There were an estimated 5,000 high net worth individuals (HNWIs) in Israel at the end of last year, according to the 2003 World Wealth Report published today by Cap Gemini Ernst & Young and Merrill Lynch.
HNWIs are those that hold financial assets, excluding real estate, of more than $1 million.
Merrill Lynch Israel VP Private Banking Ori Goldfarb said the figure was comparatively steady in comparison with the previous year.
The Merrill Lynch 2003 report counted 50 Israeli ultra-HNWI’s, those with financial assets of more than $30 million. The number of ultra-HNWI’s were also similar to the number reported a year earlier.
Around the world, the number of ultra-HNWIs rose 2% to 58,000 people, and their combined wealth grew an estimated 3.6%, Goldfarb said.
Just under 200,000 people around the world joined the ranks of HNWIs last year, up 2.1% to 7.3 million people in 2002. This was the lowest growth rate in the seven-year history of the World Wealth Report, Goldfarb said, noting that the global wealth of HNWIs grew 3.6% to $27.2 trillion last year.
“The total number of high net worth individuals in the Middle East grew 4.7%, or a net 20,000 people, to an estimated 300,000 individuals over 2002,” stated Goldfarb. “Their combined wealth grew 4.6%, or $45 billion, to $1.1 trillion (1 trillion euros).”
Cap Gemini Ernst & Young vice president James Greene said, “The global rise in wealth was due to continued growth in gross domestic product (GDP) and high saving rates in most countries. World wide GDP growth rose to 3% in 2002 from 2.3% a year earlier.”
“However, declining stock prices slowed HNWI wealth accumulation around the globe compared to that of the 1990s,” he said. “World-wide stock market capitalization fell 16.9% over the 12 months to the end of 2002.”
Greene noted that the vast majority of HNWIs had embarked on a balance sheet repair strategy to minimize risk and maximize fixed returns. They accepted the realities of the economic environment by insulating their existing financial assets and pursuing more conservative wealth preservation objectives, he said.
“The more diversified HNWIs seemed better able to protect their wealth than the average investor,” he said. “Their use of expert financial advice and diversified products enabled them to rapidly and effectively reprioritize strategic objectives, from new wealth creation to existing wealth preservation.”
As for the future, Goldfarb said, “The global economic projection for real GDP growth of 3.7% this year offers some encouragement for HNWIs. The World Wealth Report expects HNWI financial wealth to rise slowly during the next couple of years, and then increase to reach $38 trillion in 2007, an annual growth rate averaging 7%.”
Published by Globes [online] - www.globes.co.il - on 11 June, 2003