INDIA'S RICH TO QUADRUPLE WEALTH IN FOUR YEARS AS RANKS OF MULTIMILLIONAIRES GROW

[A sixth more people are worth at least £2.2m than a year ago and demand for luxury goods is on the rise]

By Jason Bruke

Mumbai with a view of Mukesh Ambani's tower on the left – the city's 

most expensive building. Photograph: Frederic Soltan/Corbis

They call it the Richie Rich Club, and it is about to get even richer. India's wealthiest will quadruple their net worth in the next four years, a report says, with hundreds of thousands of new entrepreneurs and inheritors becoming multimillionaires.

The survey, based on interviews with 150 ultra-high net worth individuals, comes amid signs of returning business confidence in the world's biggest democracy.

Recent years have seen lacklustre growth, rising prices of basic foodstuffs and a weakening currency. But the Bharatiya Janata party (BJP) won a landslide victory in May on a pledge to reinvigorate the ailing economy.

Despite the slowdown, there are now nearly a sixth more Indians worth in excess of $3.75m (£2.2m) than just one year ago, the report for the Kotak Mahindra bank notes.

"Cities are mushrooming, the middle class population growing, opportunities have increased manyfold and the political environment has improved greatly in recent months," according to Murali Balaraman, a co-author.

Between them India's rich hold assets worth a trillion dollars, which is around a fifth of the total wealth in the country. Within four years, that total is likely to reach $4tn (£2.3tn), the report says, making three times as many people multimillionaires.

Serving the new rich – and the old money – is a booming luxury market.

"They really want to show or talk about their wealth in a really subtle way, and consumption of luxury goods is a nice way to do it," Balaraman said.

Abhay Gupta, the CEO of brand consultancy Luxury Connect, said the market for top end goods and experiences would "only get bigger".

"There is a huge aspirational class who look up to what the very wealthy are doing and then copy it," he said.

Cars are among the most popular items bought, the report says. Whereas five years ago locally made SUVs were shown off by the wealthy, now only foreign cars will turn heads. Mercedes saw a 47% surge in sales in India last year. BMW launched a new $200,000 (£117,700) model in Delhi this week.

India's appalling infrastructure restricts demand, however. Lamborghini's chief executive, Stephan Winkelmann, admitted last year that the traffic and roads in India "are not so suitable" for the $450,000 (£265,000) sports cars. In India, Lamborghini sells two models: the Gallardo and the Aventador, which has a top speed of 217mph.

Winkelmann said Lamborghini's Indian customers were much younger than those in Europe, with a typical buyer being in his 30s. However, the most popular investments remain real estate – mainly within India – and jewellery.

India's super-rich have long raised eyebrows around the world with their spectacular spending. Mukesh Ambani, the country's wealthiest man, has built the world's most valuable home in Mumbai, the commercial capital.

The 27-storey tower, complete with helicopter pads, indoor cinemas and a staff of more than 600, is worth an estimated $1bn (£500m).

The three-day wedding of the niece of Lakshmi Mittal, the UK-based steel tycoon who is worth an estimated $16bn (£9.4bn), was reported to have cost $80m (£47m). Hundreds of guests were flown to Barcelona for the ceremony and party, which took place in a museum in the city.

But buyers of luxury goods searching for the psychological satisfaction of exclusivity are becoming increasingly demanding, the Kotak Mahindra report says. One ordered nine cases of Japanese whisky costing over $750 (£440) a bottle for a wedding reception.

The attraction of the imported whisky was that no one who attended the wedding would find out how to source the same drink in India, the report adds.

Another big spender systematically bought identical pairs of Louis Vuitton bags, then cut up half of them to make clothes that would match her accessories.

Even the traditional wedding is evolving fast. Presents such as silver plates, dried fruit or sweets once sent with wedding invitations are being replaced by gifts by top western designer brands.

"These days it's Rolex watches and Louis Vuitton bags," says Gupta.

Almost half new ultra high net worth individuals live in smaller provincial cities.

A high proportion give substantial amounts to charity, though the report notes that the "growth of philanthropic spends in India has not been proportional to overall growth in ultra high net worth individual wealth".

Co-author Balaraman says that growth in the number of rich people would not result in social tensions as a wide gap in incomes and wealth is an "accepted norm" in India.

"People know that someone is rich and someone is poor and they carry on with their lives," he explains.

@ The Guardian

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CHINA’S MANUFACTURING SECTOR EXPANDS AT SWIFTER PACE

[Economists say they believe Beijing will most likely need to offer further support to meet its growth target of about 7.5 percent for the full year, particularly if the already cooling property market begins to deteriorate more sharply.]

By REUTERS

BEIJING — Factory activity in China expanded in July at its fastest pace in 18 months as new orders surged, a preliminary HSBC survey showed on Thursday, the latest indication that the economy is picking up as government stimulus measures take effect.

The HSBC/Markit Flash China manufacturing purchasing managers’ index, or P.M.I., rose to 52 in July from June’s final reading of 50.7, beating a forecast of 51 in a Reuters poll.

It was the highest reading since January 2013, and it was the second consecutive month that the reading had risen above the 50-point level that separates growth in activity from contraction.

“Economic activity continues to improve in July, suggesting that the cumulative impact of mini-stimulus measures introduced earlier is still filtering through,” said Qu Hongbin, chief economist for China at HSBC. “We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery.”

Mainland China stocks rose after the P.M.I. report while shares in the rest of Asia edged higher. The Australian dollar hit a three-week high on prospects of stronger exports to China.

A breakdown of the survey showed that most of 11 subindexes that measure output and domestic and foreign demand had improved substantially from June.

A subindex measuring new orders, a gauge of demand at home and abroad, hit an 18-month high of 53.7, while the subindex for output also rose to a 16-month high in June.

The employment index also improved from May, though it was still slightly under 50, which implies that jobs were still being lost in the manufacturing sector.

Any marked weakening in the labor market would raise alarms for China’s government, which regards healthy employment levels as a top policy priority and an important condition for social stability.

Premier Li Keqiang said last week that economic growth of slightly more or less than 7.5 percent this year would be acceptable, as long it still led to new jobs and higher wages.

China’s economy grew slightly faster than expected in the second quarter, as the burst of official stimulus paid dividends, but some analysts say the recovery appears largely dependent on government assistance.

Economists say they believe Beijing will most likely need to offer further support to meet its growth target of about 7.5 percent for the full year, particularly if the already cooling property market begins to deteriorate more sharply.

Since April, China has steadily loosened policy by reducing the amount of cash that some banks have to hold as reserves, instructing regional governments to accelerate their spending, and hastening the construction of railways and public housing.

A troubled Chinese construction company avoided a landmark bond default at the last minute on Wednesday after it raised enough funds.

The funds let the company, Huatong Road and Bridge Group, steer away from what would have been the first public default in China’s huge interbank bond market, where 94 percent of all Chinese bonds are issued.

@ The New York Times