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U.S. is largest wealth market for Indians
Thursday, 15 May 2003, 19:30 IST
NEW YORK: The U.S. is the largest Indian wealth market in the world, accounting for 30 percent of the global net worth of Indians living outside the country, says management and investment banking major Merrill Lynch.
Indian Americans contribute strongly to the U.S. national economy and are estimated to include 200,000 millionaires, Merrill Lynch said.
The global net worth of Indians abroad is worth $300 billion.
"Of this, the high net worth component is about $100 billion," said Jyoti Chopra, director of South Asian Business at the Multicultural and Diversified Business Development (MDBD) group of Merrill Lynch.
"Our definition of high net worth is individuals with at least $1 million in investible assets. In the U.S., this would make the Indian American community the second largest ethnic high net worth market after the overseas Chinese community," Chopra said addressing a press conference here on "How Indian investors and business owners are faring in today's volatile financial markets".
According to Chopra, 30 percent of this wealth is in the U.S., making it the largest Indian wealth market in the world. "That is followed by 17 percent in Africa, 16 percent in the U.K., 15 percent in the Asia-Pacific region, 15 percent in the Middle East, and the rest spread across other regions," she said.
This group is currently growing at about seven percent a year and as increasing number of Indians continue to move abroad, they are repatriating resources back to India in billions of dollars, she added.
Thanks to a recent change in Indian government policy, making it easier for non-resident Indians to repatriate their wealth back to India from overseas, bank deposits by non-residents in India rose 45 percent or $2.5 billion to $27.7 billion in the nine months since June 30, 2002, she noted.
In the U.S. "non-resident Indians continue to contribute strongly to the national economy and are estimated to include 200,000 millionaires".
The median income is over $60,000, compared to the national average of $38,885, Chopra said. "In late 2001, after the technology bubble, Merrill Lynch estimated the size of the Indian entrepreneur market in Silicon Valley alone to comprise 200,000 people, with wealth worth $60 billion."
Referring to the investment profile of the South Asian community, Chopra said: "Studies by Merrill Lynch have shown that South Asians are highly conservative with a very strong propensity towards saving. Education and saving for future generations' educational needs continues to be a top priority.
"Retirement saving and financial planning is also extremely important, particularly among South Asian physicians and healthcare providers. We have found from a business standpoint considerable success in the following sectors: technology entrepreneurs, physicians and health care providers, small business owners and corporate executives. And most of the wealth we are finding has been sourced largely through work or work related accomplishments."
One feature of the investment profile of South Asians is the actual bifurcation of attitudes towards their business versus their personal investing habits.
"For example, in the management of their business, particularly the small business owners, South Asian business owners continue to operate in a typically shrewd, savvy, mercantile manner, and perhaps with greater propensity to taking risks.
"On the personal front, we tend to see the converse. They are extremely conservative and protective with respect to their personal wealth management. These two diverse factors, from our perspective, warrant highly complex wealth management strategies," Chopra said.
Yet another aspect of South Asians is with regard to estate planning services to accommodate the transfer of wealth between generations. "South Asian families tend to be large. Our research has shown that about 90 percent of South Asian businesses are family owned. Therefore, they have highly complex inheritance issues.
"We also found that the primary investment of most South Asians continues to be real estate, gold and other forms of liquid assets, often as much as 40 percent of investors portfolios being allocated to these types of assets. About 30 percent tends to be in the fixed income arena such as CDs, deposits, etc, and about 10 percent in equities and mutual funds, and the remainder in cash."
Source: IANS
Source: IANS