World’s top 1% investors rapidly getting richer: Boston Group study
11 Jun 2014
The world's richest 1 per cent had one of their finest years in 2013, propelled by robust equities performance in developed economies and healthy GDP growth in emerging markets, according to a report released by the Boston Consulting Group on Tuesday.
Global private wealth jumped 14.6 per cent, reaching a total of $152 trillion; and it disproportionately enriched the wealthiest investors, according to the report titled Global Wealth 2014: Riding a Wave of Growth.
This surge in affluence led to a 20 per cent increase in the number of millionaires worldwide, reaching 16.3 million in 2013 from 13.7 million in 2012.
The biggest gains took place in China, where the number of millionaire households increased by 60 per cent to 2.4 million. However, it still comes a distant second to the United States, which is home to 7.1 million millionaires.
Overall, Asian economies excluding Japan saw the largest gains in wealth, equal to about $8.7 trillion. North America, meanwhile, followed close behind with increases of $6.8 trillion.
Millionaire households also claimed a larger proportion of global wealth in 2013, gobbling up about 42 per cent of the economic pie compared to about 39 per cent in 2012. To put that in perspective, this group now controls more than $60 trillion, or nearly four times the annual GDP of the United States. And don't expect that to change any time soon: BCG anticipates millionaires' wealth to increase by 7.7 per cent annually during the next 5 years, far faster than the 3.7 per cent rate expected for everyone else.
However, this is only one part of a broader economic story, said Brent Beardsley, a partner at Boston Consulting Group. ''It's important to remember that going forward much of that concentration of wealth is going to be offset by the growth of a middle class in emerging markets,'' he said.
In sharp contrast to Asia-Pacific, Western Europe remained lagging in wealth production. The region's wealth only increased by 5.2 per cent in 2013, even in spite of a strong recovery in European equities, in which the Euro Stoxx 50 gained 14.7 per cent.
This is partly an inevitable side-effect of these countries' conservative investing culture, said Daniel Kessler, a partner at Boston Consulting Group. Europeans invest more heavily than Americans in cash, fixed income and other purportedly safe investments.
North Americans, meanwhile, were happy to take 2013's bull market for a wild ride. The continent's wealth grew at 15.6 per cent on an annual basis. But most of the gains came from a sweeping rebound of U.S. equities: the S&P 500 rose nearly 30% in 2013, and the Dow Jones Industrial Average gained more than 25 per cent. Meanwhile, GDP growth in 2013 – which is vital to sustaining wealth creation in the long run – only clocked in a tepid 1.9 per cent.
