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The Global Wealth Market in 2012.

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By Matia Grossi May 2012


This document was written by Matia Grossi

Senior Analyst Private Wealth Management

Matia joined Datamonitor Financial Services in 2011 as Senior Analyst for the Wealth Management team in London. As well as tracking the global wealth market and conducting a number of in-depth country and competitive analysis studies, Matia helped to reshape and deliver some of Datamonitor’s key databases. These include coverage of the retail savings and investments market and the global wealth market, which provide data and forecasts for 60 countries worldwide. Prior to joining Datamonitor, Matia worked as a market researcher with major agencies such as Frost & Sullivan and IMS Research, where he was responsible for conducting surveys for a wide range of markets including information and communication technology and security. If you have questions about the research, data, and findings within this document you can put your questions directly to the analysts. Simply email your questions to askfs@datamonitor.com To find out more about Datamonitor Financial Services contact us at: email enquiries@datamonitor.com phone +44 207 551 9437 Visit our website: http://about.datamonitor.com/sectors/financial.htm Or follow us on Twitter: @DatamonitorFS DISCLAIMER While every care is taken to ensure the accuracy of the information contained in this material, the facts, estimates, and opinions stated are based on information and sources which, while we believe them to be reliable, are not guaranteed. In particular, it should not be relied upon as the sole source of reference in relation to the subject matter. No liability can be accepted by Datamonitor, its directors, or employees for any loss occasioned to any person or entity acting or failing to act as a result of anything contained in or omitted from the content of this material, or our conclusions as stated. The findings are Datamonitor’s current opinions; they are subject to change without notice. Datamonitor has no obligation to update or amend the research or to let anyone know if our opinions change materially.

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In a nutshell The global wealth market declined in 2011 after two years of robust recovery, with the eurozone sovereign crisis, natural calamities, and stock market volatility taking their toll on market performance. The unpredictability surrounding the future of the euro and the worsening of the sovereign crisis in Europe are expected to weigh heavily on the global wealth market for the foreseeable future. Many emerging markets (with Asia Pacific leading the way) are expected to continue marching ahead. Indeed, Asia Pacific (excluding Japan) is expected to become the second largest affluent market in the world by 2015.

Key highlights include: •

At a global level the assets held by affluent individuals (defined as those holding $50,000 or more in liquid assets) amounted to $61tn at the end of 2011, barely ahead of the 2007 figure. It will take until 2014 for the market to return to a healthy growth level.

At a global level, 6.7 million millionaires (or 0.2% of the adult population) held $21tn (or 26% of total affluent assets). By 2015, the total number of millionaires will jump to 8.4 million.

North America is the largest affluent market and currently accounts for 50% of total global millionaire holdings, while Japan is the second largest wealth market in the world and one of the most equalitarian.

Only 1.4% of adult individuals are affluent in Latin America, the lowest percentage in the world.

Looking forward, North America will remain the largest wealth market, while Asia Pacific (excluding Japan) will overtake Western Europe as the second largest market.

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Because of its close ties with the declining Western European market, Central and Eastern Europe – currently the second smallest market after Middle East and Africa – will see its share of the total market decrease by 2015.

In terms of country markets, the US is currently and will remain the number one market in terms of the total affluent population and millionaires.

However, there will be other changes in the top 10 country wealth markets. For example, the Chinese market will overtake the Japanese market as the second largest by 2015.

Unsurprisingly the Portuguese, Irish, Italian, Greek, and Spanish wealth markets are among the worst performers at a global level; Greece will be the only wealth market in the world to show negative growth.

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The global wealth market declined in 2011 Volatility will characterize the global wealth market for the foreseeable future The eurozone sovereign crisis, natural calamities, and stock market declines had a heavy impact on the global wealth market in 2011. Furthermore, the unpredictability surrounding the future of the euro and the worsening of the sovereign crisis in Western Europe are expected to weigh heavily on the global wealth market for the foreseeable future, with many mature wealth markets (and Western Europe in particular) facing zero or negative growth. Asia Pacific, on the other hand, is continuing on its growth path toward becoming the largest wealth market in the world.

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The global wealth market was worth $61tn at the end of 2011, just $4tn more than in 2007 In 2011, the world’s 258 million affluent individuals (defined as those holding $50,000 or more in liquid assets) represented just 7.3% of the total adult population globally, but accounted for 77% (or $61tn) of total global liquid assets. The number of affluent individuals slightly declined from 2010 to 2011, with the tough economic environment naturally feeding through to the affluent market. Volatility has hence been a characteristic of the global wealth market since the financial crisis sent the world into a deep recession in 2008; while there were two years of strong growth in 2009–10, the market value in 2011 ($61tn) was barely ahead of the 2007 value of $57tn.

The decline in 2011 was much milder than in 2008 The stock market decline in mid-2011 was caused principally by the de facto default of Greece and the (since then proven) inadequacy of the European leadership; this in turn caused a drop in liquid wealth at a global level. The contraction was obviously much milder than the sharp fall in 2008, but was also a clear indication of the seriousness of the problems that many mature markets are facing, with tightening fiscal policies, low GDP growth, and declining standards of living, all of which mean that although the decline in 2011 was far less severe than in 2008, the situation in 2011 is very different, with much bleaker growth prospects and a high degree of volatility expected for the foreseeable future.

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2013 will be another difficult year for the global wealth market, followed by a strong recovery The persisting eurozone crisis, slowing Chinese economy, and escalating political instability in the

Global wealth market unlikely to get out of the woods before 2014

Middle East are all contributing factors to the unpredictability that is expected to continue for the next couple of years. This will translate into continued stock market volatility, as seen in 2011 and early 2012. A more stable economic recovery expected to start in 2014 will boost the number of affluent individuals and add about 20 million

individuals per year after sluggish growth in the four years between 2007 and 2011, which saw an overall increase of only 15 million.

Worldwide liquid assets held by affluent individuals, 2006–15 Liquid assets ($bn)

Growth rate

11% 9%

8%

7%

7%

7%

2% 0%

-10% 52,556 57,121 51,277 57,124 61,340 61,061 65,655 67,132 71,866 77,090

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Datamonitor

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The number of millionaires will reach 8.4 million by 2015 Approximately 6.7 million millionaires held $21tn (or 26% of total affluent assets) in 2011. These individuals represented only 0.2% of the total adult population in 2011. The number of millionaires declined globally from 2010 to 2011, with the sharp decline in stock markets taking its toll on the equity allocation of the wealthy, which naturally feeds through to the number of wealthy individuals.

Worldwide liquid assets held by millionaires, 2006–15 Liquid assets held by millionaires ($bn) Growth rate 12% 9%

8%

3%

8%

8%

3% -1%

-11% 19,398 20,046 17,914 20,067 21,769 21,634 23,486 24,210 26,127 28,169

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Datamonitor

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North America accounts for 50% of total millionaire holdings worldwide The North American market accounts for almost half of global liquid assets held by millionaires. This figure has seen little change in the past few years, and the rise of emerging economies in other regions is not expected to significantly threaten North America's position. In fact, the healthy and growing North American entrepreneurial base, high executive pay in the country, and increasing pressure exerted by the US government on the wealthy to repatriate undeclared offshore assets all point to the unwavering importance of the US in the global wealth market.

61% of total liquid assets are held in mutual funds and equities in North America – almost double the global average

Millionaires’ high allocations in equities and mutual funds in North America translates into high market volatility globally At a global level, retail investors as a whole tend to allocate most of their liquid assets into, deposits and fixed income products, and only 38% into equities and mutual funds. In contrast, North American retail investors have 61% of their liquid assets allocated in the latter two categories.

2008 saw a 7% drop in the total value of liquid assets in Western Europe

The high allocation in equities and mutual funds characteristic of North American millionaires, coupled with the dominance of North America in terms of the number of millionaires, translates into much higher volatility in the global wealth market. A clear example of this was shown during the 2008 financial crisis, with the sharp decline in the

global stock market corresponding to a -20% decline in the total value of liquid assets in the US. This was mainly due to equities and mutual funds declining by -40% and -25% respectively. This compares to a

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decline of -7% in the total value of liquid assets in Western Europe, where allocations are more focused around deposits and fixed income products.

Total retail liquid asset by asset class, 2011

North America

Worldwide

Deposits 25%

Mutual funds 33%

Deposits 52%

Equities 28%

Bonds 14%

Mutual funds Equities Bonds 9% 20% 18%

Source: Datamonitor

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Equalitarian wealth distribution is built over decades of growth in service-based economies The strong inequalities in many emerging markets skew the Global Wealth Pyramid toward a vastly unequal distribution, in which billions of individuals at the very bottom hold as much as a few million at the very top of the wealth spectrum. While mature markets generally have more homogeneous wealth

7%: the percentage of affluent individuals as share of global adult population A

distribution, most of the emerging markets have a much lower share of their populations falling within the affluent category, and as such often see a much higher concentration of wealth among tens of thousands of millionaires.

more equalitarian wealth distribution is usually due to stronger

middle class segments generated over decades in mature service-based economies. On the other hand, in many developing economies with a large industrial base there is a much higher concentration of wealth among a limited number of individuals; two extreme cases of these two scenarios are Japan and China.

Datamonitor’s Global Wealth Pyramid ~0.2%

~7% $1m+

~93%

$50k $1m <$50k

Number of people

Average holding

25%

50%

25% Percentage of assets held

Source: Datamonitor

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Japanâ&#x20AC;&#x2122;s massive service sector contributed to make the market one of the most equalitarian on the planet Japan is one of the most equalitarian countries in the world, in which the over 50 million affluent individuals represent 41% of the total adult population, six times the global average. This strong equalitarian base has originated over the last few decades from a modern, service-based economy. Services account for three quarters of the second largest economy in the world, a situation relatively unchanged for the past three decades. However, the Japanese wealth market, similarly to its broader economy, is characterized by anemic growth; in fact, from 2006 to 2015 the market is expected to be flat.

Datamonitorâ&#x20AC;&#x2122;s Japanese Wealth Pyramid ~0.5%

20% $1m+ ~41%

~59%

Number of people

$50k $1m <$50k Average holding

55%

25% Percentage of assets held

Source: Datamonitor

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China's broad industrial base and explosive growth are creating uneven wealth distribution The other extreme is China, which is the third largest wealth market in the world and one of the most rapidly expanding. The Chinese economy is still broadly dependent on a broad manufacturing base; in 2011 industry accounted for 47% of total GDP, while services only accounted for 43%, with the remaining 10% accounted for by the agricultural sector. China's economic structure has created an unequal wealth market in which a few entrepreneurs and investors are able to rapidly accumulate large fortunes while masses of workers and farmers barely survive. However, the Chinese wealth market has huge potential given the rapidly expanding service sector, which is naturally creating a vast affluent middle class.

Datamonitorâ&#x20AC;&#x2122;s Chinese Wealth Pyramid ~0.05%

~1.8%

~98%

$1m+

30%

$50k $1m

45%

<$50k

Number of people

Average holding

25% Percentage of assets held

Source: Datamonitor

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Large affluent bases in the west still hold much of the worldâ&#x20AC;&#x2122;s wealth Wealth is still mostly concentrated among the rich Western markets, but the East is poised to overtake Decades of economic prosperity have created a large affluent base in most of the Western economies. Even with the deep recession that hit the West in 2008, wealth is still for the most part concentrated among these markets.

That being said, the ongoing shift of wealth toward the emerging economies is not expected to show any sign of slowing down, with growth rates in many emerging economies still well in the double digits. In contrast, many mature markets â&#x20AC;&#x201C; most notably Japan and several European markets â&#x20AC;&#x201C; have barely grown in the past few years, and face bleak prospects for the foreseeable future.

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North America is the largest regional market North America, although a mature market, is in a different position compared to Western Europe and Japan. The region is still the largest wealth market by far, and within the mature markets it is the most attractive in terms of size, penetration of affluent individuals and millionaires, and growth prospects for 2011â&#x20AC;&#x201C;15. Growth in the region will come from a positive economic outlook, a buoyant entrepreneurial base, and from the Internal Revenue Service's (IRS's) efforts to uncover and repatriate undeclared offshore assets held by US individuals.

Growth in the number of millionaires by region, 2011 25%

Latin America

AAGR (2006-10)

20%

Asia Pacific (excl. Japan)

15%

10%

5%

North America

Middle East and Africa

Western Europe

Japan 0%

0%

5%

10% AAGR (2011-15)

15%

20%

Source: Datamonitor

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Western European growth will fall down the global pecking order by 2015 Western Europe is currently the second largest regional wealth market, but this will change by 2015. Ongoing uncertainty in the Western European stock markets coupled with the sovereign debt crisis are expected to dampen growth in the coming years. The tighter fiscal policies being implemented in many countries in the region in an effort to reduce the trillions of dollars of debt accumulated during the last two decades are stifling the growth prospects of many markets. The reliance of many Continental

2008 saw a 5.4% drop in millionaires in Western Europe

European retail investors on investing in fixed income and cash products helped make the broad Western European market relatively resilient during the last economic recession, with declines in the lower single digits in many markets. However, this tendency is also expected to substantially limit growth potential for the coming years, with the result that Western Europe will drop to the third largest regional market behind North America and Asia Pacific (excluding Japan) in 2015.

China and India are behind most of the growth in Asia China and India are behind most of the explosive

Asia Pacific and Japan will have almost one third of global millionairesâ&#x20AC;&#x2122; liquid assets by 2015

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growth seen in Asia Pacific (excluding Japan) in recent years, and will continue to be for the foreseeable future. In terms of number of millionaires, Asia Pacific (excluding Japan) is set to become the second largest regional market after North America, overtaking Japan in 2007 and Western Europe in 2012.

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Central and Eastern Europe shows strong country by country differences The strong economic ties that many of the countries in the region have with Western Europe contributed to much of the economic growth in the past decade. However, the 2008 financial crisis and the ongoing eurozone sovereign debt crisis have turned these ties sour and had a negative effect on the market, and growth prospects are now well below the historical average. Some emerging countries in the region still offer good growth potential, such as Ukraine and Serbia, while other more

7.4% of Sloveniaâ&#x20AC;&#x2122;s adult population is considered affluent, but just 0.5% in the Ukraine

mature markets such as Slovenia exhibit similar behaviors to their Western European neighbors.

Latin America has the lowest penetration of affluent individuals Latin America has the lowest penetration of affluent individuals, but also massive growth potential for its wealth market. Brazil is the largest regional market, and the 145,000 Brazilian millionaires hold 50% of the total liquid asset pool held by affluent individuals, which indicates massively unequal distribution of wealth in the market. The growth of the country's wealth

Only 1.4% of individuals are affluent in Latin America

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market is in line with GDP growth, which has been further boosted by the $33bn+ spent on investment in infrastructure projects in preparation for its hosting of the 2014 World Cup and the 2016 Olympic Games.

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Middle East and Africa to show the second highest regional growth rate The Middle East experienced extraordinary growth in the boom years, driven by high global oil demand and infrastructure spending, all fueled by cheap credit. However, an overreliance on oil exports coupled with the collapse of oil prices in 2008 slammed most Middle Eastern economies into reverse. Kuwait and the United Arab Emirates saw negative GDP growth, and the harsh conditions wiped out more than 10% of their millionaire ranks. With oil prices on the rise again the number of millionaires is set to once more grow at

11% growth expected in MEA affluent assets to 2015

double digit rates.

Liquid assets balances by region 2006â&#x20AC;&#x201C;15 2006 ($bn)

2011 ($bn)

2015 ($bn)

CAGR 2006-10

CAGR 2011-15

2,286

3,657

5,948

12%

13%

281

499

718

14%

9%

2,556

2,440

2,783

-1%

3%

Latin America

413

703

1,025

14%

10%

Middle East and Africa

184

253

387

6%

11%

North America

9,851

10,151

12,684

1%

6%

Western Europe

3,865

4,010

4,735

1%

4%

Asia Pacific (excluding Japan) Central and Eastern Europe Japan

Source: Datamonitor

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Number of millionaires by region 2006–15 2006 (‘000)

2011 (‘000)

2015 (‘000)

AAGR 2006-10

AAGR 2011-15

641

1,125

1,760

19%

14%

79

154

214

21%

10%

Japan

716

767

823

1%

2%

Latin America

116

216

306

21%

10%

Middle East and Africa

51

78

115

9%

12%

North America

2,619

3,192

3,785

5%

5%

Western Europe

1,083

1,235

1,413

3%

4%

Asia Pacific (excl. Japan) Central and Eastern Europe

Source: Datamonitor

Number of millionaires, (‘000), by region, 2011 3,192

1,235

1,125 767

North America

Western Europe

Asia Pacific (excl. Japan)

Japan

216

154

78

Latin America

Central and Eastern Europe

Middle East and Africa

Source: Datamonitor

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The top 10 markets changed in 2011 with the entry of Brazil and India In terms of millionaires' holdings the 10 largest markets in 2011 were the US, Japan, China, the UK, Germany, Italy, Canada, France, Brazil, and India. While Spain was in the 2006 top 10, the collapse of its real estate market coupled with the explosive growth seen in India and Brazil contributed to the Spanish market falling out of the top 10 in 2011.

While the UK and the US are expected to perform strongly compared to the other mature markets, markets such as Italy and France are slowly dropping towards the bottom of the list, with France already at number 10 in 2012.

Largest markets by balances held by millionaires, 2006 vs. 2011 vs. 2015 2006 ($bn)

2011 ($bn)

2015 ($bn)

1.

United States

9,381

United States

9,623

United States

12,029

2.

Japan

2,556

Japan

2,440

China

3,191

3.

1,017

856

Japan United Kingdom

2,783

744

China United Kingdom

1,802

4.

China United Kingdom

5.

Germany

660

Germany

698

Germany

819

6.

Italy

623

Italy

605

India

747

7.

Canada

470

Canada

528

Brazil

705

8.

France

465

France

473

Italy

701

9.

Spain

372

Brazil

471

Canada

655

10.

Brazil

265

India

437

France

556

11.

Taiwan

218

Spain

372

Spain

417

12.

India

205

Taiwan

269

Taiwan

352

1,057

Source: Datamonitor

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IRS activity and the Foreign Account Tax Compliance Act will boost asset growth in the US The US will remain the largest high net worth market in the world come 2015. Since the financial crisis in 2008 the US government has stepped up its commitment to ensuring that super-rich individuals with undeclared offshore assets pay their fair share of taxes and repatriate these assets. Since 2009 the IRS has launched three tax amnesties to â&#x20AC;&#x153;encourageâ&#x20AC;? wealthy Americans to pay tax on undeclared offshore assets. With each new amnesty the penalty on assets has increased. On top of this initiative, the launch of the new Foreign Account Tax Compliance Act (FATCA) means that US investors with (declared) foreign financial holdings must report them to the IRS in their annual tax return. The combination of increasing IRS activity and the FATCA is expected to push many US super-rich to repatriate at least some of their offshore assets, thus boosting the value of onshore assets.

The Chinese market will overtake the Japanese market as the second largest by 2015 China is set to become the second largest market by assets held by millionaires by 2015. The limited growth of Japan coupled with the explosive growth of China are the two main reasons for this. However, as far as the Chinese economy is concerned there is still a certain degree of uncertainty regarding a possible crash in the coming years. This would have a knock-on effect on the wealth market in the country, and potentially in the broader Asia Pacific region. A less worrying scenario is the bursting of the Chinese property bubble after years of double digit growth. The first signs of the cooling down in real estate prices started showing toward the end of 2011, with prices flat or declining in many of the major cities. This could, however, be a blessing in disguise for the broad Chinese wealth market, as Chinese millionaire investors tend to allocate a large chunk of their portfolio in real estate investments, meaning the slowdown of the property market could correspond to a massive flow of liquid assets in the liquid asset pool.

Brazil, China, and India will see their liquid asset pools more than triple between 2006 and 2015 The strong growth of Brazil, China, and India will see the cumulative value of the liquid assets held by millionaires triple from $1.5tn to $4.6tn between 2006

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and 2015. India in particular will experience explosive growth, jumping from 12th place in 2006 to sixth place in 2012, even overtaking the rapidly growing Brazilian wealth market.

European countries are among the worst performers at a global level Portugal, Ireland, Italy, Greece, and Spain (PIIGS) are among the worst performers at a global level, highlighting the difficulties faced by some of the traditional wealth markets. Western Europe as a whole has performed poorly in recent years, and the outlook up to 2015 is not much brighter, with downward scenarios looking increasingly likely.

The four Southern PIIGS markets â&#x20AC;&#x201C; with their tightening fiscal policies, austerity measures, uncompetitive labor markets, and low GDP growth rates â&#x20AC;&#x201C; have bleak growth prospects for their wealth markets.

Portugal is the second worst performer after Greece Portugalâ&#x20AC;&#x2122;s wealth market is rapidly heading toward a situation similar to Greece. The country is subject to scrutiny from the other euro members because of its forced acceptance of a bailout package in 2011. This scrutiny is forcing Portugal to adopt growth-limiting austerity measures. As with Greece and other Southern European countries, Portugal is facing zero or negative growth for years to come because of deeply rooted structural problems and inefficiencies that make the market uncompetitive in the new global marketplace.

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After a few terrible years, Ireland is expected to show the highest growth rate in Western Europe Ireland’s wealth market was one of the worst

Ireland to have the fastest growth in millionaire liquid assets in Western Europe 2012–15

performers in recent years as a result of a sharp economic contraction caused by the collapse of its real estate market. The remarkable recovery of the Irish wealth market over 2012–15 will mainly be driven by strong economic performance. However, this robust performance is tainted by the uncertainty surrounding the future of the euro and elevated stock market

volatility.

Italy is the largest Southern European wealth market Italy is the largest Southern European market, with $605bn held by millionaires in 2011. In terms of liquid assets the market performed poorly in 2006–10, with compound growth of -0.5%. This poor performance was mostly due to the extremely poor performance of the Italian stock market, which by the end of 2010 had lost over 45% of its capitalization from its 2007 peak, coupled with the country's broader economic difficulties. However, it is expected that the Italian market will record stronger growth of 3.7% for the period up to 2015, the best among the PIIGS after Ireland, underlying a fundamentally resilient wealth market.

Greece is the only market set to experience negative growth in the years up to 2015 Since 2011, the Greek government has been forced to implement dramatic budget cuts, privatization, and modernization that, at least theoretically, should help the country on the road to recovery. However, the country is set for a few turbulent years, and it is the only wealth market at a global level that is expected to

$605bn held by millionaires in Italy in 2011

experience negative growth over the coming years, and unsurprisingly so given the deep economic crisis the Greek economy is facing. The recent round of reforms might see 30,000–100,000 public employees lose their jobs in the next few years, which will have a knock-on effect on the private

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sector. According to forecasts by the Economist Intelligence Unit, unemployment is expected to reach 18% by the end of 2012, more than double the 2008 value of 7.7%. Furthermore, this probably underestimates the full effect that budget cuts, privatization, and economic reforms will have on the country.

Spain has been hit by the collapse of its real estate market and a high unemployment rate Spainâ&#x20AC;&#x2122;s wealth market has been badly hit by the economic turbulence in Western Europe, with the years between 2010 and 2012 showing no or negative growth. The collapse of its real estate market and the highest unemployment rate in Western Europe are taking their toll on the market, and the austerity measures recently announced by the Spanish government are further aggravating growth prospects for the already struggling market.

PIIGS - Growth in liquid assets held by millionaires, 2011

CAGR (2006-10)

1.5%

-2.0%

1.0%

Ireland Portugal

0.5%

0.0% 0.0%

Spain

2.0%

4.0%

6.0%

8.0%

Greece -0.5%

Italy

-1.0%

CAGR (2011-15)

Source: Datamonitor

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Appendix Methodology This study covers 59 wealth markets around the world. At its core there is a range of Datamonitor's proprietary databases, reports, and surveys, some of which have been built over a number of years through extensive data collection, analysis, and modeling. In more explicit terms this study leverages data from:

Global Savings & Investments Databases – Datamonitor’s Global Savings & Investments Databases currently covers 59 countries worldwide. These data include household and institutional holdings in deposits, mutual funds, equities, and bonds.

Global Wealth Markets Databases – Datamonitor's Global Wealth Markets Databases provide comprehensive data for 59 countries worldwide. The databases present data with detailed breakdowns of the number of affluent individuals and the aggregate onshore liquid wealth they hold across 10 US dollar liquid asset bands ($50,000–3m+) from 2006 through 2015.

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Geographic coverage spans 59 countries segmented over seven regions Asia Pacific (excluding Japan) Australia

Central and Eastern Europe Bulgaria

China

Croatia

Belgium

Hong Kong

Czech Republic

Denmark

Western Europe Austria

India

Estonia

Finland

Indonesia

Hungary

France

Malaysia

Latvia

Germany

New Zealand

Lithuania

Greece

Pakistan

Poland

Ireland

Philippines

Romania

Italy

Singapore

Russian Federation

Netherlands

South Korea

Serbia

Norway

Taiwan

Slovakia

Portugal

Thailand

Slovenia

Spain

Turkey

Sweden

Ukraine

Switzerland

Japan Japan

United Kingdom

Latin America

Middle East and Africa

North America

Argentina

Bahrain

Canada

Brazil

Kuwait

United States

Chile

Oman

Colombia

Qatar

Mexico

Saudi Arabia South Africa United Arab Emirates

Definitions Throughout the report the following terms have been used:

Affluent – Individuals with more than $50,000 in onshore liquid assets; this includes millionaires as defined below.

High net worth (HNW)/millionaire – Individuals with more than $1m in onshore liquid assets.

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Liquid assets – Liquid assets include household deposits, retail direct holdings in listed stocks and shares, retail direct holdings in government and other bonds, and retail holdings in mutual funds and other collective investment schemes. The information presented does not include life and pensions assets, unquoted equity, or any institutional or company savings and investments assets.

Onshore – Onshore includes the assets held by residents of that country within the market in question. Onshore excludes the assets held in that country by individuals residing outside the country.

Global Wealth Model Methodology A brief overview of the methodology behind Datamonitor’s Global Wealth Model is presented below. If you wish to receive a more detailed version, please do not hesitate to contact us.

The principle mechanism of Datamonitor’s Global Wealth Model is to size the wealth market for each country on the basis of knowledge of two key components:

The distribution of liquid assets across the adult population.

The size of total retail savings and investments markets for each country in any given year.

The Global Wealth Model is therefore essentially a set of sub-models, utilizing this same base methodology but adjusted for regional variances in data availability and region-specific characteristics.

The UK base model The UK is the base country within Datamonitor’s wealth model for which detailed wealth and income distribution data are available. Data relating to the UK distribution of liquid assets are sourced from HM Revenue & Customs statistics derived from inheritance tax returns and probate data. This is modeled to provide one of the most reliable distributions of liquid assets for any country. This distribution is then applied to the known size of the UK retail savings and

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investments market to establish the size of the UK HNW and mass affluent markets.

Other country sub-model For many other countries more limited data on the distribution of income and wealth are available. The Global Wealth Model therefore uses the UK as a reference country. Specifically, the Global Wealth Model takes the wealth distribution as a reference point from the UK base model and skews these data to establish a distribution of liquid assets for the modeled country.

The UK reference wealth distribution is skewed according to a series of multipliers, such as comparisons of population, savings and investments holdings per capita, and Gini indices/income distributions. The connection between the UK wealth distribution and the various multipliers is once more made by using the UK as a reference and then adjusting the relationship according to the specific country. In the Gini coefficient case, for example, Datamonitor uses the relationship between UK wealth distribution and the UK Gini coefficient as a reference and adjusts this relationship between the two indicators for each country.

Once a distribution of liquid assets has been established for the modeled country, this is then applied to the known size of the retail savings and investments markets of that country to produce the wealth numbers.

Historic data collection of savings and investments data Datamonitorâ&#x20AC;&#x2122;s Global Wealth Model relies upon the sizing of the onshore retail savings and investments market within each country studied. A database of such savings and investments data has been built up over a number of years on the basis of a substantial data collection exercise. Data covering household and institutional savings and investments, excluding government, are gathered from a wide range of sources including central banks, stock exchanges, investment associations, and national statistics offices around the world. These data are supported by primary research interviews and discussions to make and verify estimates where required.

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Data are typically collected in local currency and converted to US dollars using the end of year exchange rate for the previous year, in this case 2010. This exchange rate is applied to all years to avoid introducing exchange rate fluctuations into the data.

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ABOUT Datamonitor Financial Services At Datamonitor Financial Services, we deliver intelligence-led insight and data on financial services markets, competitors, and consumers. Our robust forecasting methodologies, proprietary databases, and the experience and knowledge of our in-house analysts help clients to make better strategic decisions in the areas of Retail Banking, Cards & Payments, Savings & Investments, Private Wealth Management, Life & Pensions, and General Insurance. Our research on cards and payments covers competitor developments, consumer attitudes, market forecasts, and technology developments, highlighting current and future trends. The Global Payment Card Analyzer, our proprietary online tool, includes market size, consumer, and competitor data for 60 countries.

If you have questions about the research, data and findings within this document you can put your questions directly to the analysts. Simply email your questions to askfs@datamonitor.com To find out more about Datamonitor Financial Services contact us at: email enquiries@datamonitor.com phone +44 207 551 9437 visit our website: http://about.datamonitor.com/sectors/financial.htm Or follow us on Twitter: @DatamonitorFS

Datamonitor is owned and operated by Informa plc (â&#x20AC;&#x153;Informaâ&#x20AC;?), the registered office of which is Mortimer House, 37â&#x20AC;&#x201C;41 Mortimer Street, London, W1T 3JH. Registered in England and Wales Number 3099067.

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The Global Wealth Market

Global Wealth Market in 2012 - White Paper  

We’ve examined the global affluent population across seven regions and its future growth prospects through to 2015. We highlight the dynami...

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