The number of millionaires around the world held flat last year, but their overall wealth declined, according to tech consultant Capgemini and partner RBC Wealth Management in a joint World Wealth Report released this week.
And for the first time ever, the Asia-Pacific region surpassed North America last year as the region with the largest number of millionaires, Capgemini and RBC said in unveiling their 2012 World Wealth Report findings at the Harvard Club in New York on Tuesday.
The total of Asia-Pacific high-net-worth individuals, defined as people with investable assets of $1 million or more, expanded 1.6% to 3.37 million last year. This compares with North America’s HNWI population of 3.35 million.
“While more people surpassed the $1 million disposable income level in 2011, the aggregate wealth of high net worth individuals declined overall, as market volatility took its toll,” said George Lewis, group head of RBC Wealth Management, in a statement. “For the first time this year there are now more high-net-worth individuals in Asia-Pacific than in any other region.”
However, India as well as Hong Kong topped the list of countries losing high-net-worth individuals in 2011, with India’s population of HNWIs dropping 18.0% to 125,500 from 153,000. Equity-market capitalization contributed to India’s plunge, wiping out asset values and levels of investable wealth. A similar stock-market decline in Hong Kong helped to reduce that HNWI population by 17.4%.
Losses in these two key markets meant that wealth contracted in Asia-Pacific overall in 2011 even though the number of millionaires in that region grew, Lewis noted. South Korea, for example, moved up in the rankings to replace India in the No. 12 spot for countries with the most millionaires.
So where are today’s high-net-worth individuals most likely to be found? Keep reading to learn about the top 10 countries for millionaires.
Read the results from last year’s CapGemini World Wealth Report at AdvisorOne.
Despite Italy’s persistent eurozone troubles, the country still ranks among the top 10 for millionaires, according to Capgemini/RBC.
So while Italy has a public debt to GDP ratio of 120.1%, the country remained home to 168,000 millionaires in 2011. To be sure, their numbers have fallen off. In 2010, there were 170,000 Italy-based millionaires, showing a 1.3% year-over-year drop.
“We expect market volatility will remain in 2012 as European leaders deal with their debt crisis,” said RBC group leader Lewis at the Harvard Club unveiling of the World Wealth Report.
Australia is the ninth-ranked country for HNWI populations, with 179,500 millionaires in 2011. That compares with 192,900 in 2010, for a 6.9% loss in Australia’s millionaire population.
Worldwide, the global HNWI population grew by only 0.8% to 11 million in 2011 after growth of 8.3% in 2010, according to CapGemini/RBC. Most of this growth can be attributed to HNWIs in the $1 million to $5 million range, whose numbers grew 1.1% to represent 90% of the global HNWI population. In contrast, wealth among the world’s HNWIs in 2011 fell by 1.7% to $42.0 trillion versus 9.7% growth to $42.7 trillion in 2010.
As for the global population of ultra-HNWIs, those with investable assets of more than $30 million declined by 2.5% in 2011. Wealth among this group declined by 4.9% after increasing by 10.2% in 2010.
Not surprisingly, Switzerland, that bastion of stability, has held on to its ranking among the world’s top 10 countries for millionaires. Indeed, Switzerland has seen its population of high-net-worth individuals grow in the last year.
Capgemini/RBC reports that Switzerland’s number of HNWIs grew by 3.6% in 2011 to 252,000 individuals versus 243,000 in 2012. The country enjoys a public debt to GDP ratio of 48.6% (compare that to the United States’ 98.5%), and the public budget balance represents only 0.4% of GDP.
The Capgemini/RBC World Wealth Report’s growth outlook for North America is “cautiously optimistic,” and that applies to Canada as well as the United States. Indeed, Canadian real GDP growth is expected to surpass that of the United States in 2013, at 2.2% for Canada versus 2.1% in the U.S.
As of the end of 2011, Canada was home to 280,000 millionaires, just 0.9% less than the population of 282,000 HNWIs in 2010.
Former President Nicolas Sarkozy’s pro-capitalist policies may have lost to Socialist François Hollande’s anti-austerity platform in France’s May elections, but high-net-worth individuals nevertheless keep la belle France firmly rooted among those nations with the largest number of millionaires.
If anything, the number of millionaires in France keeps growing. In 2011, France saw its population of HNWIs jump 1.9% to 404,000 from 396,000. C’est formidable!
Queen Elizabeth II marked her 60-year reign with a diamond jubilee celebration earlier this month that featured regional visits throughout the United Kingdom, including England, Scotland, Wales and Northern Ireland. While on her travels, Her Majesty waved to thousands of her British subjects—and to be sure, many among them were millionaires such as herself.
Great Britain is weathering the eurozone crisis better than its European neighbors across the Channel, and according to the Capgemini/RBC report, the U.K.’s GDP outlook for 1.2% growth in 2013 exceeds both Germany’s 0.7% and France’s 0.7%.
That’s good news for U.K. millionaires, whose population slipped 2.9% to 441,000 HNWIs in 2011 from 454,000 in 2010.
The growth rate in the number of Chinese millionaires exceeded any other country’s worldwide in 2011. HNWIs in China leaped 5.2% to a population of 562,000 in 2011 compared with 535,000 in 2010. This phenomenal growth happened in the face of rising inflation, tempered prior credit excesses and declining exports.
But by 2013, the Capgemini/RBC World Wealth Report predicts, more policy initiatives are likely to have materialized to control debt contagion and spur growth, helping push world GDP expansion up to a forecast 2.9%, which could push growth in China to a forecast 8.5%.
Chancellor Angela Merkel’s adherence to austerity may have made her unpopular with other eurozone nations, but her hard line has at least until now ensured that Germany sets the pace with the European Union’s “culture of stability,” as Prime Minister Mario Monti of Italy calls it.
That culture of stability also contributes to Germany’s reputation for providing a favorable environment for millionaires. In 2011—in the face of the worsening eurozone crisis—the number of HNWIs in Germany grew 3% to 951,000 from 924,000 in 2011.
That rate of growth in millionaires was higher than that of any other European nation.
Cataclysmic tsunami, earthquake and nuclear crisis aside, Japan in 2011 saw its population of millionaires grow 4.8% to 1.82 million from 1.74 million in 2010.
This growth came in the face of Japan’s whopping public debt to GDP ratio of 229.8%.
In August 2011, Moody’s Investor Service downgraded the nation’s sovereign rating to Aa3, “saying Japan would find it difficult to reduce its huge debt, given the disaster and the prospects for weak economic growth,” Capgemini/RBC reported.
However, Japan is known for its ability to withstand a crisis, and indeed, after the natural disasters household savings rose in Japan last year to 7.3% of disposable household income from 6.2% in 2010 because private consumption fell sharply after the earthquake.
Despite much hand-wringing over political gridlock in Washington and the unprecedented downgrade of U.S. debt by Standard & Poor's, the United States last year overwhelmingly remained the No. 1 country worldwide for millionaires.
The population of high-net-worth individuals dropped 1.2% to 3.07 million in 2011 from 3.10 million in 2010, according to the Capgemini/RBC 2012 World Wealth Report, but that number is still almost double that of the United States’ closest competitor, Japan.
U.S. equities performed quite well in early 2011, amid signs of recovery in the U.S. economy and in corporate profits and cash balances, Capgemini/RBC said.
“Investors were also cheered that U.S. firms were relatively unscathed by the global supply-chain crunch induced by the Japanese earthquake, and the impact of increased oil prices due to civil unrest in the Middle East and North Africa,” the report says.
However, the U.S. stock market deteriorated in May as the European debt crisis dragged on, and uncertainty persisted over the country's debt ceiling. U.S. stocks took another hit after the S&P downgrade in August.
“For the year, investors remained risk-averse overall, and favored dividend-paying companies and multinational blue chips,” CapGemini/RBC reported. “Going forward, the outlook for the U.S. equities market remains cautiously optimistic, with the housing and employment pictures beginning to improve, and signs the U.S. will escape a double-dip recession.”