- The Washington Times - Tuesday, June 20, 2006

DUBAI, United Arab Emirates (AP) — The ranks of world millionaires swelled to 8.7 million last year — half a million more than the population of New York City.

Worldwide, the number of millionaires has nearly doubled since Merrill Lynch found 4.5 million of them in 1996. Last year’s 6.5 percent growth in millionaires slowed slightly over the previous year’s 6.6 percent, with the United States and Europe slowing most alongside their cooling economies.

But the ranks of the ultrarich — those worth more than $30 million — climbed by more than 10 percent to 85,400.

Millionaires also invested more aggressively, pouring cash into emerging markets and pulling it out of fixed income holdings, as their wealth reached $33.3 trillion, more than double U.S. economic output, a study by Merrill Lynch and consultancy Capgemini found.

The Middle East saw nearly 10 percent growth in millionaires — the world’s fastest rate — with record oil revenue and soaring stock markets pushing 300,000 people over the million-dollar mark.

“This is becoming a very attractive place to invest,” said Mones R. Bazzy, Merrill Lynch’s head of Middle East private banking, based in the Gulf boomtown of Dubai. Mr. Bazzy spoke in a hotel conference room overlooking the world’s newest international stock market, the futuristic arch-shaped Dubai International Financial Center.

One factor in the Middle East’s growth in millionaires was the stock markets that spiked by more than 100 percent in Saudi Arabia and the United Arab Emirates last year. Thus far this year, those markets have plunged by more than 50 percent, which Mr. Bazzy said may have knocked a few millionaires off the list.

Merrill Lynch said the ultrarich did better because they found “select pockets” of high-growth investments in Asia, Latin America and the Mideast, while most investors stuck with stodgy earnings in North America and Europe.

North America held a slight edge over Europe in the population of millionaires, with 2.9 million to Europe’s 2.8 million. Asia counted 2.4 million, Latin America 300,000 and Africa 100,000.

The world’s millionaires are increasingly branching out from their home countries, with 65 percent paying attention to foreign markets and 30 percent buying homes overseas, the study found.

Growth of private equity holdings in 2005 outlined an increasing preference for aggressive assets, with investors funneling cash into emerging markets, while unloading fixed-income bank deposits and bonds.

That phenomenon is only supposed to grow, as some $41 trillion is expected to be passed to heirs over the next four decades, and money managers saying more than 80 percent of inheritors will want to boost their international exposure.

Dubai might be one destination. Mr. Bazzy said the ease of investment and galloping economic growth in the mushrooming city was spurring the world’s premier companies to set up businesses here.

“There are no unions, no taxes and administration is very easy. Barriers to entry are going lower and lower,” Mr. Bazzy said. Overall, the UAE counts 59,000 millionaires, while neighboring Saudi Arabia had 80,000.

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