Friday, September 18, 2009

Europe overtakes N. America as wealthiest region

Europe overtakes N. America as wealthiest region

Europe replaced North America as the world’s richest region last year as measured by assets under management, a survey by the Boston Consulting Group said.

North America, defined as the U.S. and Canada, had $29.3 trillion in assets under management, compared with $32.7 trillion in Europe in 2008, according to the survey released Tuesday by the Boston-based firm. The U.S. remains the wealthiest country at $27.1 trillion and has the highest number of millionaires - almost 4 million. Japan’s global wealth is No. 2 with $13.5 trillion and more than 1 million millionaire households.

Global wealth dropped for the first time since the survey started in 2001 as assets under management decreased 11.7 percent to $92.4 trillion last year from $104.7 trillion a year earlier. The credit crisis sent stock indexes to their worst annual losses since the Great Depression and slashed the value of real-estate holdings, hedge-fund and private-equity investments in 2008. The Standard & Poor’s 500 Index dropped 38 percent last year, the steepest annual decline since 1937.

“For the last few years, the industry was blessed with very substantial growth, markets kept rising and people kept getting richer and pumping more money to wealth managers,” said Monish Kumar, a partner and managing director in the firm’s New York office. “That era came to a crashing halt in 2008.”

The biggest drop occurred in North America, where wealth plunged 22 percent, according to the survey. The second-biggest decline was Japan, where wealth fell almost 8 percent in local currencies. Latin America, defined by the survey as Mexico, South America and Central America, was the only region where wealth grew, by 3 percent.

Expecting a slow recovery:

Wealth is expected to begin a “slow recovery” in 2010, according to the survey. Assets under management will grow at an average annual rate of 3.8 percent from the end of 2008 through 2013 to $111.5 trillion.

“We believe wealth will come back, but we remain conservative,” said Peter Damisch, a partner and managing director in Boston Consulting Group’s Zurich office. “Before 2013, we won’t get back to 2007 levels.”

The number of millionaire households globally fell to 9 million from 11 million, with North America and Europe both experiencing decreases in the number of millionaire households by 22 percent, according to the report. The results are similar to a survey released in June by Capgemini and Merrill Lynch that found the number of millionaires slipped 15 percent to 8.6 million.

Singapore has the highest concentration of millionaires with 8.5 percent of the nation’s households having more than $1 million in assets under management, the report said.

The amount of offshore wealth declined to $6.7 trillion last year from $7.3 trillion in 2007 as regulators pressured countries such as Switzerland to cut down on bank secrecy

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