Resurgence in economy, stock prices boost the number here, past previous peak of 2007.
Rebounding economic growth and a rise in share prices helped as many as 42,700 affluent Indians regain their status as dollar millionaires, increasing the total number to 126,700, according to the World Wealth Report by Capgemini and Merrill Lynch Wealth Management, released in Mumbai on Wednesday.
The rise in the total number of Indians with investible assets, excluding main residence and consumer durables, of more than $1 million or Rs. 4.6 crore, grew almost 51 per cent, the second fastest in the Asia-Pacific region after Hong Kong, which reported 104 per cent growth, the report said.
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The number exceeds the 2007 number of HNIs (High Net Worth Individuals) at 123,000, when the Indian economy and stocks were leading a five-year boom. The economy may grow 8.5 per cent this year.
In the Asia-Pacific region, India and China are likely to lead the way in future growth of rich individuals, it said. The number of millionaires rose 31 per cent in China to 477,000, as its economy in 2009 grew 8.7 per cent and the stock markets doubled. The growth in 2009 also brought Asia and Europe on par, with three million HNIs each. North America leads with 3.1 million.
In 2008, a collapsing stock market and the economic slowdown had pushed 39,000 Indians out of the HNI club, squeezing the population to 84,000. Still, with 126,700 in 2009, India is at 15th position in the world. The US had the highest population of HNIs, with 2.86 million, with Japan coming second at 1.65 million.
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The world’s population of HNIs returned to 10 million in 2009 and their combined wealth grew 19 per cent to $39 trillion, according to the report.
“The rising wealth almost explains a report that a group of Aurangabad residents placed a single order for 115 Mercedes Benz,” said a wealth manager.
Stocks drive here
For Indians, one of the key drivers of wealth was the jump in stock prices, with market capitalisation increasing 103 per cent in 2009, compared to a dip of 64 per cent in 2008. “In the case of India, the strong rebound in HNI numbers is highly correlated to the strong recovery in stock market prices and strong outlook for India’s underlying economy,’’ said Pradeep Dokania, Chairman, Merrill Lynch Global Wealth Management, India.
Another factor was the strong recovery in economic growth, with the index of industrial production recording a robust 16.8 per cent growth in 2009. “The government stimulus and credit policies have had a big impact in ensuring the adverse effect of the global financial crisis on the Indian economy was kept to a minimum. Going forward, based on the positive outlook for market and macroeconomic drivers of wealth, India is likely to remain one of the fastest-growing HNI segments in the region,” said Salil Parekh, CEO, Global Financial Services, Capgemini.
HNIs reduced their cash holdings from 21 per cent of their total portfolio in 2008 to 17 per cent in 2009, it said. At the same time, they increased their exposure to equities from 25 per cent to 29 per cent and to fixed income assets from 29 per cent to 31 per cent over the same period.
“After sitting on the sidelines in 2008, HNIs re-entered the markets in 2009. However, they are following a cautious approach and showing a preference for products with predictable returns and predictable cash flows,” said Atul Singh, head of wealth management at Merrill Lynch Wealth Management India.