Edgy markets and slow growth reduce global wealthPosted: July 04, 2012
Uncertainty over yet another euro zone debt crisis took its toll on the world's wealth and, for the second time in four years, the aggregate investible wealth of high net-worth individuals (HNWIs) declined in 2011. According to the World Wealth Report 2012, produced by Capgemini and RBC Wealth Management, the euro zone crisis increased market volatility and slowed global economic growth, unsettling investors and triggering losses in asset values.
In 2011, the number of HNWIs globally did increase marginally, by 0.8% to 11 million, with most of the growth ó 1.1% ó coming in the $1 million-$5 million "wealth band,î which represents 90% of the global HNW population. That followed two years of healthy growth in 2009 and 2010 after the devastating effects of 2008. Canada, however, bucked the trend with the number of HNWIs declining by 0.9% in 2011, dropping to 279,900 from 282,300 in 2010.
It was aggregate investible wealth, as measured by asset values, that took the real hit in 2011. It declined by 1.7% in 2011 to US$42.0 trillion. "The global population of Ultra-HNWIs declined 2.5% to 100,000 in 2011,î says the report, "and their wealth declined by 4.9%, after gaining 11.5% in 2010. The number of mid-tier millionaires declined 1% to 970,000 and their wealth by 1.2%. These two segments account for just 9.7% of the global HNW population, but 56.9% of its investible wealth.î
The Asia-Pacific region, with 3.37 million HNWIs, now boasts more HNWIs than second-place North America with 3.35 million and third-place Europe with 3.17 million HNWIs. But North America retains top ranking for the amount of investible wealth, at US$11.4 trillion in 2011 ó though that was down 2.3% from 2010. Asia-Pacific had investible wealth of US$10.7 trillion in 2011 and Europe US$10.1 trillion.
The countries that suffered the greatest loss in wealth in 2011 were India and Hong Kong.
"Equity-market capitalization plunged in India in 2011,î explains the report, "wiping out asset values and levels of investible wealth.î India's HNW populations dropped by 18%. Likewise, in Hong Kong ó where, says the report, HNWIs tend to be very exposed to equities ó the HNW population declined by 17.4%.
The bulk of the world's HNW population remains concentrated in the three top-ranked countries ó the U.S., Japan, and Germany, numbers one, two and three, respectively. Together, the three countries accounted for 53.3% of the world's HNWIs in 2011. Canada ranked seventh in the world by HNW population in 2011 and 2010.