LOUIS BECKERLING

The world's rich are growing richer again after a three-year period of wealth erosion, and in Greater China the number of "wealthy" households - those with more than US$5 million to invest - grew by 500,000 last year, according to Boston Consulting Group's biennial Global Wealth report.

The report, released yesterday, estimated the number of wealthy investors in the world (those with more than US$1 million in investable funds under management), rose to seven million.

"This represents an increase of 1.24 million `millionaire households' around the world, a 23.1 per cent increase over 2002," it said.

The wealth of the elite group grew by about US$2.8 trillion at constant exchange rates, and consolidated their commanding share of global assets. By the end of last year, the report estimated, about 93 million householders - about 7 per cent of the estimated 1.25 billion households in the world - owned 77 per cent, or US$55.3 trillion, of the US$71.6 trillion assets under management.

Greater China (the mainland, Hong Kong, and Taiwan), was becoming increasingly important to the financial service providers who followed this money trail, the report said.

Overall the wealth market in Greater China grew 11.4 per cent in US dollar terms last year - mainly because of active markets for investments in all three centres - and the number of wealthy households in the region increased an estimated 500,000, the report said.

The wealth market in Greater China accounted for US$3.29 trillion of an estimated US$6.4 trillion in assets under management in Asia ex-Japan, and generated just more than half the US$54.3 billion of Asian wealth-management revenues earned from wealthy investors last year.

"We anticipate the trend will continue with China taking the lead in growing at about 2 to 3 per cent per annum faster than Hong Kong and Taiwan," Boston Consulting's Hong Kong office vice-president Thomas Klotz said.

Overall, the wealth market in Greater China was forecast to grow 27 per cent to hit US$4.2 trillion by 2008, he said.

Japan dwarfs the rest of the region, however; its super-wealthy collectively hold about US$12.4 trillion in assets under management.

Services aimed at helping the wealthy manage assets generated about 20 per cent of global bank revenues, the report estimated - more than double the contribution to global banking revenues from investment-banking activities.

Based on its survey of the market place, the report said global bank revenues might have reached about US$1.9 trillion to US$2.5 trillion last year, and revenues generated from wealth-management services delivered to wealthy investors (those with assets under management of US$1 million and above), amounted to an estimated US$252 billion.

Add to this sum a further US$290 billion generated from providing services to the "mass affluent" (those with assets of US$100,000 to US$1 million), and wealth management revenues were likely to have reached about US$542 billion last year.

Boston Consulting vice-president in Hong Kong Giles Brennand said wealth managers in the region were keen to capture the growing business in Greater China, and success in doing so in the mainland and Taiwan would depend on acquiring the emerging wealthy and mass affluent, since they dominated the scene with more than 60 per cent of the wealth.

"They are good potential customers for wealth managers as they are often under-served but seek good advice," he said.