India’s rich list shrunk in 2008: Global survey

The Indian rich have been among the hardest hit in the meltdown, with the high net-worth individual (HNI) population falling by 31.60% in the country. There were 84,000 people who fell in the category by the end of 2008, compared to 1,23,000 the previous year.

India is the second worst hit, behind Hong Kong, in terms of percentage fall in the survey. Hong Kong’s population of rich fell by 61.3% during 2008, to come to 37,000.
An HNI is one with net assets of at least $1 million (about Rs5 crore), excluding primary residence or consumables, according to the 13th annual world wealth report released by Merrill Lynch Global Wealth Management and Capgemini.

India had the highest growth in terms of adding HNIs to its rolls in 2007, and the second highest in 2006. But the fall in equity markets in India, coupled with the slowdown, hobbled the growth story, said Pradeep Dokania, head, global wealth management, DSP Merrill Lynch Limited. “Indian markets fell 60%, compared to 30% in the US. Although Chinese markets also fell, economic growth has been stronger there.”

China’s market capitalisation was down 60% after a 291% increase the year before, and India was down 64% after rising 118% in 2007.

On a global level, the combined wealth of the world’s rich fell by 19.5% to Rs1,594.408 lakh crore.

This also affected the way these individuals look at people who manage their wealth. The report indicated that a fourth of the HNIs withdrew assets or left their wealth management firm in 2008.

“Wealth management firms should re-evaluate current capabilities to ensure simplicity and transparency, demonstrate value as defined by clients and prospects and develop new products and services to retain and attract clients in today’s environment,” said Salil Parekh, CEO, financial services, India and Asia Pacific, Capgemini.

Asset allocation also saw changes, with HNIs looking to the relative safety of avenues, such as cash and debt in 2008. The proportion of cash-based holdings rose 21% of overall portfolios, up 7% from 2006.

By 2013, overall HNI wealth is expected to grow to Rs2,357.585 lakh crore the world over, the report said.

“Despite the decline last year, Asia Pacific, including India, remains an important market for wealth management providers worldwide,” said Dokania. “Wealth accumulation and creation in the region are likely to regain traction once the global economy recovers.”