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Half-million join the Millionaires Club

The number of millionaires in the world jumped to 8.7-million in 2005. The number has almost doubled since 1996.

By Associated Pres
Published June 21, 2006

DUBAI, United Arab Emirates - The ranks of the world's millionaires swelled by more than half a million people last year to 8.7-million, according to a study released Tuesday.

Experts at the financial services firm Merrill Lynch & Co. Inc. and consultancy Capgemini, which conducted the research, credited strong global economic growth as well as solid market performance. But they said they expected some slowing of those forces in coming years - and thus a reduction in the growth of millionaire echelons.

The study, the 10th annual World Wealth Report, said the number of millionaires grew by more than 6 percent last year and has nearly doubled since 4.5-million millionaires were counted in 1996.

The wealth of the millionaires - who are defined as people with financial assets of at least $1-million, excluding their primary residences - totaled $33.3-trillion in 2005, up 8.5 percent from $30.7-trillion in 2004, the report said.

It said there were 85,400 people with financial assets of more than $30-million in 2005, a 10.2 percent increase from 2004. These so-called ultra-high-net-worth individuals numbered 77,500 in 2004.

"Economic growth and market capitalization were the two main drivers of wealth creation," Robert J. McCann, executive vice president of Merrill Lynch, said at a news conference in New York.

This, he said, has caused the assets of wealthy families to grow about 8 percent a year in the past decade. McCann said, however, that this was expected to slow to about 6 percent in the next few years as central banks raise interest rates, higher oil prices affect consuming nations and a slowing Chinese economy has a "ripple effect" on other Asian nations.

The higher wealth accumulation in 2005 also reflected more aggressive investing, the report said.

It said millionaires increased their holdings of stock to 31 percent of their portfolios in 2005, up from 30 percent the year before, and of alternative investments such as hedge funds and commodities to 22 percent in 2005, up from 20 percent in 2004. They slightly reduced holdings of real estate and cash, while fixed income investments were unchanged at 21 percent.

North America remained the wealthiest region, with 2.9-million millionaires and $10.2-trillion in wealth. But it was the first year in three that the growth in North America's high-net-worth population - 6.9 percent in 2005 - failed to exceed the previous year's growth - 9.9 percent in 2004.

The number of millionaires grew 4.5 percent in Europe to 2.8-million; 7.3 percent in the Asia-Pacific region to 2.4 million; 9.7 percent in Latin America to 300,000; and nearly 12 percent in Africa to 100,000. The red-hot Middle East saw nearly 10 percent growth in millionaires with record oil revenues and soaring stock markets pushing 300,000 people over the million-dollar mark.

One factor in the Middle East's growth in millionaires was the stock markets that spiked by more than 100 percent in Saudi Arabia and the United Arab Emirates last year. Thus far in 2006, those markets have plunged by more than 50 percent.

The world's millionaires are increasingly branching out from their home countries, with 65 percent paying attention to foreign markets and 30 percent buying homes overseas, the study found.

That phenomenon is only supposed to grow, as some $41-trillion is expected to be passed to heirs over the next four decades, and money managers say more than 80 percent of inheritors will want to boost their international exposure.

[Last modified June 21, 2006, 06:31:49]

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