The number of millionaires has risen in Hong Kong and the city continues to have one of the highest concentrations of millionaires in Asia Pacific region.

According to the third annual Asia Pacific Wealth Report, jointly published by Merril Lynch and Capegemini, there were 95,000 millionaires in Hong Kong at the end of 2007, up 10.2 percent from a year earlier. The figures will continue to grow despite global economic slowdown and recent financial turbulence, the report added.

The combined wealth of local millionaires rose 13 percent to $520 billion. These millionaires are individuals with more than $1 million in net assets for investment excluding their primary residence and consumables.

The increase in the local millionaire population was driven by economic growth, a strong performance on the stock market and higher property prices. Local millionaires allocated 33 percent of their portfolio to equities and 23 percent to real estate last year.

"Robust domestic demand and mainland's accelerated expansion bode well for the Hong Kong economy last year," Victor Tan, Hong Kong market director at Merrill Lynch global wealth management said in the statement. Despite dislocations in developed markets, local millionaires continued to increase both in numbers and their combined wealth, he added.

In the report this year, local millionaires were said to have an average net asset for investment worth $5.4 million, which was the highest in the Asia-Pacific region. Millionaires on the mainland had an average net asset of $5.1 million, followed by Singapore's $4.9 million. The average in Asia Pacific was $3.4 million.

Hong Kong also boasted one of the highest concentrations of millionaires in the region. It was 1.57 percent for Hong Kong, whose adult population had net assets of more than $1 million, behind Singapore (1.99 percent).

The wealth of Asia Pacific's richest people is projected to reach $13.9 trillion by 2012, growing at an annual rate of 7.9 percent, slightly ahead of the 7.7 percent global rate.

Asked if the recent turmoil affected the projection, Tan said: "It is a daft period in 2008. We may have short-term impact from the recent turmoil but it will grow down the road... We don't see much usage of derivatives and mini-bonds when the economy is contracting and uncertainties arise in the market."

Looking forward, Asia Pacific's millionaires are likely to turn to fixed-income securities that offer less volatile returns. They are also expected to increase their allocations to alternative investments, mainly in forms of hedge funds or investments that are resistant to uncertain market conditions.

(HK Edition 09/26/2008 page2)