Global wealth incubaTors

Wealth creation rates in China, India and Russia are surging ahead of the rest of the world. One private bank is forging inroads into these markets.

There are no discussions about growth that do not include China, India and Russia. Proponents of the global economy could never have predicted the growth outcome we are witnessing today in these three countries. As annual GDP growth soars, these three economies are literally leaving the rest of the world behind.

Although Russia’s record growth is primarily due to the booming oil and gas industry, China and India are rapidly becoming production hubs for the world’s information technology and industrial manufacturing sectors.

The result is an unprecedented creation of wealth in the hands of industrialists who are taking the risks and leading the way towards record growth and job creation, transforming the economic landscapes of these countries on a daily basis. Annual GDP growth in the 8-10% range in these countries has become standard fare. In 2006, the world average for annual GDP growth was 3.5%. In 2007, China’s GDP growth rate was expected to reach 11.5%.

Future growth
Some statistics are simply staggering. Since joining the World Trade Organization (WTO) in 2001, China has doubled its share of the global manufacturing output. In 2006/07, India’s exports climbed 20.9% to $129 billion. Clearly demonstrating the magnitude of its energy sector, in 2007, oil and gas exports represented 64% of Russia’s overall exports. Russia is expected to join the WTO in 2008. If China’s success is any indication, current forecasts for growth in Russia may have to be adjusted upward.

What matters most to investors, however, is the future. The Economist.com predicts that although GDP growth will diminish somewhat in these countries over the next five years, China, India and Russia will continue to lead the way.

Forecast Average Annual GDP Growth Rate
between 2008 and 2012 (The Economist.com)

With the forecast world average expected to continue to hover between 3-4%, China, India and Russia will double and almost triple the global average. Compare this to the United States where the GDP growth rate is expected to grow by 1.2% in 2008 and 2.8% in 2009. The GDP in the G7 countries combined is expected to grow at a rate of 3.0% between 2008 and 2012.

Wealth creation is spreading
What does this all mean in terms of wealth creation? In a world where wealth creation was dominated for decades by countries of the western world we are now witnessing a paradigm shift. Wealth creation is spreading and spreading rapidly. The advent of the global economy has transformed and will continue to transform the traditional bases for wealth creation bringing greater regional balance to the global wealth envelope.

In 2004, the most recent year for this data, the number of high net worth individuals in the world (net worth of $1 million or more excluding the primary residence) increased by 600,000 to reach 8.3 million individuals. This is the equivalent of 1,640 new millionaires every day. According to the Merrill Lynch World Wealth Report for the same year, the driving forces are clear: ‘The so-called BRIC nations – Brazil, Russia, India and China – continued to emerge as an economic force and create wealth in the process.’

Wealth creation results in an increased need for wealth management services. High net worth individuals require financial services and investment advice. At the end of 2004, there were 8.3 million high net worth individuals with a combined net wealth of over $30 trillion.

Investor activity
You don’t simply deposit this volume of wealth into a neighbourhood savings account. Private banks worldwide are clamouring to create new strategies and deploy new resources to take advantage of this unique boom in wealth generation. New investors are flocking to brokerage firms and asset management firms to take advantage of stock market upswings in these countries and to find safe havens for more long term, interest-bearing investments.

The old map of global wealth is changing
to make way for new players

One private bank in particular, Millennium Bank, is making a name for itself in worldwide financial circles. Based in the Caribbean enclave of St. Vincent and the Grenadines and owned by United Trust of Switzerland, a long-established Geneva-based trust company, Millennium Bank is forging inroads into China, India and Russia ‘in order to reach investors rather than waiting for investors to reach us’, says managing director Brijesh Chopra. ‘Our approach is proactive. The competition is far too strong to sit and wait for this new wave of investors to come to us.’

Millennium Bank is aggressively going after investors in China, India and Russia with a strategy it likes to call ‘networking for clients’. In 2007, Millennium Bank established a representative office in Shanghai and is in the process of doing the same in Mumbai and Moscow. Their approach is to take advantage of local and regional contacts to provide the intelligence required to locate and meet potential investors face to face or in a conference setting.

Millennium Bank’s five-year plan is to meet as many new investors in as many urban centres within these three countries as possible. ‘We have to work hard, very hard to achieve success. It is that ethic which inspires the confidence of our worldwide clients,’ adds Mr. Chopra.

Emerging giants
The combined populations of China, India, and Russia are the equivalent of nearly half of the world’s population. The potential for continued growth and for the emergence of middle class consumer markets is staggering. Some economists are predicting that by the year 2025, India will have a middle class consumer market of over 500 million people and that China’s urban cities will count over 550 million middle class consumers. That is over 1 billion people that will require goods and services from around the world thus creating vast amounts of additional wealth.

Emerging giants may end up being an understatement. As the world economic order continues to adjust to the forces of the global economy, China, India and Russia are poised to lead the way towards an unprecedented era in wealth creation that could see the total number of high net worth individuals triple to more than 25 million by 2025.

Private banks such as Millennium Bank are positioning themselves for one of the greatest wealth creation booms in history. They are doing it by integrating their business strategies with the realities of the new world.

Millennium Bank is a wholly-owned subsidiary of United Trust of Switzerland SA, a private Swiss trust company located in the heart of Geneva’s financial district. United Trust of Switzerland SA has been serving clients from all corners of the globe since 1931. Millennium Bank is the benefactor of Swiss banking experience, Switzerland’s recognised knowledge of privacy, as well as the vast global investment network that United Trust of Switzerland SA has built over the last 77 years.

As entrepreneurs discover the riches of success, they discover the crucial importance of managing their wealth. The emergence of China, India and Russia is led by its entrepreneurs who are taking the risks that are generating record growth. These business leaders are pioneering a path that shines as an example for the world to follow.

Millennium Bank commends the spirit of entrepreneurship worldwide and hopes that this path also leads to a world of greater peace and democracy.

Further information

Millennium Bank & Trust
Website: www.mlnbank.com