The story of the rich Indian continues, with India adding around 50 per cent more High Networth Individuals (HNIs) to its population in year 2009.
According to a 2010 Asia-Pacific Wealth report released by Merrill Lynch Global Wealth Management and Capgemini, the total number of HNIs in India at the end of 2009 was 1,26,700 with a total networth of $477 billion.
HNIs, in the report, are defined as individuals with at least $1 million in investable assets excluding their primary residence, collectibles, consumables, and consumer durables.
“The strong economic resurgence in India has been boosted primarily by India's stock market capitalisation, which more than doubled in 2009 after dropping 64.1 per cent in 2008” said Mr Pradeep Dokania, Chairman, Merrill Lynch Wealth Management.
Year 2009 saw Hong Kong and India recording the highest growth in terms of their HNI population and wealth, despite the huge decline in the same that both experienced in 2008.
The HNI population in Hong Kong experienced a massive growth of 104 per cent this year, while the HNI population in the Asia-Pacific region grew by 25.8 per cent to touch 3 million, up from 2.4 million in 2008.
The overall increase in Asia-Pacific HNI wealth was 30.9 per cent at $9.7 trillion. For the first time, the total wealth of HNIs in the Asia-Pacific region crossed that of Europe — $9.5 billion.
Total investments
The report also noted that Indian HNIs invested as much as 82 per cent of their total investments in their home-region. The reason cited for this is the non-convertibility of Indian currency in the US market. “There is restriction for Indians investing in foreign securities. An Indian can only invest about $2,00,000 a year, which is not the case for countries such as Japan that have total currency convertibility,” said Mr Atul Singh, Managing Director, Head - Global Wealth & Investment Management, India, DSP Merrill Lynch.
However, Indian HNIs did display signs of risk aversion as they increased their investment in fixed income instruments to 25 per cent from 21 per cent in 2008. Investments in equities remained the same at 32 per cent in spite of the markets rallying in 2009. HNIs also decreased their investments in the real-estate sector.
“In 2009, Indian HNIs became wary of the real-estate bubble as the premium property prices didn't correct much despite the liquidity crisis and dropped their allocation by 3 percentage points to 22 per cent,” explained Mr Singh.
Allocation in alternative investments remained the same at 8 per cent, although it was three percentage points higher than the Asia-Pacific average. Alternative investments include instruments such as hedge funds, commodities, structured products, etc.
“We expect faster economic growth, coupled with improving business conditions, which should fuel expansion in the HNI segment as business ownership and income account for 73 per cent of all HNI wealth in Asia-Pacific, excluding Japan. Moving forward, China and India will lead the way in the region with economic expansion and HNI growth likely to keep outpacing more developed economies,” Mr Dokania concluded.
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