While the number of high-net-worth individuals in Australia has grown significantly in the past year, it is the emerging market nations of China and India have had the largest increase worldwide, according to the results of the third annual Merrill Lynch and Capgemini Asia-Pacific Wealth Report.
The report found that there was an estimated 172,000 high-net-worth individuals in Australia with a combined wealth of US$550 billion at the end of 2007, up 7.1 per cent from the previous year.
Merrill Lynch Australia market director and head of global wealth advisory Thomas Alexy said the increase was driven by Australia’s economic growth, which was partly fuelled by demand for commodity exports to Asia.
“Despite dislocations in developed markets, the number of high-net-worth individuals in Australia grew at a faster rate than the global average,” he said.
According to the report, the average net worth of Australia’s high-net-worth individuals rose slightly to US$3.2 million, compared with US$3.4 million for the Asia-Pacific region.
Also, for the third year running, the Asia-Pacific region dominated the list of the world’s 10 fastest growing markets for high-net-worth individuals, taking the top five spots on the list.
India topped the list with a 22.7 per cent increase in high-net-worth individuals, followed by China with a 20.3 per cent increase, and South Korea, Indonesia and Singapore with gains of 18.9 per cent, 16.8 per cent and 15.3 per cent, respectively.
The report also noted that saving rates, as a percentage of gross domestic product, were higher in the region than most developed markets.
Looking ahead to 2009, the report stated that Asia-Pacific high-net-worth individuals are likely to turn to fixed-income securities that offer less volatile returns.
“They are also expected to increase their allocations to alternative investments, mainly in the form of hedge funds or other investments more suited to uncertain market conditions.”
While the growth prospects for high-net-worth individuals will be somewhat hampered by the global economic downturn, the long-term potential of the Asia-Pacific high-net-worth marketplace remains strong, the report noted, with the wealth of high-net-worth individuals in the region projected to reach US$13.9 trillion by 2012. By then, Asia-Pacific is expected to replace Europe as the second largest regional repository of high-net-worth wealth.
