Rich lost 20% of wealth

NEW YORK - THE world's rich lost a fifth of their wealth in 2008 and the number of people with fortunes of more than US$1 million (S$1.46 million) fell 15 per cent as the financial crisis wiped out two years of growth, a study showed on Wednesday.

The total value of the world's wealthy - people with net assets of more than US$1 million excluding their main home and everyday possessions - dropped below 2005 levels to US$32.8 trillion, the 13th annual Merrill Lynch/Capgemini World Wealth Report found.

Nearly 35 per cent of that wealth belongs to so-called ultra rich people with fortunes of more than US$30 million, who account for 0.9 per cent of the rich population. In 2008 the number of ultra-rich people and their value dropped by nearly a quarter.

'There was really nowhere to hide as an investor in 2008,' Dan Sontag, Merrill Lynch Global Wealth Management president, told a news conference. 'No region ended the year unscathed.'

The United States, Japan and Germany are home to 54 per cent of the world's rich and this year China surpassed Britain and now has the fourth largest rich population. Rounding out the top 10 are France, Canada, Switzerland, Italy and Brazil.

The United States saw an 18.5 per cent drop in its rich population, but it still remains No. 1 with 29 per cent, or 2.5 million, of the world's rich. Japan's rich population fell 10 per cent, but Germany lost only 2.7 per cent of its wealthy.

As global markets plunged, wealthy investors fled with the study showing the proportion of cash-based holdings increased to 21 per cent of overall portfolios, up 7 per cent from 2006.

In North America, which traditionally favours equity investments, stocks made up 34 per cent of portfolios of the wealthy in 2008, down from 43 per cent a year earlier.

'That tells you how risk averse people got,' Mr Sontag said.

'Last year was about preservation, not appreciation.' 'The 2008 flight to safety imperative... is easing now,' he said. 'We're encouraging (rich people) to return to higher risk, higher return assets and away from capital preservation instruments as conditions improve.' -- REUTERS


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