Emerging Markets Drive Up Wealth In 2007

Jun 26 2008 | 12:52pm ET

The world’s richest got a little richer last year to the tune of US$40.7 trillion, fueled by growth in the emerging markets.

According to the World Wealth Report, released by Merrill Lynch and Capgemini, the number of high net-worth individual investors in the world increased 6% in 2007 to 10.1 million, the number of ultra-high-net-worth individuals increased by 8.8%, and, for the first time in the history of the report, the average assets held by high net-worths exceeded US$4 million.

The largest regional growth of the HNWI population occurred in the Middle East, Eastern Europe and Latin America, with increases of 15.6%, 14.3% and 12.2%, respectively. Gains in commodity exports, paired with growing international acceptance of emerging financial centers as significant global players, contributed to the growth rates of emerging economies.

Brazil, Russia, India and China continued to play pivotal roles in the global economy in 2007, driven by impressive economic gains and robust market capitalization growth.

“This year's report found that the number of high-net-worth individuals, and the amount of wealth they control, continued to increase in 2007, with the greatest wealth being created in the emerging markets of India, China and Brazil," said Robert McCann, president of Global Wealth Management at Merrill Lynch.

India led the world in HNWI population growth at 22.7%, followed by China at 20.3%, Brazil at 19.1% and Russia at 14.4%.

The report found that cash/deposits and fixed income securities accounted for 44% of HNWI financial assets, up nine percentage points from 2006. Fixed-income securities saw a six-percentage-point increase in asset allocation, accounting for 27% of holdings, up from 21 percent in 2006.

Green investing proved popular among investors last year with total investments in clean technology increasing to $117 billion, up 41% percent from 2005, with notable strength in wind and solar segments. The Middle East and Europe were the most environmentally attuned HNWI and Ultra-HNWI populations, with participation ranging from around 17% to 21 percent in 2007.

However, only 5% of HNWIs and 7% of Ultra-HNWIs in North America allocated part of their portfolio holdings to green investing.


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