World's wealthy are getting richer faster on equity boost
The rich are getting much richer and doing so a lot faster. Personal wealth around the globe reached $201.9 trillion (€174trn) last year, a 12pc gain from 2016 and the strongest annual pace in the past five years, according to a new Boston Consulting Group report.
Booming equity markets swelled fortunes and investors outside the United States got an exchange-rate bonus as most major currencies strengthened against the dollar.
The growing ranks of millionaires and billionaires now hold almost half of global personal wealth, up from just under 45pc in 2012, according to the report.
In North America, which had $86.1trn of total wealth, 42pc of investable capital is held by people with more than $5m in assets. Investable assets include equities, investment funds, cash and bonds.
"The fact that the wealth held by millionaires as a percentage of total wealth is increasing does not mean that the poor are getting poorer," according to Anna Zakrzewski, the report's lead author.
"What it means is that everyone is getting richer. Specifically, we believe that the rich are getting richer faster."
Last year's big winner was China, which now ranks second globally in terms of financial wealth after overtaking Japan in the past five years, said Ms Zakrzewski.
While China trails only the US in the number of millionaires and billionaires, the biggest driver of growth in the Asian country was its so-called affluent segment, or those with $250,000 to $1m of investable assets.
"China will continue to experience similar growth as in the past and this will mean that over the next five years, there will be more wealth created in China than in the US," said Ms Zakrzewski, adding that the number of millionaires there was expected to grow four times as fast as in the US.
Without the boost from a weakening dollar, the global wealth gain would have been 7pc. The region that benefitted the most from currency appreciation was Western Europe, where a 15pc advance in US dollar terms shrinks to 3pc in local currency.
Eastern Europe and Central Asia had the greatest concentration of wealth at the top, with billionaires alone holding almost a quarter of investable assets. The 28 Eastern Europeans in the Bloomberg Billionaires Index had a total net worth of $294bn (€253bn). Money in investment funds and publicly traded equities gained the most, while bonds were the only core-asset class to post negative growth last year, falling 7pc.
The Middle East was the region with the greatest share of wealth held in investable assets - $3.1trn of a total $3.8trn.
If personal wealth creation continues at the rate of the past few years, Boston Consulting projects a compound annual growth rate of about 7pc from 2017 to 2022 in US dollars.
However, events such as stock market corrections and geopolitical uncertainties could knock that down to 4pc.
In a worst-case scenario, such as a major economic crisis, global wealth might produce a compound growth rate of only 1pc over five years, the study concluded.