The Relentless March of Asia's Millionaires

At the World Economic Forum on East Asia in Vietnam earlier this month, I was struck by the air of self-confidence among the hosts and participants, which included government and business leaders from the ten ASEAN countries as well as China, India, Japan and Korea. “Everyone is hoping to learn from Asian dynamism,” crowed China’s Wan Zhizhen, who is vice-chairman of the National Committee of the Chinese People’s Political Consultative Conference.

 
The release this week of the 2010 World Wealth Report will do nothing to dent that confidence. The annual survey by Capgemini and Merrill Lynch of the global population of high net worth individuals (HNWIs, defined as those with investable assets of at least US$1 million) found that, for the first time ever, Asia Pacific has caught up with Europe in terms of millionaire numbers. Collectively, Asia’s rich have US$9.7 trillion in liquid assets – slightly higher than Europe’s US$9.5 trillion.
 
All these have implications on the way companies in Asia – and their CFOs – operate today and their strategic planning going forward. At the East Asia Forum, government leaders spoke of the importance of free trade, deregulation, intra-regional integration, environmentally sustainable growth and socially inclusive development. In the World Wealth Report, private consumption among Asia’s rich was found to have risen 5% to US$3.8 trillion even as direct real estate investment surged 56% to US$25 billion in the second half of 2009.
 
Return of the Millionaire
The rise in HNWI numbers in Asia is remarkable given the fall in their ranks in 2008. That year, the survey counted 2.4 million high net worth individuals across the region, down 14% from 2007. Their overall wealth decreased 22% to US$7.4 trillion.
 
The World Wealth Report found that millionaire numbers have now more than made up for the decline in 2008 – Asia Pacific had 3 million millionaires in 2009, the same as in Europe. Asian wealth surged 31% to US$9.7 trillion, the second-largest nest egg of millionaire riches after North America, which has US$10.7 trillion, up 18% from 2008.
 
The Asia Pacific is “home to eight of the world’s ten fastest-growing HNWI populations,” notes the report. “Hong Kong and India lead the pack, after experiencing mammoth declines in their HNWI bases in 2008.”
 
China retains its position as home of the world’s fourth-largest number of HNWIs, with 477,000 of them, up 31% from 2008. “China and India will continue to lead the way, with economic expansion and growth likely to keep outpacing more developed economies,” says the report. “The region’s HNWI growth is likely to be the fastest in the world as a result.”
 
Investment and Consumption
Gaining insights into this tiny but lucrative and growing segment of Asia’s consumer market is important for companies in Asia, particularly those in financial services, real estate, hotels, travel and luxury goods.    
 
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