Asia-Pacific region overtakes North America for first time both in number of rich people and wealth held by them
Potential customers walk past a private jet during an aviation show at the Shanghai Hongqiao airport, China.
The ranks of the world’s super-rich swelled to more than 15 million last year, led by Japan and China, where wealthy individuals appear to have prospered despite 2015’s stock market turmoil.
The Asia-Pacific region has for the first time overtaken North America both for the number of rich people and the wealth held by them, according to the annual world wealth report from consultancy firm Capgemini.
Around the world, the number of “high net worth individuals” (HNWIs) – defined as those with investable assets of at least $1m (£675,000) excluding their main home, art collection, vintage sports cars and other collectibles – rose nearly 5% in 2015 to 15.4 million.
The combined wealth held by the global super-rich increased by 4% to $58.7tn, boosted by stock market gains in some parts of the world and higher property prices. However, the rate of growth in the wealth of HNWIs in North America slowed sharply last year, while in Brazil and Russia their numbers and wealth declined.
The US still has the most HNWIs, almost 4.5 million. Japan is second, with 2.7 million, then Germany, with almost 1.2 million. China came fourth, with just over 1 million, followed by the UK, with 552,800 individuals, up 3,200 on 2014. The UK has been in the top five for some time.
China had the biggest rise in the number of wealthy people, up 16% on the previous year. The increase was down to sustained economic growth and rising property prices. China’s super-wealthy include Jack Ma, founder of e-commerce business Alibaba, and its richest man, the property tycoon Wang Jianlin.
In the UK, the collective personal fortunes of the super-rich rose 1.1% last year to $2tn. Britain is among the top four markets expected to drive wealth growth through to 2025, behind China, the US and India, according to wealth managers polled by Capgemini.
More than 4.5 million new HNWIs have been created globally since the height of the financial crisis in 2009.
In Asia-Pacific, the wealth of the super-rich soared 10% to $17.4tn last year, outstripping North America, where it grew 2% to $16.6tn, down from the 9% in 2014.
While the US and Canadian economies put in a solid performance, equity markets finished the year in negative territory. In contrast, after a year of sharp swings, the Shanghai Composite and the Nikkei each ended 2015 more than 9% higher.
Japan and China together accounted for 60% of the growth in the number of millionaires around the world last year. Asia-Pacific is expected to account for two-fifths of the world’s wealth within the next 10 years – more than that of Europe, Latin America, the Middle East and Africa combined.
David Wilson, wealth management expert at Capgemini, said this was driven by demographics, as Asia was approaching 3 billion people compared with half a billion in North America, as well as digital penetration.
“The big story has been entrepreneurs in Asia,” he added, while salary incomes and inheritance played an important role in Europe and the US.
In the US, an estimated $59tn of wealth is being transferred to heirs, charities, estate taxes and estate closing costs between 2007 and 2061. Of that $36tn is going to heirs.
Latin America was hobbled by the poor performance of Brazilian equities last year, posting a 2% fall in the number of HNWIs and a near-4% decline in wealth. Europe’s growth was steady, at nearly 5% for both the number of millionaires and their wealth, led by Spain, the Netherlands, France and Germany.
Brazil, battered by the commodity price slump, political turmoil and sharp falls in currency and equity markets, was the poorest performing country in the world, losing 8% of its millionaires. Canada, Russia, Mexico and Singapore also recorded declines of between 2% and 3%.
Capgemini said it had taken longer than anticipated for Asia-Pacific to overtake North America as the region with the biggest amount of wealth because of the slowdown in China, India and other countries in recent years.
An alliance of organisations including ActionAid, Greenpeace International, International Trade Union Confederation and Oxfam warned that while the wealthy prospered, 702 million people living in extreme poverty were being left behind by a “broken economic system”.
Jenny Ricks of the Fight Inequality Alliance said: “Last year the wealth of the richest totalled $58.7tn, which is over 150 times the size of the economies of all of the world’s poorest countries combined. This shows the extent money and power are concentrated in the hands of the wealthiest few.
“For every person with more than $30m, there are over 4,800 people living in extreme poverty. This gross inequality is a symptom of an unjust and unfair economic system that allows the rich to get richer at the expense of the poor.”
The Capgemini report showed that the number of ultra-rich people – those with assets worth more than $30m – rose at a slower rate than in previous years. Their number grew by just over 4% in 2015, compared with annual increase of nearly 8% between 2010 and 2014. Their wealth grew 2.5% last year compared with an average of 6% in the previous four years, dragged down by Latin America.
If current trends continue, the wealth held by the world’s richest is projected to exceed $100tn by 2025 – nearly triple the amount in 2006, according to Capgemini. Despite the financial crisis, the millionaires’ wealth has expanded almost fourfold over the last 20 years.
Ricks called on governments to reverse cuts to public spending, privatisation, tax breaks for the wealthy and “the race to the bottom on human rights”.
Capgemini said an unexpected trend of the past 20 years had been the high levels of cash held by the world’s richest. Despite overall strong stock market performance, millionaires have continued to hold almost a quarter of their financial wealth in cash – to fund their lavish lifestyles as well as to protect against market volatility.