The population of high networth individuals (HNWIs) -- those with investable wealth of USD 1 million or more -- in Asia-Pacific has surpassed any other region in 2011, but their aggregate wealth declined marginally, according to a Capgemini and RBC Wealth Management report.
The HNWI population in Asia-Pacific hit 3.37 million, surpassing North America for the first time and passing Europe for the second straight year, said the Asia-Pacific Wealth report.
The report focused on 10 core markets: Australia, China, Hong Kong, India, Indonesia, Japan, Singapore, South Korea, Thailand, and Taiwan. It said HNWI population did contract in several Asia-Pacific markets last year, most notably India and Hong Kong.
Interestingly, India and Hong Kong had led the growth in the prior two years.
"The equity-market decline and a steeper-than-expected economic slowdown drove down the number of individuals with more than USD 1 million in liquid assets available to invest," the report said.
Benchmark indices of major Asia-Pacific equity markets sank, largely due to concerns about the European economy, but also because regional and domestic challenges, such as inflation, weighed on investor sentiment and confidence.
In aggregate, the region's MSCI index sank 17.3 per cent, but the worst performance was in India, where the MSCI India ndex ended the year down by 38 per cent.
"... domestic inflation, debt, policy paralysis, and infrastructure bottlenecks shook investor confidence in the Indian growth story-which, in turn, had a devastating impact on the Indian stock market," the report said.
Meanwhile, the rupee was hit the hardest, depreciating against the US dollar by 16.9 per cent in 2011, due both to the global economic trends, and a combination of domestic issues like widening trade and current account deficits, high inflation, declining growth, and policy paralysis.
But these losses were offset by robust growth in the markets of China, Japan, Indonesia, Malaysia and Thailand because of which the decline in aggregate investable wealth was restricted to 1.1 per cent at USD 10.7 trillion in 2011.
Japan alone accounted for 54.1 per cent of the region's HNWIs, China for 16.7 per cent, and Australia for 5.3 per cent, the report said.