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UAE millionaires grow to 79,000

Issac John, Deputy Business Editor
Filed on June 26, 2008

DUBAI - UAE's high net worth individuals grew from 68,000 to 79,000 in 2007, up 15.3 per cent, as the number of HNWIs across the planet increased six per cent in 2007 to 10.1 million, mainly driven by India and China, accounting for the fastest surge of 22.7 per cent and 20.3 per cent respectively in their millionaire population.

UAE's millionaires accounted for a combined total wealth of $91 billion while the overall growth of HNWI (individuals with assets of at least $1 million, excluding their primary residences and consumables) population in the Middle East even grew at 15.6 per cent marked by a 17.5 per cent surge in combined wealth. The 12th annual World Wealth Report, released yesterday by Merrill Lynch and Capgemini, shows that while the wealth of the richest people across the globe increased 9.4 per cent to $40.7 trillion, the number of ultra high net worth individuals (Ultra-HNWIs ) increased by 8.8 per cent. For the first time, the average assets held by HNWIs exceeded $4 million. The upswing in the number of millionaires was driven by market capitalisation growth in emerging economies, the report says.

Saudi Arabia, which has the highest concentration of dollar millionaires in the Middle East, currently has 101,000 HNWIs, up from 90,000 in 2006, with a combined total wealth of $182 billion.

“This year's report found that the number of high net worth individuals, and the amount of wealth they control, continued to increase in 2007, with the greatest wealth being created in the emerging markets of the Middle East, India, China, and Brazil,” said Amir Sadr, Head of the Middle East Wealth Management business at Merrill Lynch.

“While trends indicate opportunities exist for wealth management firms to tap into new growth markets, success will go to those that recognise their existing service, delivery and technology strategies must be adapted and tailored to meet the unique needs of these target growth markets.”

India led the world in HNWI population growth at 22.7 per cent, driven by market capitalisation growth of 118 per cent and real GDP growth of 7.9 per cent. Although India's real GDP growth decelerated from 9.4 per cent in 2006, current levels are considered more stable and sustainable. India's two largest exchanges - the Bombay Stock Exchange and the National Stock Exchange - ranked among the world's top 12 exchanges by end of 2007, boosted by initial public offering markets and heightened international interest.

Sadr said as a region, the Middle East's growth was the most impressive where a sharp increases in oil prices, highlighted by the 57.2 per cent gain on crude oil futures, contributed to a 15.6 per cent increase in the Middle East.

'Reflecting the Middle East's economic vitality was the fact that it remained the region with the most exposure to commercial real estate, with 33 per cent of HNWI real estate investments allocated to this asset.'

Impressive growth of emerging economies was boosted largely by thriving export sectors and heightened domestic demand. The largest regional growth of the HNWI population occurred in the Middle East, Eastern Europe, and Latin America, with increases of 15.6 per cent, 14.3 per cent, and 12.2 per cent, respectively. Gains in commodity exports, paired with growing international acceptance of emerging financial centres as significant global players, contributed to the growth rates of emerging economies.

The BRIC nations (Brazil, Russia, India and China) continued to play pivotal roles in the global economy in 2007, driven by impressive economic gains and robust market capitalization growth.

“This year's Report found that the number of high net worth individuals, and the amount of wealth they control, continued to increase in 2007, with the greatest wealth being created in the emerging markets of the Middle East, India, China, and Brazil,” said Sadr.

“While trends indicate opportunities exist for wealth management firms to tap into new growth markets, success will go to those that recognize their existing service, delivery and technology strategies must be adapted and tailored to meet the unique needs of these target growth markets.”

China experienced the second largest expansion of their HNWI population, advancing 20.3 per cent - an increase fuelled by market capitalisation growth of 291 per cent and real GDP growth of 11.4 per cent. Significant price increases and strong IPO activity propelled the Shanghai Exchange to become the sixth largest exchange in the world in terms of market capitalisation.

But while market capitalisation and real GDP growth rates were higher in China than India, the HNWI population of India grew faster in 2007. The Report suggests that as market capitalisation and real GDP in China were spread over a larger population, there were smaller per capita gains in China. In 2006, India had a larger market capitalization growth than gross national income, significantly impacting HNWI population growth in India. In addition, China is currently experiencing explosive growth in its “mass affluent” population, which has yet to break the HNWI threshold of $1 million.

'The global economy had a transitional year in 2007, characterised by sharply opposing macroeconomic environments. While momentum carried over from 2006 helped to sustain unabated growth in the first few months of 2007, the economy faced heightened uncertainty by year-end. Global growth remained solid in 2007, in terms of both real GDP and market capitalisation - the two primary drivers of wealth generation. Strong worldwide gains in the first half of 2007 boosted HNWI growth across the globe; while in the second half of the year, resilient emerging economies offset slowdowns in mature ones. The global economy grew by 5.1 per cent, down slightly from the 5.3 per cent global growth in 2006,' he said.





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