The FINANCIAL TIMES May 17 1999
World's richest 6m get richer
By George Graham, Banking Editor
The world's estimated 6m millionaires have shrugged off the effects of last
year's financial turmoil and are getting richer by the day.
New research by Merrill Lynch, the investment bank, with Gemini Consulting,
a management consultancy, found the wealth held by high net worth
individuals with more than $1m of financial assets grew last year by 12 per
cent to $21,600bn.
The World Wealth Report produced by the two firms projects a steady rise to
$32,700bn by the end of 2003 - a growth rate which is expected to attract
more firms into the lucrative market for private banking and wealth
management services.
This year's estimates suggest the rich are, in fact, richer than had been
thought. Estimates have been revised upwards by around $2,000bn, in the
light of new data from the US and Germany showing wealth is concentrated in
fewer hands than was supposed.
Although Asian and Latin American millionaires suffered from the turbulence
which hit their domestic markets last year, the rich were, in general, able
to survive the crisis with their wealth intact.
"Most high net worth individuals remained relatively calm and rode out the
stock market storm," said Christopher Humphry of Gemini.
Wealthy clients reduced the equity portion of their portfolios, moving more
money into cash deposits and fixed income bonds. In Asia and the Middle
East, too, some clients shifted assets from local currency to the US dollar.
"There was much less wholesale liquidation of portfolios than in past
periods of volatility...In aggregate, clients would now probably be 5 per
cent higher in cash than in the middle of last year," said Michael Giles,
chairman of Merrill Lynch International Banking.
The crisis passed quickly, and by the end of 1998 wealthy Latin Americans,
who had moved offshore were already moving back into fixed income
securities in their domestic markets.
Last year's movements into cash and offshore appeared to represent a
reversal in the long-term trends towards equities and onshore investments
which most analysts have found in the private banking arena.
But Mr Humphry did not think this reversal was more than a temporary
diversion. "We would hold that these two trends remain true despite what
happened last year."
