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Asia billionaire wealth drops sharply

The wealth of the super-rich fell by 4.3% globally to $8.5trn last year, with the biggest declines in China and Asia-Pacific, according to a report by UBS and PwC.

It was the first reduction in the amount of wealth owned by the world’s billionaires since 2015, as volatile equity markets, rising US interest rates and geopolitical turmoil took their toll last year.

The UBS and PwC Billionaires Insights report, “The Billionaire Effect”,found that during the five years to the end of 2018, global billionaire wealth grew by 34.5%, and the population of billionaires rose 38.9% to 2,101 individuals.

“[However], the billionaire boom of the past five years has now undergone a natural correction. The stronger dollar, combined with greater uncertainty in equity markets amidst a tough geopolitical environment, has created the conditions for a dip,” said Josef Stadler, head of ultra high net worth at UBS Global Wealth Management, in a statement.

Asia-Pacific’s billionaires were the worst affected. Their total wealth fell 8% to $2.5trn from $2.71trn last year, and the number of billionaires dropped 7.4% to 754 from 814.

The decline follows five years during which their wealth has almost quadrupled, and China’s entrepreneurs have become the world’s second largest billionaire group, overtaking Russia’s, according to the report.

However, weak economic growth, equity markets and local currency contributed to a sharp decline in billionaires’ wealth in China, which fell 12.3% in US dollar terms last year, according to the report. The continued crackdown on corruption would have had an effect, too.

The wealth of the super-rich also dropped in Hong Kong (-4.5%), India (-7.9%), Japan (-8%), South Korea (-18.3%) and the Philippines (13.7%).

Wealth drop consensus

The UBS and PwC report follows other recent reports that suggest that the rapid increase in the wealth of the super rich in the region might have peaked.

Last month, Wealth-X’s World Ultra Wealth Report 2019, found that Hong Kong’s ultra high net-worth (UHNW) population slumped 10.6% to 6,270 and its net wealth fell 9% to $1.18trn, causing Hong Kong to lose its status held in 2017 as home to the most UHNW individuals when compared to cities globally.

Also in October, a joint survey by the Private Wealth Management Association (PWMA) of Hong Kong and KPMG found that deteriorating geopolitical and economic trends as well as volatile markets have engendered a pessimistic outlook among most wealth managers. On average they forecast 5%-10% annualised assets under management growth over the next five years, down from 10%-20% in the previous year’s survey.

Nevertheless, despite the decline last year, Asia-Pacific continues to have the highest number of billionaires globally, and China and Hong Kong together minted more billionaires than the Americas in 2018, according to the UBS and PwC report.

Moreover, China’s billionaires tend to be entrepreneurs and they come from a broad range of industries, with technology and consumer and retail leading the way. About 98% of them are self-made billionaires, compared to 61% in EMEA and 67% in the Americas. The average age of China’s billionaires is 57, significantly lower than the global average of 64.

In addition, the number of female billionaires in Asia-Pacific has doubled in five years to 58, the highest growth among all regions, and 57% of them are entrepreneurs, according to the report.

Summary of billionaire data, 2017-2018

Source: UBS and PwC Billionaires Insights report (wealth data in $bn)

Part of the Mark Allen Group.