The number of millionaires in the world rose to 7.7 million last year -- with 2.5 million of them in North America -- as the global economy recovered from a two-year recession, a new study says.

The United States recorded the largest net gain in millionaires, rising 14% to 2.27 million, according to a survey by Merrill Lynch & Co. and Capgemini Group that was released yesterday.

"The U.S. had a phenomenal year both from a [gross domestic product] point of view as well as market exposures," said Sofia Chappuis, a manager with Capgemini in New York. "High net-worth individuals in the U.S. are very aggressively focusing on growth ... and this goes for both Canada and the U.S."

Low interest rates, strong stock markets and growing foreign economies helped create more millionaires in North America, said Gregory Smith, senior manager with Capgemini Canada.

It is Hong Kong, followed by India, that is enjoying the fastest growth rate in millionaires, the study found. Canadian millionaires rose to 200,000, up 11%.

In Canada, the wealth of millionaires totalled about US$570-billion, and is expected to reach US$828-billion by 2008, the report said.

But the number of millionaires in Canada may actually be higher than the report indicated, said Keith Sjogren, principal with the Taddingstone Consulting Group Inc., which puts out the Canadian Millionaire Report. He estimates the number at around 300,000.

Globally, the total wealth of high net worth individuals rose 7.7% to US$28.8-trillion. As the global economy recovered last year, the world's wealthy shifted their focus to wealth accumulation rather than preservation, the study found. There was a "very dramatic" shift into equity, Ms. Chappuis said, with investments up 35% in 2003.

Alternative investments, such as hedge funds, and real-estate also delivered healthy returns to the world's wealthy last year.

Asia saw a significant rise in wealthy individuals last year, led by "red hot" GDP growth rates in China and India. In China, the number of millionaires rose 12% to 236,000, and in India the number now exceeds 60,000 -- up 22% from last year.

Honk Kong returned to 2001 levels after last year's recession, recording a 30% rise in millionaires to 45,000.

Europe experienced modest gains, with the number of millionaires up 2.4% to 2.6 million, the study found. "In Europe, the economy is struggling to get out of recession," said Ms. Chappuis.

"On top of that, you have a different set of taxation and monetary and fiscal policies in almost all of the European countries that really hamper the creation of individual wealth."

Spain was the notable exception, with 129,000 millionaires in 2003 -- an 18% increase from last year.

In Russia, the number of wealthy citizens rose 5% to 84,000. Two months ago, Moscow surpassed New York as home to the world's most billionaires, according to Forbes Magazine.

The Middle East and Latin America both experienced minimal rises in the number of millionaires, increasing 2.4% and 1.3%, respectively.

High net worth individuals around the world are of growing importance to financial institutions, Mr. Sjogren said. "It's a segment that's growing at a faster rate than the retail market as a whole. It's a segment that is, per customer, way more profitable."

The study said the wealth of the world's millionaires should exceed US$40.7-trillion by 2008.

The eighth annual World Wealth Report includes individuals with a net worth of at least US$1-million, excluding the value of their homes.

Illustration:
• Color Photo: Bobby Yip, Reuters / Hong Kong has enjoyed a wealth recovery, recording a 30% rise in millionaires to 45,000.
• Chart/Graph: MILLIONAIRE HOT SPOTS: Fastest-growing millionaire-creating nations. HNWI (High net-worth individuals) population growth, 2002-03 : (See print copy for complete chart/graph.)