Global billionaires increase total wealth to $6 trillion, add to their rank

01 November 2017 Consultancy.uk

Wealth is continuing to accrue in the hands of society’s wealthiest, with a bumper year recorded for the world’s billionaire classes, whose total wealth increases by 17%, or roughly $900 billion. In a new report, the trends related to the world’s most wealthy are explored, covering the most recent bump in total wealth, as well as other factors, such as where the most wealth is being generated, and where it is located.

The report, titled ‘New value creators gain momentum Billionaires insights 2017’, was compiled by PwC’s strategy consulting arm, Strategy&. It is based on wider market data, including that derived from the Morgan Stanley Capital International All Country World Index, which covers equities across 47 major emerging and developed markets.

The wealth of billionaires has tended to follow the recession cycle, with total wealth falling during the .com crisis and the financial crisis – particularly in Asia. The latter hit billionaires relatively hard, with almost $2 trillion in value (although not the capital itself), lost. The considerable rise in equities in the following years, however, supported considerable growth to the total wealth of the billionaire classes, although there were notable dips, one in 2011, and a more recent dip between 2014 and 2015.

Billionaire wealth outperforms MSCI

The most recent data reflects that billionaire wealth is well positioned to take advantage of current market conditions, with growth double the increase in the MSCI AMWI Index, at 17% and 8.5% respectively. In total, billionaire wealth was up $900 billion to around $6 trillion.

In terms of where the greatest value was created, financial market movement and currency shifts dominated wealth accretion. Technology industry changes saw a solid +23% increase, while materials were up a staggering +31%. Other portfolio areas that had solid returns were industrials, conglomerates and financial services.

Materials and industrials boost wealth

The shift in commodity prices, particularly oil, were a head-wind between 2014-15, while in 2015-16 they slowed. They were a considerable hindrance on growth, as were Asian real estate prices, as well as fluctuations in the US dollar.

The total number of billionaires hit 1,542, with the US up around 25 in total, with 14 dropping off and 39 added, to a total of 563. Europe, crowned by old money, stayed relatively stable – with 21 falling off the radar and 24 added – at a total of 342.

2016 sees rapid growth

Asia meanwhile, saw a considerable addition, with a 23% increase, 162 in additions and 45 subtractions, to a total of 637 billionaires in 2016. China alone has around 218 billionaires, followed by India, at 100. The wealth of the former was boosted by, among others, ‘geopolitical stability in Greater China, rising Chinese real estate prices, infrastructure spending, the growing middle class and buoyant commodity prices all joined together to boost wealth.’

US retains dominance

In terms of total wealth, the US remains dominant – for the time being at least – with a solid 15% increase to $2.7 trillion. Self-made billionaires added the most relative wealth, with their average wealth up from $4.5 billion to $4.9 billion in the region.

Wealth distribution

Europe saw a small 5% increase in total wealth, from $1.2 trillion to $1.3 trillion. Self-made billionaires still trail old money billionaires, however, at an average $3.7 billion and $4 billion respectively. Old money also continues to dominate the wider wealth pie in the region.

In Asia, however, new money dominates. In total, wealth increased from close to $1.5 trillion to almost $2 trillion, a 31% jump. The majority of that wealth is in the hands of self-made billionaires, although total average wealth still remains higher in old-money, at $3.8 billion over $3 billion.

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