World reaches 10 million millionaires — World — BrisbaneTimes

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World reaches 10 million millionaires

June 25, 2008 — 6:26AM

The ranks of the world’s millionaires grew at the slowest pace in four years in 2007, amid the seizure of credit markets and a shift to »safer» investments, according to a survey by Capgemini and Merrill Lynch.

The number of people with more than $US1 million to invest, not including the value of their homes or consumable goods, increased 6% to 10.1 million last year, the firms said in their annual World Wealth Report, published today. That was a slowdown from 8.3% in 2006.

The world’s millionaires increased the value of their assets by 9.4% to $US40.7 trillion ($A42.5 trillion), less than the 11.4% rise in 2006, the survey showed. The collapse of the US subprime-mortgage market last July and its fallout triggered more than $US390 billion of mortgage-related losses and writedowns by the largest financial institutions.

«We expect the environment to remain challenging for the next six months to a year,» Nick Tucker, market leader for Merrill’s UK private-client division, said in London today. Slower economic growth may lead to a decline in the number of millionaires in the US and UK this year, he added.

Wealthy individuals poured 44% of their assets into »safer» investments, like deposits and bonds last year, Merrill and Capgemini said. That happened as they pared their holdings of real estate investments to 14% of their assets, from 24% in 2006.

Market turmoil

Turmoil in credit markets also weighed on growth in assets under management for the global wealth-management industry last year, with the median increase slowing to 12% from 14% in 2006, a separate survey by Scorpio Partnership, a consulting firm in London, showed today.

The slump in the US housing market is still eroding the wealth of some individuals. Median home-price declines have been as much as 25% in 14 of 19 wealthy Manhattan suburbs in Connecticut, New Jersey and Westchester County, New York, since the start of the year, according to a Bloomberg survey of brokers and multiple listing services.

During last year, the Standard Poor’s 500 Index of the largest US stocks rose 3.7% and the UK’s FTSE 100 Index gained 2.4%, while the Morgan Stanley Capital International Emerging Markets Index climbed 37%. The number of millionaires in emerging markets jumped, as India and China posted gains of 23% and 20%, respectively.

»The impressive growth of emerging economies was boosted by thriving exports and heightened domestic demand,» Tucker said.

The amount of millionaires rose 8.7% in the Asia- Pacific region and 16% in the Middle East, while growth slowed to 2.1% in the UK and about 4% in the US

Chinese millionaires

China is edging closer to the UK, recording 415,000 millionaires last year, compared with 495,000 in Britain. There were more than 3 million wealthy individuals in the US, Merrill and Capgemini said in the report, which covers 71 countries.

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The International Monetary Fund predicts advanced economies this year will suffer their fastest price gains since 1995 and their weakest expansion in seven years.

The number of »ultra-high» net worth individuals, or people with net assets of at least $US30 million, advanced 8.8% to 103,320, according to the survey. High net worth individuals will amass total wealth of $US59.1 trillion by 2012, or annual growth of 7.7%, the survey predicted.

UBS AG and Merrill Lynch, the largest and third-biggest money managers for the wealthy, had slower growth in assets under management last year, Scorpio Partnership said. Merrill’s assets from affluent clients rose 8.3% to $US1.31 trillion, and UBS managed the equivalent of $US1.9 trillion, 8.8% more than in the previous year, Scorpio said.

Battle for clients

It’s a »constant battle,» for large firms to differentiate themselves as wealth managers, Merrill’s Tucker said. Scorpio estimates that banks are competing for more than $US9 trillion in still untapped assets from the world’s millionaires.

Wealthy individuals didn’t forgo expensive purchases last year. The Forbes cost of living extremely-well index, which tracks the annual cost of a basket of goods including art and jewelry, rose 6.2% in 2007, compared with a year earlier, according to Merrill Lynch and Capgemini.

Sales of some luxury goods have remained resilient in the face of the tightening in global credit markets. Porsche SE, the maker of the 911 sports car, this month said that sales in the 10 months to May 31 rose 0.7%, with profit growth matching revenue gains, as drivers bought more Cayenne models.

Ferretti SpA, the Italian maker of Riva yachts, plans to file for an initial public offering in the next few days after receiving approval from shareholders, Chief Executive Officer Vincenzo Cannatelli said June 20. Ferretti, 60% owned by private- equity firm Candover Investments Plc, wants to expand its current operations and to buy new companies, Cannatelli said.

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