HONG KONG China now has more super rich than Japan, mostly entrepreneurs benefiting from the country's surging economic growth, according to an annual survey by Merrill Lynch and Capgemini published on Thursday.
Japan is still home to 56 percent of high net worth individuals in the Asia-Pacific region, or 1.5 million Japanese with US$1 million or more in investible assets excluding their primary residence. China, however, has more than 6,000 ultra high net worth individuals, with at least US$30 million in investible assets, compared with around 5,300 in Japan.
India and Vietnam are also seeing a fast expanding pool of wealthy residents. Like China, they saw the number of millionaires increase by more than 20 percent last year, according to this year's Asia-Pacific Wealth Report.
The region's 2.8 million high net worth individuals account for nearly a third of the world's millionaire population.
Weak equity markets this year, aggravated by the widening global financial crisis this month, are depressing investment portfolios, although wealthy investors in the Asia-Pacific in the past 12 months have reduced their exposure to equities and real estate in favor of cash deposits and fixed-income securities.
"Looking forward, high net worth individuals (in the Asia-Pacific) are likely to reduce their investments in their domestic markets and focus more on faster growth markets with higher returns such as Latin America and Eastern Europe," Stephen Corry, Asia-Pacific investment strategist at Merrill Lynch Global Wealth Management, told a press conference.
Financial markets are likely to remain volatile, however. Corry said it would take coordinated central bank action to restore confidence in markets, such as an interest rate cut by the European Central Bank although a Eurozone rate cut does not look forthcoming.
However, Asia's still solid economic growth should continue to boost the number of high net worth individuals by 8 percent this year and for each of the next four years. By 2012 their wealth should reach US$13.9 trillion, up from US$9.5 trillion in 2007, the survey predicted.
Japan's millionaires have mostly inherited wealth, making them far more risk-averse than the rich in emerging economies like China and Vietnam, who tend to be first-generation wealthy and far more willing to take chances with their money, Capgemini said.
Hong Kong's 95,000 millionaires, led by a clutch of property tycoons, have the highest average net worth in the region at U$5.4 million, compared with a global average of US$4 million.
(Reporting by Susan Fenton, editing by Jonathan Hopfner)