53000

Where do India's super-rich invest

Real estate (26.5%)

Cash and deposits (22.7%)

Fixed income (17.7%)

Equities (17.4%)

Alternative investments (15.8%)

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