By Mathew Maavak
The total number of millionaires rose to 8.7 million worldwide last year, according to Capgemini SA and Merrill Lynch & Co. This would exceed the population of New York City and number slightly less than the population of Seoul.
Millionaires were springing up fast in the emerging economies, with the Asia-Pacific region topping the list, followed by Africa, the Middle East and Latin America.
Soaring oil prices over the past three years and the appreciation of stock markets by almost a third in emerging economies played a major role.
The number of high net worth individuals grew most dramatically in Korea (21.3 percent), India (19.3 percent), Russia (17.4 percent) and South Africa (15.9 percent). HNWIs refer to people with net financial assets of at least $1 million, excluding their primary residence and consumables. Worldwide, the number of HNWIs rose by 6.5 percent.
The number of "ultra-HNWIs" -- those with financial assets of more than $30 million -- grew by 10.2 percent to 85,400 last year.
The combined wealth of the millionaire club amounted to $33.3 trillion in assets, triple the value of the 500 largest publicly traded U.S. firms. This amounts to an average of $3.8 million per millionaire. "The assets of wealthy individuals continue to grow significantly faster than gross domestic product increases," said Eva Castillo, head of Merrill's brokerage for individual investors in the United Kingdom and Europe, during a recent press briefing in London. The $44.4 trillion world economy grew 4.8 percent last year, according to the International Monetary Fund.
Millionaires account for 0.13 percent of the world's population. About 40 percent, or 2.6 billion people, live on less than $2 a day, according to the World Bank.
In the Asia-Pacific region, the number of millionaires rose 7.3 percent to 2.4 million.
This trend may point to the ongoing greater accumulation of capital in the hands of fewer individuals, widening the rich-poor gap worldwide. Soaring fuel and commodity prices, higher interest rates, and a fluid employment environment tend to push capital upward along a pyramidical wealth structure, as people everywhere tend to crimp daily expenses to prioritize basic necessities.
Seoul's official policy and debates over property speculation, the ongoing free trade negotiations with the United States and multipronged approaches to boost employment and consumer spending levels are meant to staunch such a trap.
While the wealthy are likely to get wealthier still, it may be at a slower pace. Millionaires' assets will increase by about 6 percent over the next five years, reaching $44.6 trillion by 2010, compared with the 8 percent average notched over the past 10 years.
According to a bloomberg report on the topic, debutant millionaires are benefiting fund managers. At UBS AG, the world's largest broker for the wealthy, assets under management rose 8.8 percent last year to $1.32 trillion, according to Scorpio Partnership, a consulting firm in London. Citigroup Inc. and Merrill came second and third, with assets of $1.31 trillion and $1.1 trillion.
World economic growth may slow to 4.7 percent in 2007 after the fastest three years of expansion since the early 1970s, according to the IMF. This year, the world economy may grow 4.9 percent.
Millionaires held 44 percent of their investments in U.S. assets last year, down from 46 percent a year earlier. Asia-Pacific assets accounted for 23 percent of holdings, up from 21 percent.
A good number of millionaires tend to channel investments into diversified assets, with 20 percent going into private equities and hedge funds, 21 percent into fixed income and 30 percent into equities.
Business ownership accounted for 37 percent of millionaires' wealth, the single biggest source, particularly in Europe and in Latin America. About of quarter of the wealth derived from income and a further 18 percent from inheritances.
The report also noted that rich investors didn't sell in panic as stocks plunged during the past six weeks. Though the emerging markets index fell by around 20 percent since May 8, wealthy investors capitalized on the market swings to buy shares for less.
Published in The Korea Herald on June 22, 2006
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