Billionaires see fall in wealth

The collective wealth of the world’s ultra-rich has fallen for the first time since the aftermath of the global financial crisis even as Asia, powered by China, continues to create a billionaire every three days, according to research published on Thursday.

Last year the world’s billionaires lost 5 per cent of their fortunes, or $300bn, and their wealth growth failed to match stock market performance for the first time in two decades, according to the report by UBS, the world’s largest wealth manager, and PwC, the professional services firm.

Over the past 20 years billionaires have increased their wealth sevenfold — double the rate of global stock market growth — in what has been termed a second “Gilded Age” for wealth creation. While the first — in the late 19th century — was founded on industrialisation and characterised by the rise of families such as the Rockefellers and the banker JPMorgan, the second has been built on development of the internet and financial fortunes generated from hedge funds and private equity.

Among the causes for the fall in billionaires’ fortunes last year were transfers of wealth — which is then diluted among the next generation — falling commodity prices and a rising US dollar, the currency on which the report is based. Slowing economic growth is also weighing on prospects.

“We think there is a decent chance that we may see some growth [in billionaires’ wealth] but [it] will not be as unprecedented as it has been,” said Josef Stadler, head of UBS’s global ultra-high-net-worth business, who pointed to the low interest rate environment. “In the short term, financial assets and risky assets favour big money. In the medium to long term, low rates may stifle growth.”

Today’s wealthiest form an extremely select group: billionaires make up just 0.01 per cent of those worth more than $30m, according to Wealth-X, a data provider tracking the rich.

China accounted for 80 of Asia’s 113 new billionaires last year. Hong Kong and India accounted for a further 22. More than four-fifths of the region’s wealth is self-made and first generation, compared with two-thirds in the US.

Banks in Asia have been courting the region’s entrepreneurs in an effort to position themselves as close advisers in the expectation that some of the businesspeople will go on to generate far greater fortunes — and advisory fees.

But such vast wealth can prove fleeting. While 41 billionaires made the cut in the US for the first time in last year’s UBS/PwC report, 36 dropped below that level. In China the situation was even more volatile: while Asia generated 113 billionaires last year, 80 dropped below that level, of whom 50 were Chinese. Their declining fortunes were attributed to fluctuating markets and a government crackdown on corruption and graft.


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