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World's Millionaire Population Rises, China Overtakes US For Super-Wealthy - Credit Suisse

Tom Burroughes, Group Editor , October 22, 2019

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A research institute for the banking group produced an annual report tracking who is winning, or losing ground, in the rankings of the world's wealthy. One finding that it highlighted was that inequality has declined, not risen.

Ultra-wealthy China 
Among the UHNW group in mid-2019, the report estimates that 55,920 adults are worth at least $100 million, and 4,830 have net assets above $500 million. North America dominates the regional breakdown, with 84,050 members (50 per cent), while Europe has 33,550 (20 per cent), and 22,660 (14 per cent) live in Asia-Pacific countries, excluding China and India.

This year, for the first time, China recorded more members of the global top 10 per cent (100 million) than the US (99 million).

In a finding that goes against assumptions of widening inequality, the Credit Suisse report said that wealth inequality actually shrank within most of the countries during the early years of the century. Today, the share of the bottom 90 per cent accounts for 18 per cent of global wealth, compared with 11 per cent in the year 2000.

“While it is too early to say wealth inequality is now in a downward phase, the prevailing evidence suggests that 2016 may have been the peak for the near future,” the report said. 

The report said that 2.9 billion individuals – 57 per cent of all adults in the world – have wealth below $10,000 in 2019. The next segment, covering those with wealth in the range of $10,000–100,000, has seen the biggest rise in numbers this century, trebling in size from 514 million in 2000 to 1.7 billion in mid-2019. This reflects the growing prosperity of emerging economies, especially China, and the expansion of the middle class in the developing world. The average wealth of this group is $33,530, a little less than half the level of average wealth worldwide, but considerably above the average wealth of the countries in which most of the members reside.

Women’s wealth
Women’s wealth has grown relative to that of men in most countries due to rising female labor force participation, more equal division of wealth between spouses and other factors.

The report said that a paradox of tax policy from the first half of the 20th century was that it squeezed women’s wealth. “Traditionally, inheritance has been a more important source of wealth for women than for men - partly because lower incomes restricted accumulation on their own account, partly due to widowhood, and partly because females hold on to bequests longer than male heirs because they tend to live longer. The reduced flow of inherited wealth over the first half of the 20th century tended to lower the relative wealth of women due to their greater dependence on inheritance,” the report said. 

Millennials “have not been a lucky cohort”, the study said, noting that they were hit at a young age by the global financial crisis, its associated recession and the poor job prospects that followed, but they have also been disadvantaged in many countries by high house prices, low interest rates and low incomes, making it difficult for them to buy property or accumulate wealth.

The report predicts that the number of millionaires will reach almost 63 million in the next five years, with global wealth projected to rise by 27 per cent over the next five years, reaching $459 trillion by 2024. Low-and middle-income countries are responsible for 38 per cent of the growth, although they account for just 31 per cent of current wealth. Growth by middle-income countries will be the primary driver of global trends. 

The number of UHNW individuals will reach 234,000, the report said. 

“Global wealth grew during the past year but at a very modest rate of 2.6 per cent. This low growth is partly attributable to US dollar appreciation: using five-year average exchange rates, total wealth grew by 5.9 per cent since end-2017, and wealth per adult by 3.8 per cent,” Anthony Shorrocks, economist and report author, said.

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