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Citigold and New Economic School (NES) Produce Research Report "Mass Affluent Segment in Russia: Crisis Outlook"


Citigold and NES have conducted the first market research on the mass affluent segment in Russia. The research examines size and specifics of the Russian mass affluent segment, its impact on Russia’s economy, how the segment was affected by the crisis, and how it will develop in the next several years.

Key highlights:

* In 2008, the mass affluent segment (MA) in Russia has grown to 1.2 million people with the total investable wealth of RUB 4.2 trillion.
* In the optimistic scenario, the MA segment in Russia will decline by 15 percent and recover in three years, in the pessimistic scenario it will decline by 28 percent and recover in 10-15 years.
* The mass affluent segment generates 30 percent of the income in Russia and has 40 percent share of all money maintained on bank deposits in Russia and 70 percent share of all money invested in local mutual funds.
* The largest mass affluent segment group consists of 45+ year-old men with large families who have an average of RUB 10 million of investable wealth. This group also dominates in the local investment instruments and is particularly dominant in offshore investment instruments.
* Over half of mass affluent individuals keep most of their investable wealth (90-100 percent) in deposits and cash.
* Almost 30 percent of mass affluent individuals invest a substantial share (around 75 percent) of their portfolio into offshore instruments.
* Among BRIC countries, Russia has the lowest penetration of on-shore investment instruments in comparison to the pool of national wealth.

Zdenek Turek, Head of Citi in Russia and CIS, noted at the presentation of the research: "Citi, as a world leader in wealth management for affluent customers, possesses a unique knowledge of the segment and the role the sector plays in global and local economies. For the past seven years of serving Russian affluent customers, we observed tremendous growth of this important class.

Affluent customers continue to be unknown and underestimated in Russia, often confused with either the middle class or the so-called ultra high net worth individuals. We partnered with NES to conduct a research focused on the growing importance of this segment and the role mass affluent segment plays in the development and growth of Russian economy".

Sergei Guriev, Rector of the New Economic School (NES), said: "The mass affluent segment, though being an emerging class, already plays vital part in Russian consumer market development and economy growth. Mass affluents comprise only 0.8 percent of Russia’s population, receive RUB 6 trillion or 30 percent of all income in Russia, and their total investable wealth is 10 percent of country’s GDP.

The Affluent segment in Russia, as in other BRIC countries, has been very dynamically developing in recent years and was severely hit as a result of global financial crisis and recession. Our research shows, however, that the mass affluent segment in Russia – due to a surprisingly lower exposure to risky assets and strong long-term macroeconomic outlook for Russia – has very good potential for quick recovery and further growth"

The research covers the following aspects:

* The mass affluent customers in BRIC – overview and comparative analysis.
* The mass affluent in Russia – market size and analysis.
* Mass affluent clusters and investment behavior.
* Post crisis scenario analysis for mass affluent in Russia.
* Portrait of the mass affluent customer.


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