India came second to Vietnam in the growth rate of the number of High Net Worth Individuals (HNIs) according to the Asia-Pacific Wealth Report prepared by Capgemini and Merrill Lynch. India had an estimated 123,000 millionaires by December 2007, showing an estimated growth of 23 per cent the previous year.
However, the report released on Thursday, pointed out, “The growth in India’s HNI population was the fastest worldwide… Last year, the combined wealth of India’s HNIs rose 25.7 per cent to $440 billion.” “Despite dislocations in developed markets, the number of HNIs in India grew at a faster rate than the global average,” said Pradeep Dokania, head of global wealth management, DSP Merrill Lynch.
For the purpose of the survey, HNIs were defined as individuals with more than $1 million (Rs 4.6 crore) in net assets, excluding primary residence and consumables. However, the data does not reflect the latest financial turmoil witnessed in some developed economies and their impact on investment climate across the world, said Vaidyanath Ramaswamy, head-capital markets, Capgemini India.
“Rapid economic expansion, increased foreign investment and gains on the country’s stock markets (in 2007) fuelled the jump in HNI population last year,” Ramaswamy added.
In the wake of the financial turmoil in leading global markets, there will be a shift in the asset allocation from riskier asset classes like equities, said Dokania, adding, “Long-term investments will remain the same. But short-term investments will shift to safer havens like debt or fixed deposits.”
The average net worth of Indian HNIs rose slightly to $3.6 million (Rs 16.7 crore) compared with $3.4 million (15.6 crore) for the Asia-pacific region. The global average was $4 million (Rs 18.4 crore). Asia-Pacific region dominated the list of world’s 10 fastest-growing markets for HNIs taking the top five slots. Vietnam led the way with 24.2 per cent growth followed by India. China came third with 20.3 per cent growth. South Korea (18.9 peer cent), Indonesia (16.8 per cent), and Singapore (15.3 per cent) followed them.