The United Bank of Switzerland (UBS) and PricewaterhouseCooopers (PwC) report that their wealth grew by 19 percent last year.
On September 26, as well, the German group Allianz launched its global report on the financial wealth of individuals, entitled Allianz Global Wealth Report 2018. And on October 18, the Swiss company Crédit Suisse released the ninth edition of Global Wealth Report 2018, which also focused on the large assets of the rich and the mega-rich, including billionaires.
A fifth report entitled Billionaires Insights was dedicated to billionaires, and was drawn up by the UBS financial services company and by the consulting firm for PwC.
8.9 trillion dollars
For the report, the UBS and PwC analysts looked at 2,158 billionaires from 43 countries: from the Americas; from Europe, the Middle East and Africa (EMEA); and from APAC, which is the Asia Pacific region including economies such as Australia, China, India and Singapore. According to the authors, the data represents approximately 98 percent of the global billionaire wealth.
The report shows that in 2017 the aggregate assets of the billionaires grew by 1.4 trillion dollars reaching 8.9 trillion dollars. According to the authors, this is an increase of 19 percent, or almost one fifth. This is “the greatest absolute growth ever” and “substantially higher” than the average of 9 percent recorded over the last five years.
The average age of these mega-rich is 64 years—as revealed by the data contained in the report—with an average wealth of 4.1 billion dollars. Almost a third of the 2,158 billionaires, or 701, have already exceeded the 70-year threshold, which means that their assets will pass over the next two decades to their heirs or will be donated to philanthropic works.
The Chinese century
The UBS and PwC study was published under the very eloquent title “New Visionaries and the Chinese Century.” In fact, everything indicates that the world is witnessing what could be defined without any exaggeration as “the Chinese century.” The data relating to the most populous country in the world is in fact impressive.
At the end of 2017, the authors of the report point out, the Asian colossus was home to 373 billionaires—in 2006 there were only 16 and in 2004 just 2—of which a staggering 97 percent were self-made. Moreover, of the 332 new billionaires reported in 2017, more than half, or 199, were self-made, of which almost half, or 89, were Chinese.
Last year, the aggregate assets of Chinese billionaires rose 39 percent to 1.12 trillion dollars, a figure equivalent to the capital of the Swiss Market Index, which is the leading stock index of Switzerland. Also in 2017, China has churned out more than two billionaires a week.
New type of entrepreneurship
Even though China has authorized private companies only as recently as 1988, just thirty years ago, the country has made great strides in a very short time. This is also demonstrated by the fact that almost a fifth, or 17 percent, of the new Chinese billionaires founded their businesses less than ten years ago. In the US, according to the UBS and PwC report, it was only 7 percent.
According to the authors of the report, the Chinese business class stands out from their colleagues in the rest of the world. The study describes the billionaires of the “Middle Kingdom,” which have an average age of 55, as “incessantly innovative,” able to always grasp “new opportunities” to strengthen their companies and always ready to “reinvent themselves.”
“Chinese culture is different from the rest of the world, especially the EU,” said one Asian billionaire, who is quoted in the report. “In China people work harder and are more willing to experiment by trial and error,” he explains. This makes Chinese entrepreneurs more flexible and able to react more quickly to the various challenges, compared to Europeans, who “work in a more structured way.”
As the report recalls, in the period 2016-2018, fifty or so “unicorn” companies were created in China, that is, companies that have managed to acquire a capital of over one billion dollars, a number just shy of 62 companies in the US that have achieved the same.
The rest of the world
Moreover, China is moving the entire APAC region, which includes not only the “developed” economies of Australia and Japan, but also the emerging ones of India and Indonesia. According to data from UBS and PwC, Asia currently has 814 billionaires and in the course of 2017 it has created 177, at the impressive rate of three every week. India currently has 119 billionaires (+19 compared to 2016), while Indonesia is at 20 (number remained unchanged).
The figure of 177 corresponds to an increase of 14 percent, the ratio continues, that is, twice as much as the European growth (7 percent) and almost three times that of the Americas: 5 percent.
In 2017, the net assets of the Asia Pacific region’s billionaires rose by 32 percent, that is, by almost a third, to reach 2.7 trillion dollars. “At this rate, they will be wealthier than their American peers in less than three years,” reports the document. In 2017, Indian billionaires, for example, saw their assets grow by 36 percent, reaching 440.1 billion dollars.
While Asia now already has more billionaires than the US, despite this the largest concentration of “billionaire” wealth remains in the hands of the US, even if it is slowing down: it has grown in fact only 12 percent, that is at a pace well lower than the global average, to 3.1 trillion dollars.
In 2017, on the one hand, 53 new billionaires were created in the USA—in 2012 there were still 87—on the other hand, Europe recorded 17 new billionaires (an increase of 4 percent), the number has risen to 414. Their aggregate wealth grew by 19 percent, up to 1.9 trillion dollars, thanks also to the appreciation of the euro against the dollar.
Beijing’s watchful eye
Even if Chinese billionaires “fly,” Beijing keeps an eye on them, suggests an article in German by the Neue Zürcher Newspaper (October 27). The actress Fan Bingbing has experienced it firsthand, the newspaper recalls. After an absence of three months, the actress appeared again in public at the beginning of October, apologizing for having evaded taxes and declaring herself ready to pay a fine of about 130 million dollars.
Even the detention in Beijing of a consultant at the UBS headquarters in Singapore seems to point in the same direction: the Chinese authorities closely monitor the assets of billionaires and in particular want to keep them from leaving the country, investing elsewhere, even in offshore activities. According to Patrick Ziltener, a Chinese expert at the University of Sankt Gallen, quoted by the Neue Zürcher: “China wants to prevent a sudden flight of capital.”
While the Chinese currency, the yuan, lost about 10 percent of its value in just six months after the commercial battle with the US, another element that worries Beijing is growing inequality, as the Swiss newspaper continues. The richest 1 percent of the Chinese population has 30 percent of the resources, that is double compared to 20 years ago. And while the richest 10 percent reaches almost 70 percent, the poorest 50 percent stake has fallen to 6 percent. Figures that undoubtedly worry Beijing.
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