Youngest Indian millionaires lead Asia, world HNIs

India has the youngest millionaires in Asia and amongst the world’s fastest growing populations of high networth individuals in the world.

India’s elite have a networth equivalent to more than a third of its total gross domestic product (GDP) and their numbers grew by afifth in 2010, according to the Asia-Pacific Wealth Report released on Thursday by Merrill Lynch Global Wealth Management and Capgemini.

The total wealth held by India’s high networth individuals who have investible assets in excess of a million dollars (Rs4.9 crore) was $582 billion (Rs28.59 lakh crore) during 2010.This is equivalent to 34.23% of the country’s total GDP of $1.7 trillion (Rs73.07 lakh crore), as per the latest government data.

The high networth wealthy individuals’ (HNWIs) wealth  in India grew by 22% in 2010. India added 26,000 HNWIs, registering a 20.8% growth in numbers in 2010. The total number of such individuals in India has risen to 1.53 lakh in the year 2010 as against 1.27 lakh in 2009.

“The key drivers of wealth in India is the real GDP expansion by 9.1% in 2010, and the market capitalisation which increased by 24.9% in 2010,” says Pradeep Dokania, managing director and chairman, Global Wealth and Investment Management, India DSP Merrill Lynch limited.

Another reason why wealth is being created is because the national savings as a percent of GDP (gross domestic product) increased to 33.5% in the year 2010. “Peaking inflation could give a negative impact on the household savings and could also have a negative effect on the rising number of HNWIs in India,” said Dokania.

India is amongst the eight Asia-Pacific markets which are part of the 20 fastest growing markets in terms of its population of high networth individuals.  Other markets include Hong Kong, Vietnam, Sri Lanka, Indonesia and Singapore.

India also has the highest number of billionaires in the age group of 31-45, as against Japan and Hong Kong which have HNWIs above 66 years of age.

A significant portion of this money is invested in equities.
HNWIs from India had around one-third of their holdings in equities, said the report.

Atul Singh, managing director and head Global Wealth & Investment Management, India DSP Merrill Lynch limited said, the exposure of HNWIs towards equity for FY12 could come down due to choppy markets and that to the fixed income could increase considerably due to increasing interest rates.

Fixed Income allocation is expected to increase from 26% to 29% whereas allocation to Cash or deposits is set to decrease from 9% to 8%.

Allocation to equities is expected to decrease marginally from 36% in 2010 to 35% in 2012.

Investments by HNWIs in real estate could also see a sluggish growth because investors have become wary as investments in real estate are illiquid and risky too, according to the report. Indian HNWIs had 23% allocation towards real estate which is expected to fall down to 21% for FY12. Allocation towards alternative investments is expected to increase by 2012 to 8% from 6% in 2010.