More Indians have $1 million to invest than ever before

The number of Indians with an investible surplus of at least one million dollars is higher than ever before, according to a report from Merrill Lynch Wealth Management in association with Capgemini.

The population of high networth individuals in India numbered 1,53,000 in 2010 — the highest figure ever for India and taking it to the 12th place among the nations with the highest number of such individuals.

The population of wealthy in India has grown 20.8% from 126,700 a year earlier.

The rise in Indian wealth is on the back of a “GDP growth rate of 9.1% in 2010 and an increase in market capitalisation by 24.9%.”
India was the top performing market among the ten largest equity markets in the world in 2010 but the benchmark index for the Bombay Stock Exchange has lost 13.56% in 2011.

Domestic demand in India as well as other nations such as China and Singapore helped boost the economic output of the Asia Pacific region, with gross domestic product (GDP) coming in at 8.3% for the region.

The population of high networth individuals in the Asia-Pacific region surpassed that of Europe for the first time. The region now has 33 lakh high networth individuals (HNIs) compared to 31 lakh for Europe.

The region is now only second to North America, which houses the country with the single largest number of rich people in the world — the United States. Combined with Japan and Germany, the trio account for 53% of the global population of the rich.

Globally HNIs collectively own $42.7 trillion (Rs1919.36 lakh crore) or more than 30 times the size of India’s $1.4 trillion (Rs62.93 lakh crore).

The population of ultra-high networth individuals who have an investible surplus of at least $30 million was 1,03,000 in 2010, accounting for 36.1% of global HNI wealth.

Global HNIs’ interest in investments of passions such as purchasing art, jewellery and collectibles also saw a revival in 2010, according to the report.

The largest chunk of such investments was in the form of luxury collectibles which accounted for 29% of such spending on items such as boats, automobiles including Mercedes-Benz and Ferrari and even jets.

Art accounted for 22% of such purchases along with jewellery, gems and watches which accounted for another 22%.
Another interesting segment for investments of passion was sports, which accounted for 8% of the segment in 2010.

“In India this would take the form of investing in teams in leagues such as the IPL (Indian Premier League), sailing, and race horses,” said Atul Singh, managing director and head, Merrill Lunch Global Wealth Management, India.

By the end of 2010, HNIs held 33% of all their investments in equities, 29% in fixed income investments, 19% in real estate and 14% in cash and deposits.

The report expected HNWIs to raise their equity and commodity allocations even more in 2012 while reducing their allocations to real estate and cash or deposits.