Friday, June 10, 2011

Swelling Global Wealth




Global Wealth soared to a record $121.8 trillion in 2010, says a latest study by global consultancy firm, BCG.

Global Wealth, defined as total assets under management (AuM) across all households and which includes cash deposits, money market funds, listed securities held directly or indirectly through managed investments, and onshore and offshore assets, gained 8% or $9 Trillion to reach $121.8tn by the end of 2010 thereby signaling a solid recovery (after the tumultuous 2008 and early 2009 post-the global financial crisis), says a latest report by the Boston Consulting Group. The study, “Shaping a New Tomorrow: How to Capitalize on the Momentum of Change,” adds that the number of Millionaire Households too jumped by 12.2%, during the year. Though, it notes, changes in regulations and client behavior continue to dampen wealth managers’ results.

North America had the largest absolute gain of any regional wealth market in assets under management (AuM), at $3.6 trillion, and the second-highest growth rate, at 10.2 percent. Its $38.2 trillion in AuM made it the world’s richest region, with nearly one-third of global wealth, the report findings suggest. However, it was the Asia-Pacific (excluding Japan) which recorded the fastest growth in wealth, at 17.1%.  And any guesses how India fared? No points for guessing, India along with US, China and UK notched up the largest absolute gains, in terms of individual countries, according to the findings of the BCG report.


The strong performance of the financial markets accounted for the lion’s share (59%) of the growth in AuM, the report highlights. According to it, from year-end 2008 through 2010, the share of wealth held in equities increased from 29% to 35%. “During the crisis, cash was king,” said Monish Kumar, a BCG senior partner and a coauthor of the report. “Since then, clients have been steering their assets back into riskier investments.” North America continued to have the highest proportion of wealth held in equities – 44%, up from 41% in 2009. “The wealth management industry has overcome tremendous adversity over the past several years, and the sustained recovery of global wealth bodes well for its future,” added Kumar, who is the global leader of asset and wealth management at BCG. “But the positive signs should not be misread as a return to normal. A number of disruptive forces, including increased regulatory oversight and changes in client behavior, are rewriting the rules of the game—both literally and figuratively,” he cautioned.

In terms of millionaire households, the United States stood above the rest with a figure of 5.2 million, followed by Japan, China, the United Kingdom, and Germany. Further, Singapore continued to have the highest concentration of millionaire households, with 15.5% of all households having at least $1 million in AuM. In fact, Singapore also emerged as the country with the fastest-growing number of millionaire households at 170,000 - up nearly a third from 2009, the study shows. Switzerland had the highest concentration of millionaire households in Europe and the second-highest overall, at 9.9%, the report says.

Also, the report adds, three of the six densest millionaire populations were in the Middle East—in Qatar, Kuwait, and the United Arab Emirates. The proportion of wealth owned by millionaire households increased the most in Asia-Pacific, at 2.9 percentage points, followed by North America, at 1.3 percentage points.

In terms of “ultra-high-net-worth” (UHNW) households, defined as those with more than $100 million in AuM, the United States once again stood ahead of others with a figure of 2,692, while Saudi Arabia had the highest concentration of UHNW households, measured per 100,000 households, at 18, followed by Switzerland (10), Hong Kong (9), Kuwait (8), and Austria (8). China experienced the fastest growth in the number of super-wealthy households, which jumped by more than 30 percent to 393, said the BCG report.

Amy

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