Asia Overtakes North America With World's Largest HNW Population

Eliane Chavagnon

20 June 2012

Asia-Pacific is now the largest high net worth market in the world, overtaking North America with a HNW population growth rate of 1.6 per cent in 2011 to reach 3.37 million – a figure which signifies a growth rate of 11 per cent in two years, according to the RBC Wealth Management/Capgemini World Wealth Report 2012. .

The region is now the largest HNW market in the world, having overtaken North America with a HNW population growth rate of 1.6 per cent in 2011 to reach 3.37 million – a figure which signifies a growth rate of 11 per cent in two years.

Across the globe, the overall financial wealth of high net worth individuals fell by 1.7 per cent in 2011 to stand at $42 trillion, while those in the $1.0 million to $5 million segment - which represents 90 per cent of all HNW individuals - increased both in numbers and wealth.

Capgemini’s annual World Wealth Report is a global benchmark for tracking HNW individuals and identifying the most striking trends in the wealth management industry. This year marks its sixteenth edition and for the first time was conducted in association with the Royal Bank of Canada Wealth Management. It was previously produced with Bank of America Merrill Lynch.

Besides data on the population of HNW individuals and regional trends, the report also highlighted issues such as the rising cost of running private wealth. For example, in 2010, the average cost/income ratio of wealth management rose by 0.8 per cent from previous year to 79.8 per cent, having been at 76.8 per cent in 2008.

The $1-$5 million wealth bracket grew by 1.1 per cent and 0.8 per cent in volume and wealth respectively; however, the number of HNW individuals in the upper wealth band (those with over $5 million), declined in both these respects.

North America maintains its position as the wealthiest region representing HNW individuals, with $11.4 trillion.

Asia’s ascent

“It is significant that for the first time this year there are now more HNW individuals in Asia-Pacific than any other region,” George Lewis, group head at RBC Wealth Management, said. “However, losses in key markets such as Hong Kong and India meant that wealth contracted in Asia-Pacific overall.”

While it was only last year that India became the twelfth largest country in terms of its HNW population, the size of its HNW populace has “dropped significantly” and the country is now replaced by South Korea.

The Middle East bucked the overall downward trend following a “robust” population growth rate compared to other regions, having “gained marginally” by 2.7 per cent to 0.5 million and with wealth creeping up by 0.7 per cent to $1.7 trillion.

In terms of what drove wealth creation last year, investors favoured capital preservation by means of cash and fixed income, Paul Patterson, head of global trust at RBC explained at a media briefing on the report this morning.

Meanwhile, volatility - largely influenced by European concerns - caused investors to opt for safe-haven assets. At the same time, however, asset classes experienced “mixed results”, with poor equity and real estate performance.