Wealth shifts to emerging countries

Singapore has a population of only 4.8 million but 17.1 per cent of its households are millionaires. Photo / Thinkstock

China, India and Singapore posted the biggest increases in millionaires last year as the Asia-Pacific region countered a decline in wealth in western Europe and the United States, according to Boston Consulting Group.

Millionaire households in China rose 16 per cent to 1.43 million while those in Singapore climbed 14 per cent to 188,000 and India saw a 21 per cent increase to 162,000, the Boston-based firm said in a report.

Millionaire households in the US fell by 129,000 to 5.13 million.

Europe's debt crisis and declining equity markets slowed the increase in global wealth last year with a 1.9 per cent gain to US$122.8 trillion compared with a 6.8 per cent growth rate in 2010, Boston Consulting said. Singapore had the highest proportion of millionaire households while Hong Kong led the rankings for the percentage of billionaires.

"It's the first significant interruption of growth since the financial crisis," said Peter Damisch, a partner with Boston Consulting in Zurich. "Emerging markets will play a bigger role in private wealth."

The Stoxx Europe 600 slid 11 per cent last year with industrial and financial-services companies among the biggest decliners.Germany's Dax Index tumbled 15 per cent while the Standard & Poor's 500 Index was little changed.

Wealth in North America declined 0.9 per cent to US$38 trillion, while western Europe posted a 0.4 per cent drop to US$33.5 trillion, the report said.

Global wealth surged at a compound annual rate of almost 11 per cent from 2002 to 2007 before the financial crisis and the indebtedness of developed-market economies slowed growth, according to Boston Consulting data. The firm predicts a growth rate of 4 per cent to 5 per cent over the next five years, driven by wealth creation in emerging markets.

Asia-Pacific, excluding Japan, saw an 11 per cent increase to US$23.7 trillion and will maintain that growth rate to surpass private wealth in Europe over the next five years, Boston Consulting predicted. The region may reach US$40 trillion by 2016, it said.

Boston Consulting expects private wealth in China and India will increase by 15 per cent and 19 per cent a year respectively through 2016, with affluent Chinese more than US$10 trillion better off by the end of the period.

Wealthy individuals in Latin America saw an increase of almost 11 per cent in assets last year, lifted by economic growth in Brazil and Mexico.

Singapore has 17 millionaire households in every 100 with the Gulf states of Qatar and Kuwait, which were less affected by the Arab Spring than other Middle East oil-producing nations, ranked second and third.

Switzerland, which came fourth with 9.5 per cent, was top of a ranking for the proportion of households with more than US$100 million, according to the 12th annual wealth management report, which surveyed 63 markets. Switzerland had 11 households per 100,000, followed by Singapore with 10 and Austria with eight.

Boston Consulting omitted Saudi Arabia from its ultra-wealthy ranking because it was too difficult to define different households within the royal family network, Damisch said.

Cross-border assets in Switzerland, the biggest offshore centre, were unchanged at US$2.1 trillion as the repatriation of funds by clients in neighbouring European countries was offset by inflows from emerging market customers, the report said. Western European offshore wealth in Swiss banks dropped 2.2 per cent while assets in Switzerland and Luxembourg originating in North America "dwindled to an almost negligible amount", Boston Consulting said.

Worldwide, investors increased offshore assets 2.7 per cent to US$7.8 trillion with Hong Kong and Singapore among the beneficiaries. The two biggest Asian offshore booking centres may surpass Switzerland in the next 15 to 20 years, according to the report.

The shift in wealth growth to emerging economies poses a challenge for wealth-management firms based in the US and Europe, according to Damisch.

Finding and keeping talent in these developing markets is a "key success factor" and businesses may need to make several years of investment before making a profit, the report said.

A BAD WEEK AT THE OFFICE FOR BILLIONAIRES

The world's richest people lost a combined US$24.4 billion ($32.3 billion) last week as concerns over Spain's rising borrowing costs and the sputtering American job market caused global markets to tumble.

Casino mogul Sheldon Adelson lost US$2.2 billion. Shares of his Nevada-based Las Vegas Sands fell 10.3 per cent during the week. On Friday, Macau casinos reported gambling revenue rose 7.3 per cent in May, its slowest pace since July 2009.

Adelson, 78, is the 22nd-richest person in the world, according to the Bloomberg Billionaires Index.

"We seem to be bogged down in a very sluggish pattern," John Carey, who helps oversee about US$220 billion at Pioneer Investments in Boston, said. "The jobs report was discouraging, and it's been discouraging the past several weeks. It reaffirms this fear that the economy is slowing."

The Dow Jones Industrial Average erased its 2012 gain after US employers created the fewest jobs in a year and Chinese manufacturing slowed. The Standard & Poor's 500 Index sank 2.46 per cent on June 1, to close at 1278.04 in New York, its biggest drop since November.

Ten-year Treasury yields dropped below 1.50 per cent for the first time on Friday as US payrolls climbed by 69,000, less than the most-pessimistic forecast in a Bloomberg News survey, and Chinese manufacturing grew at its weakest pace since December.

Mark Zuckerberg, worth US$14.1 billion, fell off the Bloomberg index. Shares of Facebook dropped 13.1 per cent during the week.

Mexico's Carlos Slim, 72, remains the world's richest person with a net worth of US$63 billion. The tycoon lost US$3.1 billion during the week, as shares of his telecommunications company America Movil fell 3.04 per cent. Brazil's richest man Eike Batista's fortune fell 8.1 per cent to US$24.9 billion after deciding to sell a stake in his AUX gold business rather than make an initial public offering. The Bloomberg index measures wealth against market and economic changes.

- Bloomberg

OUT WITH THE OLD, IN WITH THE NEWS

Millionaires of the old world have made way for the new rich. According to a global wealth report just released by the Boston Consulting Group,

'The Battle to Regain Strength', the Asia-Pacific region posted the biggest increase in millionaire households. Private wealth in that region (not including Japan) increased by 10.7 per cent to US$23.7 trillion. That countered a wealth decline in Western Europe and North America. Here are the world's top 15 countries for millionaires, ranked by the proportion of households.

1. Singapore

* Population: 4.8 million
* Percentage of millionaire households: 17.1 per cent

The small city-state of Singapore counts the highest number of millionaire households relative to its population: 188,000, or 17.1 per cent. Singapore has long been the place of business in East Asia for the financial-services industry and is one of the largest centres for offshore banking.

2. Qatar

* Population: 1.9 million
* Percentage of millionaire households: 14.3 per cent

Qatar has the world's third-largest natural gas reserves and will host soccer's Fifa World Cup in 2022. It also counts about 47,000 millionaire households among its inhabitants. Oil and gas exports account for more than 50 per cent of GDP and help to provide the Gulf state with the highest per-capita income after Liechtenstein.

3. Kuwait

* Population: 3.6 million
* Percentage of millionaire households: 11.8 per cent

Kuwait owns about 7 per cent of world oil reserves, and oil exports account for about 95 per cent of export revenue. Kuwait has about 63,000 millionaire households, with the Alghanim and al Kharafi families being the country's richest.

4. Switzerland

* Population: 7.7 million
* Percentage of millionaire households: 9.5 per cent

Besides being home to 322,000 millionaire households, Switzerland also boasts the highest proportion of ultra-high-net-worth families in the world: 11 households per 100,000 have more than US$100 million in private financial wealth. Switzerland's, and Europe's, richest person is Ingvar Kamprad, the Swedish founder of Ikea, the world's largest furniture retailer.

5. Hong Kong

* Population: 7.2 million
* Percentage of millionaire households: 8.8 per cent

Hong Kong is home to the largest number of billionaires and to about 212,000 millionaire households. Hong Kong's, and Asia's, wealthiest man is Li Ka-Shing, who oversees conglomerate Hutchison Whampoa and real estate company Cheung Kong Holdings.

6. United Arab Emirates

* Population: 4.7 million
* Percentage of millionaire households: 5.0 per cent

Of the seven members of the Gulf state, no emirate was hit harder by the global financial turmoil than Dubai, the financial and transport hub of the Middle East. Dubai was on the brink of default in 2009 and survived solely through central bank intervention. The seven emirates count about 57,000 millionaire households, the majority of millionaires being Western expats based in Abu Dhabi or Dubai.

7. United States

* Population: 322.4 million
* Percentage of millionaire households: 4.3 per cent

The US, with the largest economy in the world, counted the largest number of millionaire households in 2011: 5.13 million, down about 129,000 from 2010. America's richest man is Bill Gates, co-founder of Microsoft, with a fortune of about US$60 billion.

8. Israel

* Population: 7.8 million
* Percentage of millionaire households: 3.6 per cent

Israel's booming technology business is fuelling the livelihood of the country's 83,000 millionaire households.. The wealthiest Israelis are the Ofer brothers, Idan and Eyal, who inherited their father's shipping fortune and art collection.

9. Taiwan

* Population: 23.2 million
* Percentage of millionaire households: 3.2 per cent

Taiwan counted 246,000 millionaire households in 2011. The island's economy relies heavily on the export of electronics, machinery and petrochemicals. The richest Taiwanese is Tsai Wan-Tsai, who owns publicly listed Fubon Financial Holding.

10. Bahrain

* Population: 1.3 million
* Percentage of millionaire households: 3.2 per cent

Bahrain, an island kingdom in the Gulf, became a centre of global attention after the 2011 Arab Spring sparked riots and repression in the oil-rich state. Bahrain has 8000 millionaire households. The country's richest inhabitants are the royal family, headed by King Hamad bin Isa al Khalifa.

11. Japan

* Population: 125.2 million
* Percentage of millionaire households: 2.9 per cent

As Japan slowly recovers from the nuclear fallout following the March 2011 earthquake, the country saw its millionaire households decline to 1,587,000 last year. Japan's richest man is Tadashi Yanai. The founder of clothing retailer Uniqlo is worth more than US$11 billion.

12. Belgium

* Population: 10.4 million
* Percentage of millionaire households: 2.9 per cent

2011 was the year that Belgium, after 541 days of negotiations, finally got a new Government. Despite the prolonged political impasse and the ongoing euro debt crisis, the country still counts about 134,000 millionaire households among its inhabitants.

13. Oman

* Population: 2.8 million
* Percentage of millionaire households: 2.5 per cent

The sultanate of Oman, the 24th-largest oil-exporting nation in the world, counted about 12,000 millionaire households among its inhabitants in 2011. The monarch of Oman, Qaboos bin Said al Said, and his family are believed to be the nation's richest individuals.

14. Ireland

* Population: 4.8 million
* Percentage of millionaire households: 2.2 per cent

Ireland may be the land of Guinness but its wealthiest inhabitant is mobile phone mogul Denis O'Brien. After four years of severe austerity measures, Ireland's economy is slowly coming back on track. Despite the economic carnage and an unemployment rate that remains above 14 per cent, Ireland still has more millionaires per head than any other country in Europe except Belgium. The country's millionaire households numbered about 33,000.

15. The Netherlands

* Population: 16.7 million
* Percentage of millionaire households: 2.1 per cent

The fortunes of the richest Dutch families are not too affected by the turmoil of the debt crisis ravaging the eurozone. Although the country dipped back into a recession, and its economy shrank by 0.7 per cent in the fourth quarter of 2011, it still boasted about 152,000 millionaire households last year.

- Boston Consulting Group and Bloomberg Billionaires