rich get richer

Doug Henwood dhenwood at panix.com
Mon May 17 16:28:05 PDT 1999


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."



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