The old saying holds true: The rich do get richer.
Even as world financial markets broke down last year, personal wealth around the world grew 5 per cent to $109.5 trillion, according to a global wealth report released by the Boston Consulting Group. However, India accounts for just about 1 per cent of the worldwide wealth market size of over $100 trillion. India’s wealth market, despite being underdeveloped and relatively small, is “attractive enough to be competitive,” the report said.
Worldwide, it was the sixth consecutive year of expanding wealth. The fastest growth was among households in developing regions, such as China and the Gulf States and among families who were already rich.
That wealth also is increasingly concentrated among the richest. The top 1 per cent of all households owned 35 per cent of the world’s wealth last year. Meanwhile, the top 0.001 per cent, ultra-rich households holding at least $5 million in assets, commanded $21 trillion — a fifth of the world's wealth.
The planet also continues to mint new millionaires rapidly. The biggest jumps in 2007 came from emerging countries in Asia and Latin America. Overall, the number of millionaire households grew 11 per cent to 10.7 million last year. While the rich are still rich, they have been making some adjustments as a result of the financial crisis, the report said.
This year, assets are being shifted to more conservative investments, more money is being kept onshore in home markets and some individuals have curtailed new investment. Yet BCG cautioned the outlook for wealth markets and the banks who serve them, is dimmed by the current financial crisis.
North American personal wealth growth slowed to 3.8 per cent last year, compared with 9 per cent in 2006, reflecting the the mortgage crisis and the onset of the credit crunch last summer.
“The financial crisis continue to cast a pall over established wealth markets,” said Victor Aerni, a Zurich based partner who co-authored the report.
BCG forecasts personal wealth will continue growing, but at a slower pace. This year, with Wall Street suffering one of its worst slumps in decades, growth in assets is expected to rise less than 1 per cent. Things will improve over the next five years, BCG said.
Wealth is growing at much faster rates among the rest of the world. Households in Asia, the Pacific Rim excluding Japan and Latin America saw the greatest growth, with wealth rising 14 per cent. That growth was fuelled by manufacturing in Asia and commodities in Latin America and West Asia.
BCG observed that banks, brokerages and money managers will have little choice, but to expand their presence in these fast growing centres.