12 July 2007

Middle East sees dispersion of wealth

INTERNATIONAL. The Middle East was the only region to see a dispersion, rather than consolidation of wealth, according to the 11th annual World Wealth Report released recently by Merrill Lynch and Capgemini.

The global demand for oil in 2006 helped increase the number of HNWIs (High Net Worth Individuals) by 11.9%, but a correction in an overvalued stock market pulled down market capitalisation rates, slowing total wealth accumulation measured in US Dollars.

"Total HNWI wealth in the Middle East increased last year by 11.7%, however the overall HNWI population in the Middle East grew by 11.9%, which points to a greater dispersion of wealth," explains Amir Sadr, head of Middle East offshore, Merrill Lynch Global Private Client Group.

He added: "The strength of oil revenues signify that public finances in the region should remain robust and it will also generate funds for capital investment, strengthening the Middle Eastern economy in the longer-term."

Driven by a strong global economy, the wealth of the world's high net worth individuals (HNWIs ) increased 11.4% to US$37.2 trillion in 2006, according to the report. The number of HNWIs in the world increased 8.3% in 2006 to 9.5 million and the number of ultra high net worth individuals (Ultra-HNWIs ) grew by 11.3% to 94,970.

Emerging economies proved resilient, with continued growth in their HNWI populations and solid investor cash flow to riskier corners of the market. The largest growth of the HNWI population occurred in Singapore and India, where the increases over 2005 was 21.2% and 20.5%, respectively.

The BRIC nations (Brazil, Russia, India and China) continued to play increasingly important roles in the global economy in 2006. China and Russia were among the top ten countries with the fastest growing HNWI populations. China's HNWI population grew by 7.8% and Russia's increased by 15.5%. Brazil and India also showed continued strength based on domestic private consumption and competitive service and manufacturing sectors.

Latin America saw real GDP growth of 4.8% in 2006, and lured substantial foreign direct investment. The region's HNWI population jumped by 10.2% in 2006 as it continued to outperform the global average of 8.3%.

Real GDP and market capitalization growth rates - the two primary drivers of wealth generation - accelerated through 2006, which helped to increase the total number of HNWIs around the world as well as the amount of wealth they control. The realisation of economic gains on par with those of 2003 and 2004 was led by emerging markets that continued to outperform the rest of the world. China and India, for example, sustained real GDP growth rates of 10.5% and 8.8% respectively, in 2006.

Market capitalisations grew rapidly in Europe, Asia-Pacific and Latin America, driven by strong corporate profits, IPO activity and ongoing foreign investment. Although performance varied across the world, almost all indices posted gains. For example, the Dow Jones World Index grew by 16.4% in 2006.

"This year's Report found that the number of wealthy people, and the amount of wealth that they control, continued to increase in 2006, with extraordinary wealth creation in Singapore and India," said Amir Sadr.

"The level of wealth creation around the world provides a tremendous opportunity for wealth management firms, and success will go to the firms that offer a service model that meets the ever-changing needs of today's sophisticated clients."

"The globaliSation of wealth creation has accelerated," said Bertrand Lavayssière, Group Director, Capgemini Financial Services. "if 2005 was characteriSed by a flow of investment to international funds from HNWIs, 2006 ushered in a new era whereby emerging economies leaped ahead with direct foreign investment, strong domestic demand, and hefty stock market gains."

In 2006, HNWIs shifted more money into real estate investments, at times liquidating some of their alternative investments to fund these real estate opportunities. Global direct real estate transaction volumes reached US$682 billion in 2006, up 38% from 2005. Real estate investment funds, or REITs, performed strongly to create an overall preferred investment channel. While alternative investments remained a key component of HNWI portfolios, overall HNWI allocations to those investments dipped in 2006.

In the report's first breakout of philanthropic giving, it found that HNWIs, led by the ultra-wealthy, gave an estimated US$285 billion to philanthropic causes in 2006.

Finally, the report found that the global perspective of HNWIs continued to increase in 2006, driven by an expanded awareness of international developments, better international fund performance and risk mitigation.

Looking ahead, mature markets like the United States are expected to act as an anchor on the world economy as moderate growth rates settle in. With many central banks tightening monetary policy, the period of high liquidity that has so stimulated recent growth may soon come to an end. Finally, the growth rates of Asia and Latin America are expected to ease back as global demand slows. (Source: BI-ME)

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Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.