• High networth wealth in China and India will increase by more than US$4 trillion over the next ten years
• Average financial wealth (AFW) per HNWI has dropped in all Asia-Pacific countries from 2007 to 2008 except India

Mumbai, October 13, 2009 : Asia Pacific’s population of high net worth individuals (HNWIs^[1][1]) fell 14.2% to 2.4 million in 2008 amid a global economic downturn and market volatility, according to the Asia-Pacific Wealth Report released today by Merrill Lynch Wealth Management and Capgemini. The combined wealth of the region’s HNWIs dropped 22.3% to US$7.4 trillion.

Ultra-HNWIs, or individuals with investable assets of at least US$30 million, witnessed steeper wealth erosion than the HNWI population in the region. The number of ultra-HNWIs in Asia Pacific fell 29.6% to 14,300 and their total wealth shrank 35.1%.

China and India to Lead Growth in Asia Pacific HNWI Wealth

Growth in Asia Pacific’s HNWI population and wealth is set to pick up as market conditions improve. The region’s economies are showing signs of recovery and are forecast to grow at a faster pace than the global economy by 2010. China and India are likely to lead HNWI growth in Asia Pacific, underpinned by robust domestic consumption and a growing number of affluent individuals. The combined wealth of Asia Pacific’s HNWIs is estimated to grow at an annual rate of 8.8% until 2018, faster than the global average of 7.1%.

With a strong potential for expansion, the HNWI population in China and India is expected to triple over the 2008-2018 period. “China and India, will be an important driver of global economic growth in the years ahead, likely elevating the region’s HNWIs to a more dominant position among the ranks of the world’s wealthy. India registered a 6.1%growth in private consumption in 2008,following China at 8.0%.This is commendable considering that private consumption saw a huge slump across the Asia Pacific region.” said Mr. Pradeep Dokania, Head of Global Private Client, at DSP Merrill Lynch. “We expect Asia Pacific to be a significant driver of global HNWI wealth, with China and India at the forefront of growth and Japan remaining an important high net worth market. The region’s diverse economic landscape presents tremendous growth opportunities for wealth management firms,” he added.

Salil Parekh, CEO, Financial Services, India and Asia Pacific, Capgemini said, “The world has seen one of the most severe financial crises in recent times and is still trying hard to recover. This crisis has severely impacted the global wealth management and private banking industry. After experiencing the largest growth in HNWIs in 2007, India reversed the trend in 2008, as the key drivers of wealth such as GDP, Market Capitalization, etc., were hit hard by the crisis. The drop in GDP growth and Market Capitalization resulted in erosion of massive amount of HNWI wealth in 2008.”

He added, “However, the economic outlook for India remains positive and it is likely to register strong GDP growth in the near future. Even though India has stringent regulations, huge market potential and growth have made it important for global companies while considering their business strategies and investment decisions. India needs to watch out for new trends like emerging wealth outside metro areas, NRIs as a very high potential segment, SEBI’s recent step towards increase in transparency by scrapping the entry-load for mutual fund distributors. No doubt this move from the regulator will open new horizons for holistic wealth management model which will eventually benefit the end investor.”

Asia-Pacific HNWIs favoured safety and liquidity in cash-based investments in 2008

HNWIs in the Asia-Pacific region have always tended to favor cash-based investments more than their peers in other regions. By the end of the year, Asia-Pacific HNWIs had allocated 29% of their assets to cash/deposits, compared with the 21% global HNWI average, as they sought to minimize their risk exposure, increase portfolio liquidity and create more flexibility for managing their assets.

While HNWIs in India allocated lower than average to cash / deposits (13%) compares to a higher investment in fixed maturity plans, the highest asset allocation category was equities (33%). That was down from 2007 (37%) as market capitalization sank (-64.1% ), but the allocation remained relatively large as India’s HNWIs have become very comfortable with equities and prefer direct investments in the equity market – especially given the stellar performance of the local equity market in recent years. (Market capitalization was up 118.4% and 49.0% in 2007 and 2006 respectively).

Concentration of Wealth in Japan and China

Japan and China continue to host a large percentage of the Asia Pacific HNWI population and its wealth. Last year, the two markets were home to 71.9% of the region’s HNWIs and 65.8% of total wealth, up from 68.8% and 62.4% respectively in the previous year.

The number of HNWIs in Japan fell 9.9% to 1.37 million and their wealth shrank 16.7% to US$3.2 trillion. The decline was milder than in other markets as Japan already witnessed slower economic growth in 2007, and the country’s HNWIs are typically more conservative in their asset allocations which limited their losses last year.

Despite steep market capitalization losses, China avoided the larger losses in HNWI numbers seen in other markets due to the closed nature of its markets combined with robust macroeconomic growth. The number of HNWIs in China fell 11.8% to 364,000 and their combined wealth dropped 20.7% to US$1.7 trillion. Still, China’s HNWI population surpassed that of the U.K. to become the fourth-largest in the world. India’s HNWI population also took a hit, falling 31.6% to 84,000. Hong Kong’s HNWI population had the biggest percentage decline in the world, falling 61.3% to 37,000. Nonetheless, despite last year’s decline, the average net worth of Hong Kong HNWIs remained at US$4.9 million, considerably higher than the regional average net worth of Asia Pacific HNWIs which stood at US$3.1 million.

“Unprecedented market conditions last year wiped out two years of gains in Hong Kong’s HNWI numbers,” said Francis Liu, Market Managing Director for Greater China at Merrill Lynch Wealth Management. “Looking ahead, wealth accumulation is set to resume in Hong Kong as the economy recovers and capital continues to flow into the local market.”

About Merrill Lynch Wealth Management

Merrill Lynch Wealth Management (MLWM) is a leading provider of comprehensive wealth management and investment services for individuals and businesses globally. With more than 15,000 financial advisors and approximately $1.2 trillion in client assets as of July 17, 2009, it is among the largest businesses of its kind in the world. More than two-thirds of MLWM relationships are with clients who have a net worth of $1 million or more. Within MLWM, the Private Banking & Investment Group provides tailored solutions to ultra high net worth clients, offering both the intimacy of a boutique and the resources of a premier global financial services company. These clients are served by more than 160 Private Wealth Advisor teams, along with experts in areas such as investment management, concentrated stock management and intergenerational wealth transfer strategies. Merrill Lynch Wealth Management is part of Bank of America Corporation.

About Capgemini

Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working - the Collaborative Business Experience - and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost. Present in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7 billion and employs 90,000 people worldwide. More information is available at www.capgemini.com.

Capgemini’s Financial Services Global Business Unit

(FS GBU) brings deep industry experience, enhanced service offerings and next generation global delivery to serve the financial services industry. With a network of 12,000 professionals serving over 900 clients worldwide, the FS GBU collaborates with leading companies in banking, insurance, and capital markets to create tangible value. For more information please visit www.capgemini.com/financialservices.

Note to Editors/Reporters: To download the 2009 World Wealth Report, please visit www.capgemini.com/worldwealthreport.

[1] Individuals with net assets of at least $1 million, excluding their primary residence and consumables.