Asia-Pacific millionaires outnumbered those in North America for the first time last year as the world's wealthy saw a decline in their fortunes, according to a report by Capgemini SA and RBC Wealth Management.
The number of individuals in Asia-Pacific with at least $1 million in investable assets jumped 1.6 percent to 3.37 million, helped by an increase in rich people in China, Japan, Thailand, Malaysia and Indonesia, according to the World Wealth Report released today. So-called high-net-worth individuals in North America dropped 1.1 percent to 3.35 million.
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"While throughout the world the euro-zone crisis has affected markets in general and investors' level of uncertainty, within the Asia-Pacific region we have seen strength in their domestic economies underlying their performance from an economic standpoint," Gay Mitchell, deputy chairman for RBC Wealth Management, said in an interview in Toronto. "As such it's yielded an increase in population for high net-worth individuals."
The population of millionaires worldwide was little changed at 11 million, according to the report. Their wealth dropped 1.7 percent to $42 trillion of assets last year, the first decline since 2008, as the euro region's sovereign debt crisis and lack of economic growth in the U.S. roiled investors.
Emerging economies continued to grow in 2011, while the U.S. and Europe struggled under the burden of sovereign debt that sparked uncertainty across financial markets. China's real gross domestic product surged 9.2 percent last year, even after slowing compared with 2010, Capgemini and RBC said. That beat growth of 1.7 percent in the U.S. and western Europe.
North America remained the richest region with $11.4 trillion in high net-worth assets, compared with $10.7 trillion in Asia-Pacific, the report said. Wealth in Europe fell 1.1 percent to $10.1 trillion after rising 7.2 percent in 2010. Latin America had the biggest drop among the regions, falling 2.9 percent to $7.1 trillion in assets for its rich. The Middle East was the only region to post growth in assets among the wealthy, increasing funds 0.7 percent to $1.7 trillion.
"Market volatility and the uncertainty from the economic environment certainly has investors concerned and we've seen a continued shift to preserving capital and investing in more conservative asset allocations, certainly in North America and in Europe," Bill Sullivan, a Rosemont, Illinois-based director at Capgemini, said in a telephone interview. "Asia-Pacific individuals may have a slightly more aggressive attitude toward investing right now."
The super-rich category with $30 million or more saw their assets shrink 4.9 percent, following 12 percent growth in the prior year, contributing to the total decline.
Global wealth will grow at 4 percent to 5 percent during the next five years, driven by wealth creation in emerging markets, especially Asia, excluding Japan, Boston Consulting Group said in a separate report this month. Wealth surged at a compound annual rate of almost 11 percent from 2002 to 2007 before the financial crisis, and the indebtedness of developed- market economies slowed growth, according to the Boston-based firm.
Global equity market capitalization ended last year at $43.1 trillion, down 19 percent from 2010, the report said. The MSCI AC World Index, which tracks global stocks in developed and emerging markets, lost 9.4 percent in 2011 and the MSCI AC Asia Pacific Index fell 17 percent, according to data compiled by Bloomberg.
Adapting to the shift in the balance of wealth across the world is a challenge, especially for firms that can't adapt legacy business models, said Jean Lassignardie, head of sales and marketing for financial services at Capgemini, said by telephone, referring to companies managing generations of money in more mature markets. That may result in a "significant churn in the leaders of the industry," he said.
Wealth managers should readdress their business models and focus on increasing asset bases without adding new costs, Paris- based Lassignardie said. Developed-market private banks face rising costs, an inability to generate significant fees in the current low interest-rate environment and increased client demand for low-risk capital-preservation products, according to today's report.
Capgemini and RBC Wealth Management, a unit of Toronto- based Royal Bank of Canada, compiled data from 71 countries representing 98 percent of the world's gross national income. Capgemini's annual survey was previously sponsored by Merrill Lynch Wealth Management, a unit of Bank of America Corp.
RBC Wealth Management oversees more than C$322 billion ($316 billion) for customers globally.