World's richest to be worth $48.5 trillion

With hopes of economic recovery gaining momentum, the wealth of high net-worth individuals across the world are likely to touch a whopping $48.5 trillion by the year 2013, a survey says.

According to the latest report by Capgemini and Merrill Lynch Global Wealth Management, "HNWI financial wealth will grow to $48.5 trillion by 2013, advancing at an annualised rate of 8.1 per cent driven by the recovery in asset prices as the global economy and financial system right themselves."

The North America and Asia-Pacific would lead the growth in HNWI financial wealth and "Asia-Pacific will actually surpass North America by 2013".

Growth in these regions will be driven by increased US consumer expenditure and the Chinese economy, which is already experiencing increased consumer demand.

The recovery in the HNWI wealth, which dropped nearly 20 per cent in 2008 to $32.8 trillion would however be slow.

"We expect some initial signs of growth in selected countries, which could pick up steam from 2010" but warned that protracted weakness in the global economic and financial systems could force a downward revision in forecast numbers.

The United States' role would be crucial for global economic recovery and experts believe the recession in US would end in the third or fourth quarter of 2009.

Among other major growth drivers, China has shown increased signs of recovery, due to its domestic stimulus spending.

The world HNWI population, concentrated mainly in North America, Europe and Asia, dropped roughly by 14.9 per cent to 8.6 million in 2008.

"Their combined wealth fell 19.5 per cent to $32.8 trillion," the report said. The global market capitalisation plummeted nearly 50 per cent in 2008, resulting in losses worth $30 trillion.

"Last year was about preservation and flight to safety. However, by 2013, HNWI wealth is forecast to grow to $48.5 trillion globally. Asia-Pacific is likely to overtake North America as the largest region by wealth," Dokania said.

With no safe havens, HNWIs ended up with significant amounts of cash in their portfolios, he added.

"As markets recover, they will have the flexibility to readjust their strategies and reinvest in new, developing opportunities along the way," Dokania said.

In response to the crises, HNWI's poured more money into fixed income, cash-based investments, and real estate, the report said.

"Allocation to fixed income and cash-based investments increased six per cent from 2007, totaling 50 per cent of overall HNWI portfolios globally. All regions dramatically increased home-region and domestic investment in 2008," the report said.