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| World's richest shrug off markets turmoil Financial
Times, 14 May 2001 The amount of wealth owned by the world's richest people rose 6 per cent to $27,000bn (£19,000bn) last year despite the turmoil in global stockmarkets. The number of "high net worth individuals" - those with more than $1m to invest - increased by 184,000 to 7.2m, a rise of 3 per cent, according to a study. However, the downturn in equity markets created an even more exclusive group of "minute millionaires" - people who acquired high net worth during the last months of the technology bubble only to sink back when shares in the sector plummeted. Almost a third of those who joined the millionaires club in the first quarter of 2000 had dropped out of it by the end of the year. Growth in 2000 was much lower than in previous years, according to the World Wealth Report, produced annually by Merrill Lynch, the US investment bank, and Cap Gemini Ernst & Young, the professional services firm. In 1999, more than 1m people had joined the ranks of high net worth individuals, with an 18 per cent surge in their wealth. Strong economic growth in 2000, especially in the first six months, contributed to higher incomes, new businesses and greater individual wealth in every region except Asia, where there was a contraction. The sharp fall in share prices after the first quarter eroded much of the increase, although Tim Taylor, chief marketing officer for Merrill Lynch in Europe, says the wealthy appear to have avoided the worst falls. "High net worth individuals have been much more agile at getting out of technology stocks and into cash, bonds and alternative investments," Mr Taylor said. The report's authors have reduced their growth forecasts for the next five years, previously 12 per cent a year. The two organisations now expect 8 per cent annual growth which would raise the amount owned by high net worth individuals to $39,700bn. "Last year's stockmarket turmoil has had a depressive impact," said Chris Humphrey of Cap Gemini Ernst & Young. "Our less optimistic projection reflects emerging uncertainty about global economic growth and stockmarket volatility." Although the US stockmarkets fluctuated widely, North America saw the strongest wealth growth last year at 9 per cent. The 2.3m European high net worth individuals saw their wealth rise 7.5 per cent but Asians - the winners in 1999 with a 22 per cent increase - saw their wealth fall more than 9 per cent in 2000. The report notes the increasing interest among the wealthy in specialised investments such as hedge funds and private equity to achieve higher growth rates. Rich investors are also making greater use of derivatives to protect their portfolios, particularly when their wealth is concentrated in a single investment such as their company's shares. |
