Asia’s growing millionaire class is rising through the global ranks, with Hong Kong’s new wealthy leading the way.
Asia boasted 3.3 million high net-worth individuals last year according to the World Wealth Report 2011, released Thursday by Merrill Lynch Global Wealth Management and Capgemini. Hong Kong’s population of millionaires swelled by 33%, more than any other place in the world.
The report defines high net-worth individuals as those with at least $1 million in financial assets, excluding collectibles, consumer goods and primary residences.
Asia ranks second in the world in terms of largest millionaire population—ahead of Europe’s 3.1 million such individuals, but behind North America’s 3.4 million. Asia is quickly closing even that gap: The millionaire class grew 9.7% in Asia last year, outpacing the 8.6% and 6.3% growth in North America and Europe, respectively. Six of the top 10 places with the greatest growth were in Asia.
“I think it’s entirely conceivable Asia will overtake North America in the near future,” said Wilson Lo, head of North Asia advisory for Merrill Lynch Global Wealth Management at a news conference in Hong Kong.
Mr. Lo said Hong Kong’s wealthy class will continue to grow, but not at last year’s rate. “That growth rate will slow down,” he said, calling it “unsustainable.”
The reasons behind the growing population of Asia’s rich are hardly surprising: Asia’s strong economies have rebounded swiftly from the financial crisis of 2008, while Europe and the U.S. continue to muddle through a period of slow growth. Moreover, stock markets and real-estate markets in the East have outpaced those in the West. In Hong Kong, for example, the Hang Seng index rose 60% during the two-year period of 2009-2011, while its real-estate market surged 61% over the same period.
Given the booming real-estate market, rich people in Asia (excluding Japan) are investing more of their portfolios in property. The global average among high net-worth individuals in 2010 were 19% weighted in property, whereas Asians outside of Japan had 31% invested in the sector. Meanwhile, Japanese investors remained very conservative in 2010, holding the most amount of cash. In Japan, high net-worth individuals had 29% of their assets in cash, more than double the 14% global average.
Just what do these millionaires spend their money on? According to the report, Asia’s wealthy buy more jewelry, gems and watches than the global average—25% of their overall “investments of passion” are spent on these items, compared with the 22% global average. However, they spend less on art: Asian millionaires allocated only 16% of their discretionary spending to art, below the 22% global average.
“Those of you interested in starting a business, an art gallery might be interesting,” quipped Mr. Lo.