JEDDAH: The number of high net worth individuals (HNWIs) in Saudi Arabia increased 8.2 percent to 113,300 HNWIs in 2010 as compared to the previous year, the latest annual Merrill Lynch-Capgemini World Wealth Report said Wednesday. In Bahrain, there were 6,700 HNWIs in 2010, up 24.0 percent from 2009. While in the UAE, the HNWI population declined by only 3.5 percent to 52,600 in 2010, in contrast to the larger decline of 18.8 percent in 2009, the report noted. The wealth and population of global HNWIs surpass pre-crisis levels in nearly every region, the report added. The global population of Ultra-HNWIs grew by 10.2 percent in 2010 and its wealth by 11.5 percent. In 2010, the Middle East had one of the highest growth rates after Africa, with HNWIs population rising by 10.4 percent to 440,000, and their combined wealth increasing by 12.5 percent to $1.7 trillion. The report noted further that global HNWI population and wealth growth reached more stable levels in 2010, with the population of HNWIs increasing 8.3 percent to 10.9 million and HNWI financial wealth growing 9.7 percent to reach $42.7 trillion (compared with 17.1 percent and 18.9 percent respectively in 2009). "The past few years have seen great fluctuations in HNWI wealth and population," said Tamer Rashad, head of Middle East, Merrill Lynch Wealth Management. "In 2010, we saw growth rates slow down from the higher double-digit levels of 2009 when many markets were quickly returning from significant crisis-related losses." The global HNWI population remained highly concentrated in the US, Japan and Germany, which together accounted for 53.0 percent of the world's HNWIs. The US is still home to the single largest HNW segment in the world, with its 3.1 million HNWIs accounting for 28.6 percent of the global HNWI population. "While over half of the global HNWI population still resides in the top three countries, the concentration of HNWIs is fragmenting very gradually over time," said Karthikeyan Rajendran, Sales Director, Middle East, Global Financial Services, Capgemini. "The concentration of HNWIs among these areas will continue to erode if the HNWI populations of emerging and developing markets continue to grow faster than those of developed markets." However, Asia-Pacific posted the strongest regional rate of HNWI population growth in 2010 among the top three markets. While HNWI wealth had already overtaken Europe in 2009, Asia-Pacific has now surpassed Europe in terms of HNWI population, expanding 9.7 percent to 3.3 million, while Europe grew 6.3 percent to 3.1 million. Asia-Pacific HNWIs' wealth gained 12.1 percent to $10.8 trillion, exceeding Europe's HNWI wealth of $10.2 trillion, where the wealth increase was 7.2 percent in 2010. Asia-Pacific is now the second largest region for both HNWI wealth and population, second only to North America. Also of note in the Asia-Pacific region, India's HNWI population became the world's twelfth largest in 2010, entering the top 12 for the first time. In an environment of relatively stable but uneven recovery, equities and commodities markets, as well as real-estate (specifically in Asia-Pacific), performed solidly throughout 2010, the report noted. By the end of 2010, HNWIs held 33 percent of all their investments in equities, up from 29 percent a year earlier. Allocations to cash/deposits dropped to 14 percent in 2010 from 17 percent in 2009 and the share held in fixed-income investments dipped to 29 percent from 31 percent. Among alternative investments, many HNWIs favored commodities. Commodity investments accounted for 22 percent of all alternative investments in 2010, up from 16 percent in 2009. HNWIs in Asia-Pacific, excluding Japan, also continued to pursue returns in real estate, which accounted for 31 percent of their aggregate portfolio at the end of 2010, up from 28 percent a year earlier and far above the 19 percent global average. In addition, investments in emerging markets provided opportunities for HNWIs in search of profit. In the first 11 months, investors poured record amounts into emerging market stock and bond funds before selling to capture profits as the year ended and after the value of many emerging market investments topped pre-crisis highs. "Global capital markets and major asset classes performed well over the year on the back of rising investor risk appetite," said Rashad. "The shift toward equities in 2010 by HNWI investors reflected the search for returns and the desire to recoup more crisis-related losses. We also saw HNWIs continue to favor specific asset classes, such as equities and commodities, based on market opportunity or long-standing preferences." Looking forward, HNWIs are expected to increase their equity and commodities allocations even more in 2012 while reducing their allocations to real estate and cash/deposits. Regional preferences are less certain as the extent of emerging market opportunities will depend on whether those markets can push to new highs while economies are being weaned of government stimulus. Powered by fast-growing China and India, the Asia-Pacific region's millionaire ranks rose 10 percent to 3.3 million, second only to the 3.4 million residing in North America and inching ahead of Europe, which had 3.1 million. Asia's combined wealth, up 12 percent to $10.8 trillion last year, surpassed Europe and threatens to overtake the United States and Canada, where wealth rose 9 percent to $11.6 trillion. "Their capital markets may be emerging, but their economies have clearly arrived," John Thiel, head of Merrill's private banking group and its "Thundering Herd" of 15,700 US brokers, told Reuters. "They're not 'emerging' anymore." More than half of the world's millionaires are still found in the United States, Japan and Germany, but that the wealthy are spread among more countries, according to Merrill and global consulting firm Capgemini. Assets held by millionaires worldwide rose by 9.7 percent to a record $42.7 trillion.
