India no more in the list of 12 countries with biggest number of HNIs

India is no more enlisted in the list of top 12 countries with largest HNI population as sharp plunge in equity market in 2011 made a bad impact on property and investable wealth of the billionaires.

In the list prepared by Capgemini and RBC Wealth Management the order of the countries with largest High Net-worth Individual (HNI or HNWI) population is as follows:

1. US
2. Japan
3. Germany
4. China
5. UK
6. France
7. Canada
8. Switzerland
9. Australia
10. Italy
11. Brazil
12. South Korea

• India is replaced by South Korea as the 12th country
• India first appeared in the elite list for the first time in 2010.

Why there is decline in HNIs / HNWIs in India? 

According to Capgemini and RBC Wealth Management:

• India had lost a large number of High Networth Individuals (HNI) due to sharp decline in equity market in 2011 that shattered asset values as well as levels of investable wealth of these people
• Indian equity market capitalization plunged by a huge 33.4% in 2011, after a gain of 24.9% in 2010.
• Consequently India lost 18% of its HNI population
• Increasing budget/ fiscal deficit also played a devastating role in this loss.
• Lack of faith in the political process and the lethargic domestic reforms upset investors.

As per the Report:

• There is a decline in overall financial wealth of HNIs across all regions, except the Middle-East, where the size of the HNI population increased 2.7% to 0.45 million
• No. of HNIs in Asia-Pacific inflated 1.6% to 3.37 million in 2011
• With this Asia-Pacific became the largest HNI region for the first time. It surpassed North America, which has a HNI population of 3.35 million
• Despite this, North America still has the most HNI wealth at $11.4 trillion compared to $10.7 trillion in the Asia-Pacific region

Who is a High Net Worth Individual (HNI)?

The Merrill Lynch – Capgemini World’s Wealth Report defines:
HNWIs or HNIs: Those who hold at least US$1 million in financial assets
ultra-HNWIs: Those who hold at least US$30 million in financial assets, with both excluding collectibles, consumables, consumer durables and primary residences.

**In actual, there is no standard definition of HNIs. They can be based on Net Worth, Investible surplus, assets under advise
Most common standard in India:
   a)  Emerging HNI: Investible surplus of Rs. 25 lakh – Rs. 2 crore.
   b)  HNI: Investible surplus of over Rs. 2 crore.

**(source: http://www.icicidirect.com)

Month: Current Affairs - June, 2012