“Passion Investments” of Millionaires

The World Wealth Report has been released by Capgemini and Merrill Lynch for the 12th time. The evaluation of general welfare level in 71 countries is based on the statistics furnished by national and international institutions (including savings and investments corrected with regard to stock market movements; non-declared savings and investments abroad). An individual possessing net assets worth at least $1 million is rated as a millionaire.
The joint annual survey performed by Capgemini and Merrill Lynch detected 10.1 million moneybags in the world. Their number went up 6% during the reporting year and taken together they hold a fortune of $40.7 trillion (+ 9.4% to 2006), while their average assets amount to $4 million.
Emerging economies and first of all Brazil, Russia, India and China generated the highest growth of rich population. According to the surveyors, in 2007 there were 136,000 high net worth individuals (HNWI) in Russia, up 14.4% to one year ago. “Indeed, despite serious problems, such as a critical lack of modern infrastructure, environmental degradation and a declining population, the ongoing development of external relationships is likely to improve the economy’s fundamentals,” the report says. “Moscow is emerging as a global financial center. Notably, Russia is currently the world’s largest exporter of gas and its second-largest producer of oil, which allowed it to capitalize on sharp increases in energy prices through its exports of natural resources.”
The researchers report that as in 2006, the expenses for HNWI devotions (“passion investments”) are led by luxury collectibles – 16.2%; and fine art – 15.9%; then followed by jewelry – 13.8%; and travel services – 13.5%. The researchers found out that the number of buyers purchasing premium goods and the number of customers visiting auction houses was growing mainly by virtue of China, India, Russia and the Middle East. “We used to think in terms of hedge funds when targeting new customers,” says David Norman of Sotheby’s. “Now, we look for barrels of oil.”
Will the rich continue to spend more despite the economic crisis? The analysts of the above companies say that the luxury and art markets are sensitive to crises after all, though tend to be latecomers in response. So, the demand for appropriate artworks and jewelry may drop. “However, historically, investments in fine art, private planes, luxury automobiles and other high-priced collectibles have been more immune to economic downturns,” the authors of the report conclude. They add that new wealth and growing consumer demand in Asia-Pacific, Eastern Europe and the Middle East will continue to outweigh the pressures of an economic slump in Western markets.