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Hong Kong has highest density of very rich

The wealth of individuals with net worth of between $5m and $30m grew by around 10% in the financial services-dominated economy last year, according to a Wealth-X survey.

At 9,679 “very high net worth” (VHNW) individuals per million adults, Hong Kong leads all other countries by a significant margin. Their total wealth also increased, despite the territory’s economy being disrupted by large scale street protests during the second half of 2019, in response to government efforts to amend the territory’s extradition law with mainland China.

A December recovery in the local stock market helped buoy the wealth of the territory’s richest individuals, noted the latest Wealth-X report, adding that the steady rise in the number of VHNW individuals reflects “the economic benefits of a stronger relationship with China over the past two decades”.

Switzerland, Luxembourg and Singapore have the next highest density of VHNW individuals. Like Hong Kong, they are well established financial services hubs with large private banking sectors.

Source: Wealth-X 2020; World Bank

Worldwide, the number of VHNW individuals grew 10% last year to 2.7 million people, compared with a 1% increase in 2018. Their aggregate wealth also rose by around 10% to $26.6trn, with North America leading the way in number of individuals, collective net worth and a growth rate of 15%.

Nevertheless, Asia strengthened its position as the second largest VHNW region, with its population expanding by 10.3%, to 723,790 individuals. This was a significant turnaround from last year’s decline of 1%, and was driven by double-digit growth in the VHNW populations in China, Japan and Hong Kong, which lifted the region’s global market share to 27%, according to the report.

Cumulative net worth in Asia also rose strongly, increasing to $7.3trn, spurred by a recovery in equity markets after a poor performance in 2018, despite US-China trade tensions, currency depreciation against the dollar, a downturn in the global consumer electronics cycle and slowing GDP growth momentum in China.

The combined VHNW wealth in China and Japan now accounts for over 60% of total net worth in the Asia region, according to the report.

In contrast to the Middle Eastern and South Asian countries which have the highest proportion of VHNW individuals whose fortunes stem from inheritance, Wealth-X highlighted the large proportion of self-made VHNW individuals in China (at almost 96%) and, in the same region, Singapore (89%).

“Economic history can help to explain this phenomenon. Private ownership — and family-owned businesses — are only a fairly recent development in China, where economic liberalization has had just 40 years to run, whereas, in Singapore, structural changes, industrialization and investment in the market economy began only in the mid-1960s,” said the report.

Looking ahead, the Wealth-X emphasised the rapid rise of VHNW individuals in China, pointing out that 17 of the world’s 20 fastest growing VHNW cities are in China.

Top 10 VHNW Countries

Source: Wealth-X

Part of the Mark Allen Group.