The Asia-Pacific region replaced Europe in 2010 as the the world’s second biggest market after North America for high net worth individual (HNWI) populations, according to a report by Merrill Lynch Global Wealth Management and the French consulting giant Capgemini.

According to the Asia-Pacific Wealth Report 2011, the three top countries: Japan, China and Australia, accounted for 74.4 percent of HNWIs across the region in 2010 and 68.2 percent for wealth, with Japan and China together being home to the largest number of HNWIs in the region with 62.8 percent of its wealth.

“Asia-Pacific remains a region of enormous wealth creation, spearheaded by China, India and Japan," reported Michael Benz, head of Asia-Pacific Wealth Management at Merrill Lynch Global. He said the increasing sophistication and demands of the region’s HNWIs “mean that those wealth management firms that can leverage across their businesses are best placed to serve their clients’ needs.”

Australia and India both posted robust growth in 2010, rising in the rankings of the world’s top 12 markets for HNWI population. India made the top 12 for the first time in 2010.

“Australia has been one of the most consistent macroeconomic performers over the past three years,” said David Wilson, Strategic Analysis Group Manager for Capgemini Financial Services. He noted that part of the reason for Australia’s resilient HNWI and wealth growth is due to the fact that its HNWIs allocate a large amount of their investments to equities and real estate – 65 percent compared to 53 percent for the regional average. These asset classes performed relatively well over the past couple of years.

The report says “as the majority of Asia-Pacific HNWIs source their wealth from business ownership, wealth management firms that can generate enterprise value … will be able to serve their clients better.”  In other words, “wealth management firms need to offer capabilities from other business units to better serve Asia-Pacific HNWIs, such as leveraging the corporate and investment banking resources, as businesses progress through different stages."