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China rises, but rich feel pinch

CHINA has surpassed Britain to become the country with the fourth largest population of rich people, but most of the world didn't fare so well as the global economic crisis took its toll on the wealthy.

The world's rich lost a fifth of their wealth in 2008, and the number of people with fortunes of more than US$1 million fell 15 percent as the downturn wiped out two years of growth, the 13th annual Merrill Lynch/Capgemini World Wealth Report found.

The total value of the world's wealthy - people with net assets of more than US$1 million excluding their main home and everyday possessions - dropped below 2005 levels to US$32.8 trillion, according to the report, released on Wednesday.

The steep reduction in millionaires represented the largest decline in the report's 13-year history, said Ileana van der Linde, a principal with Capgemini.

"We've never seen such a decline in all the years we've been doing the report," she said in an interview with The Associated Press. "This market was really unprecedented."

The downturn lowered the combined wealth of the world's millionaires by 19.5 percent to US$32.8 trillion. It also brought even greater losses to the ultra rich.

No region spared

The population of individuals with more than US$30 million in assets decreased 24.6 percent, and the group's wealth dropped 23.9 percent, largely because many favored riskier investments that experienced hefty losses this past year.

Geographically, the fallout occurred around the globe, touching every region, the report noted.

In the US, the number of millionaires fell 18.5 percent to 2.5 million people, but the country remained the single largest home to such wealthy individuals, followed by Japan and Germany.

Other countries, notably those in Latin America, fared better.

Millionaires in Brazil, for instance, saw their combined wealth decline only 8.4 percent, far less than the global average.

Such a trend may be explained by the fact that Latin America investors tend to be more conservative, van der Linde said, and favor fixed-income securities.

The report forecast that the wealth of the world's rich would grow to US$48.5 trillion by 2013 and that North America and the Asia Pacific would lead the way.

The Asia Pacific region was expected to surpass North America by 2013 as the top regional home for the world's rich.


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