The number of Israeli millionaires rose by 42.7% to 8,419 in 2009 from 5,900 in 2008, according to Merrill Lynch Israel, based on the Capgemini World Wealth Report 2010.
Merrill Lynch Israel head of global wealth management Sigal Shapira attributed the increase of "high net wealth individuals" - aka millionaires - to long-term investment, which paid off during the economic downturn. Capgemini defines high net wealth individuals as persons with net assets of at least $1 million, excluding their primary residence and consumables, and an ultra high net wealth individuals, as persons with net assets of at least $30 million, excluding their primary residence and consumables.
Merrill Lynch Israel said that the number of millionaires worldwide increased by 17.1%, Israel had the third highest rate of increase after Hong Kong (104%) and India (51%). It did not mention that the increase in the number of millionaires underscores Israel's rising social inequality among developed economies. The increase in the number of millionaires came during a recession, at least during the first half of 2009, even as most salaries employees suffered pay cuts and worsening terms.
Shapira told "Globes" that there were two kinds of new Israeli millionaires. "They are millionaires who dropped out of the list due to a reduction in their net worth in 2008, but returned to the list in 2009 as their wealth recovered. There were also the newly rich, some of whom may have immigrated because of the easing of conditions for returning Israelis."
Shapira added, "We tend to think of a high-tech entrepreneur in his 30s, but the wealth drivers in Israel come from all industries."
The aggregate investible assets of Israel's millionaires rose by 41% to $42.4 billion in 2009 from $30.1 billion 2008. The wealth drivers included a 40% rise in the value of Tel Aviv Stock Exchange (TASE) securities and a 15.5% increase in housing prices.
Even as the number of Israel's millionaires soared in 2009, the number of multimillionaires - ultra high net wealth individuals in Capgemini parlance - rose by 14% compared with 2008, from 73 to 83. Worldwide, the number of multimillionaires rose by 15.4%.
Merrill Lynch Israel also pointed to two wealth inhibitors in 2009: a 22% drop in exports from $57.2 billion in 2008 to $44.4 billion in 2009, and a 30% contraction in industrial output.
A Merrill Lynch Israel survey of the countries millionaires found that while the economic crisis may have passed, its effects are more lasting. 59% of the respondents said that they are again confident in their portfolio managers, 71% do not have full confidence in the government regulatory agencies that are supposed to oversee the capital market and protect investors against risk. In other words, investment managers have more millionaires to work for, but these millionaires are more suspicious.
Published by Globes [online], Israel business news - www.globes-online.com - on June 22, 2010
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