INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

INDIA HAS 83,500 MILLIONAIRES

   INDIA is making faster dollar millionaires than most other economies. The number of high net worth individuals (HNI) grew by 19.3% in 2005, the second best performance after South Korea 's 21.3% — though Korea is growing on a lower base.

The number of dollar millionaires (individuals with financial assets of Rs 4.5 crore and above) in India now stands at 83,500 compared to 70,000 in 2004, according to the World Wealth Report from Capgemini and Merrill Lynch.

While HNIs are on the rise across the world, Asia-Pacific is the only region where they generated a larger amount of cash through investing. The rationale behind a faster growth in wealth creation was a faster growth in real GDP and market capitalisation in the Asia-Pacific region.

The report states that over the previous decade, financial wealth among HNIs has grown from $16.6 trillion to $33.3 trillion. Also, the number of HNIs across the world currently is nearly 9 million from 4.5 million in 1996, growing at 8% CAGR (refer table). These financial gains were particularly strong in Latin America , Eastern Europe , Asia-Pacific, Africa and West Asia , where emerging markets continue to play a moderate game of “catch up” with major markets.

The number of ultra HNIs too, is on the rise. Ultra HNIs are defined as individuals with financial assets of $30 million plus (Rs 135 crore plus). The total number of these ultra HNIs now stands at 85,400, a 10.2% increase in 2005, compared to an 8.9% increase in 2004. The report states that these gains show that while market returns and economic indicators signaled that a deceleration was underway in many regions of the world, HNIs were still able to find select pockets of high performance in 2005.

    The rise in millionaires has given a fillip to the private banking. Currently, only a handful entities cater to the the high-end of private banking here. These are ABN Amro, BNP Paribas, Deutsche Bank, DSP Merrill Lynch, Soc Gen. Others like UBS, Credit Suisse are also looking at launching private banking in India .

According to ABN Amro's executive vice-president and head-private clients, Asia , Barend Janssens, “We foresee an expansion in the need for wealth management services in India due to deregulation of markets and our target base in India includes diamond merchants, large corporates and small and medium enterprises.”

One area where HNIs found significant opportunity was in the Asia-Pacific region, where the twin drivers of market capitalisation and GDP continued to deliver high rates of growth. Latin America and West Asia also exhibited strong growth, which benefited HNIs investing domestically and from other parts of the world. Alert to cooling real estate and capital markets, HNIs continued to re-assess their market opportunities and investment strategies. Generally speaking, HNIs remained guarded with respect to real estate and mature markets, however, their portfolio balancing act varied from region to region.