A Rebound for China and India's Millionaires
Still, with Asia already experiencing a recovery not seen in the rest of the world, it's likely that the ranks of the rich will swell again this year, as will their wealth hoards. The report, which is based on a survey of wealth managers who deal with clients with at least $1 million in net worth (excluding the value of their principal residence) predicts the number of millionaires could jump as much as 9% this year thanks to booming stock markets and recovering property markets in the region.
What's more, the outlook for Asia-Pacific's affluent looks pretty rosy over the longer term, with wealth expected to grow at 8.8% annually between now and 2018, compared with a global average of 7.1%. "Asia-Pacific is likely to fare better than the rest of the world in 2009," says Francis Liu, market managing director for Greater China at Merrill Lynch Global Wealth Management. The two emerging giants, China and India, "will expand and drive growth in 2010."
Where the Rich Are Getting Richer Indeed, China now has the fourth-largest number of millionaires in the world, overtaking Britain last year for the No. 4 spot and France the year before. Despite an 11.8% contraction in the number of China's high-net-worth individuals (from 413,000 in 2007 to 364,000) last year, in large part because Shanghai's stock market had such a rotten year, China's millionaires at the end of 2008 had combined wealth of $1.7 trillion—accounting for 23% of the region's assets controlled by the rich.
Although India's high-net-worth population shrank 31.6%, to 84,000—and its combined wealth declined 29%, to $310 billion—those figures could bounce back this year thanks to the stock market, up 75% this year. Indian millionaires tend to hold a very high percentage of their wealth in equities—about 32%, compared with 22% for the region as a whole.
The lion's share of wealth is still concentrated in Japan, however, where millionaires control $3.2 trillion, or 43% of the assets. Yet while the actual number of Japanese millionaires fell 9.9%, to 1.37 million, last year, there is still growing dissatisfaction over the widening gap between rich and poor. In the early 1970s, 61% of Japanese considered themselves to be middle class, a figure which has shrunk to 50% today, according to a government survey.
Concern over Income Inequality The ranks of working poor are growing, and this trend is attributed to changes in labor laws earlier this decade, making it easier to hire and fire temporary workers. Some 17% of Japanese men working full time in their 30s earn $33,000 or less, a figure considered insufficient to support a family. Deepening malaise over income distribution is a big reason the Democratic Party of Japan won a landslide victory on Aug. 30, ending more than half a century of nearly uninterrupted rule by the conservative Liberal Democratic Party.
Economic inequality is a growing concern in Europe, as well. According to Eurostat, the European Union's official statistics body, roughly one-fifth of the region, or 100 million people, currently live on less than 60% of the EU's average individual income of $11,800 a year. That's particularly true in Central and Eastern Europe. The wholesale privatization of former national industries, such as electricity generation and manufacturing, has created a small cohort of wealthy businessmen, while many workers still earn less than their Western counterparts.