Global wealth also melts with turmoil
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Hurriyet Daily News
Oluşturulma Tarihi: Haziran 25, 2009 00:00
ISTANBUL - The global financial meltdown has significantly reduced individual wealth as well as company values, a recent report shows. Turkey's rich also could not escape the crisis but the winners during the crisis were developing economies, according to the World Wealth Report.
The world's population of high net worth individuals, or HNWIs, whose investible assets stand at a minimum $1 million per individual, fell by 14.9 percent in 2008 to 8.6 million people, according to a new report
The World Wealth Report, prepared by Capgemini and Merrill Lynch, has revealed that the total asset value of HNWIs dropped by 19.5 percent to $32.8 trillion.
"The unprecedented decline [in asset prices] wiped out two robust years of growth in 2006 and 2007, reducing both the [HNWIs] population and its wealth to below levels seen at the close of 2005," Kubilay Cinemre, Merrill Lynch Turkey general manager, told at a press conference in Istanbul on Wednesday.
Ultra-high net worth individuals, defined as individuals with net assets of at least $30 million per individual, suffered more extensive losses in financial wealth than the HNWIs, as their wealth decreased by 23.9 percent, the report said.
Largest decline in wealth
The largest drop in HNWI population was seen in the United States with a fall of 18.5 percent, but the country remains home to the largest number of rich people with 2.5 million individuals, or 28.7 percent of the total global population. But the most outstanding discovery of the report is the increase of emerging countries like China and Brazil on the list of the global wealthy. China rose to fourth place from fifth in 2007 with a high net wealth population of 364,000 people. Brazil jumped in the list to 10th place with 143,000 people from 12th in 2007.
"The main reason is the increase in commodities prices in the first half of 2008," said Cinemre. In Turkey, the population of high net worth individuals and the value of their total assets followed the global trend. "The population of high net worth individuals dropped by 29.2 percent to 33,700 people in 2008," Cinemre said. This was caused by the economic slowdown and sharp declines in the Istanbul Stock Exchange, he said.
"However, the Central Bank’s cautious monetary easing policy and continuing competition in infrastructure investments had a positive impact on the wealth of Turkish individuals," Cinemre said, adding the measures taken by the Central Bank were successful in reducing the impact of global economic crisis.
Cinemre said the global wealth is anticipated to increase by 8.1 percent to $48.5 trillion as a result of a predicted rise in consumer spending and strong growth in China. The share of Asia-Pacific countries within global wealth is expected to almost double and reach 13.4 percent from the existing 7.4 percent, he added.
North America and the Asia-Pacific regions are predicted to lead in wealth growth, with Asia-Pacific surpassing North America by 2013, he said. "These regions will be spurred by increasing U.S. consumer spending and the extension of the autonomy of the Chinese economy, already sparking a new increase in consumer demand."
"In 2008, the global markets faced a sharp fall and shed 50 percent of their value. This loss of asset value reached to $30 trillion, a level approximately equal to annual gross national product, or GNP, of the world," he said.
The global crisis forced high-income individuals to invest their money into safe havens or mainly keep them in cash, the report showed. Fixed-income investments, cash and liquid assets rose to 50 percent in 2008 from 44 percent a year earlier. Moreover, those individuals invested in slightly more to real estate holdings, which rose to 18 percent of the total global portfolio from 4 percent in 2007.
The World Wealth Report, prepared by Capgemini and Merrill Lynch, has revealed that the total asset value of HNWIs dropped by 19.5 percent to $32.8 trillion.
"The unprecedented decline [in asset prices] wiped out two robust years of growth in 2006 and 2007, reducing both the [HNWIs] population and its wealth to below levels seen at the close of 2005," Kubilay Cinemre, Merrill Lynch Turkey general manager, told at a press conference in Istanbul on Wednesday.
Ultra-high net worth individuals, defined as individuals with net assets of at least $30 million per individual, suffered more extensive losses in financial wealth than the HNWIs, as their wealth decreased by 23.9 percent, the report said.
Largest decline in wealth
The largest drop in HNWI population was seen in the United States with a fall of 18.5 percent, but the country remains home to the largest number of rich people with 2.5 million individuals, or 28.7 percent of the total global population. But the most outstanding discovery of the report is the increase of emerging countries like China and Brazil on the list of the global wealthy. China rose to fourth place from fifth in 2007 with a high net wealth population of 364,000 people. Brazil jumped in the list to 10th place with 143,000 people from 12th in 2007.
"The main reason is the increase in commodities prices in the first half of 2008," said Cinemre. In Turkey, the population of high net worth individuals and the value of their total assets followed the global trend. "The population of high net worth individuals dropped by 29.2 percent to 33,700 people in 2008," Cinemre said. This was caused by the economic slowdown and sharp declines in the Istanbul Stock Exchange, he said.
"However, the Central Bank’s cautious monetary easing policy and continuing competition in infrastructure investments had a positive impact on the wealth of Turkish individuals," Cinemre said, adding the measures taken by the Central Bank were successful in reducing the impact of global economic crisis.
Cinemre said the global wealth is anticipated to increase by 8.1 percent to $48.5 trillion as a result of a predicted rise in consumer spending and strong growth in China. The share of Asia-Pacific countries within global wealth is expected to almost double and reach 13.4 percent from the existing 7.4 percent, he added.
North America and the Asia-Pacific regions are predicted to lead in wealth growth, with Asia-Pacific surpassing North America by 2013, he said. "These regions will be spurred by increasing U.S. consumer spending and the extension of the autonomy of the Chinese economy, already sparking a new increase in consumer demand."
"In 2008, the global markets faced a sharp fall and shed 50 percent of their value. This loss of asset value reached to $30 trillion, a level approximately equal to annual gross national product, or GNP, of the world," he said.
The global crisis forced high-income individuals to invest their money into safe havens or mainly keep them in cash, the report showed. Fixed-income investments, cash and liquid assets rose to 50 percent in 2008 from 44 percent a year earlier. Moreover, those individuals invested in slightly more to real estate holdings, which rose to 18 percent of the total global portfolio from 4 percent in 2007.