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Updated: September 28, 2010 15:54 IST

India, China likely to remain fastest-growing HNWI segment: study

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The strong economic resurgence in India has been boosted primarily by the country’s stock market capitalisation, says a report by Merill Lynch.
The Hindu
The strong economic resurgence in India has been boosted primarily by the country’s stock market capitalisation, says a report by Merill Lynch.

With the high networth individuals (HNWIs) population showing a robust growth of 33.2 per cent in the Asia—Pacific region last year, India and China are likely to remain the fastest—growing HNWI segment in the world, a report said.

Emerging Asia (China, India, Indonesia and Thailand) is fast becoming the main engine of growth in the Asia—Pacific region and its HNWI segment showed a robust growth of 33.2 per cent in 2009, with wealth up 40.4 per cent, according to the 2010 Asia—Pacific Wealth Report released by Merrill Lynch Global Wealth Management and Capgemini here.

India and China were the only two major Asia—Pacific countries in which industrial production actually rose in 2009, as they enjoyed a more diversified export market and broader domestic demand.

Hong Kong and India, which experienced the world’s largest decline in HNWI population and wealth in 2008, experienced the strongest resurgence in 2009. The population of HNWIs grew 104.4 per cent in Hong Kong, almost reaching pre—crisis levels and 50.9 per cent in India, the report said.

HNWI wealth in Hong Kong and India jumped 108.9 per cent and 53.8 per cent, respectively, amid strong growth in both markets and macro—economic drivers of wealth.

“The strong economic resurgence in India has been boosted primarily by the country’s stock market capitalisation which more than doubled in 2009 after dropping 64.1 per cent in 2008,” Merrill Lynch Wealth Management, India, Chairman, Pradeep Dokania, told reporters here.

“The increased confidence by Indian HNWIs facilitated by the strength of the underlying economy which grew 6.8 per cent in 2009 has resulted in a surge in HNWI wealth in the region,” Dokania said.

“China and India will lead the way in the Asia—Pacific region with economic expansion and HNWI growth is likely to keep out—pacing more developed economics,” he said.

China’s rapid GDP growth is expected to slow a little to 8.3 per cent in 2011. Going forward, China is expected to focus on balancing its economy by boosting the service sector and driving private consumption.

However, India’s growth is expected to keep accelerating with GDP forecast to expand 8.1 per cent in 2011 after a gain of 7.8 per cent in 2010 due to the significant expansion of private consumption and investment, the report said.

The report said the Reserve Bank of India is expected to tighten monetary policy progressively in 2010 to make sure its economy does not overheat as the global financial crises recedes.

The proportion of Asia—Pacific HNWI assets allocated to cash—based instruments dropped to 22 per cent in 2009 from 29 per cent in 2008 and fixed income investments accounted for only 20 per cent of assets, unchanged from 2008.

However, HNWIs from China and India allocated a very high 85 per cent and 82 per cent, respectively, to the home region investments, it said.

Keywords: HNWI

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