Credit Suisse Research Institute on Wednesday released its fourth annual Global Wealth Report 2013, which finds that from mid-2012 to mid-2013 aggregate global household wealth increased by 4.9% in current dollar terms to USD 241 trillion.
North America overtook Asia Pacific and Europe to be the wealthiest region with an 11.9% wealth growth to USD 78.9 trillion, fueled by a recovery in house prices and a bull equity market in the USA. As a result of a 22% depreciation of the Japanese yen against the US dollar during the period, household wealth in Japan dropped 20.5% to USD 22.6 trillion, leading total wealth in Asia Pacific to decline by 3.7% to USD 73.9 trillion. However, Asia Pacific ex-Japan continued to register stable wealth growth of 6.2% to USD 51.3 trillion in mid-2013, with India registering USD3.6 trillion in total wealth, an increase of 7.4%.
Giles Keating, Global Head of Research for Private Banking & Wealth Management, Credit Suisse, said: “The report shows a USD 11 trillion rise in wealth to USD 241 trillion, with the USA as the clear winner, overtaking Europe, while APAC fell back due to sharp depreciation of the yen.”
Credit Suisse Research's Michael O’Sullivan said: “Our research shows that global wealth has doubled since 2000, quite compelling given some of the economic challenges of the last decade. We expect this trend to continue in the foreseeable future, driven largely by Emerging Markets’ strong economic growth and rising population levels.”
In Asia Pacific, Japan is the only country where household wealth declined in current US dollar term due to a 22% depreciation of the Japanese yen against the US dollar during the period. Household wealth in Japan dropped 20.5% or USD 5.8 trillion, causing total wealth in Asia Pacific to fall by 3.7% to USD 73.9 trillion. However, Asia Pacific ex-Japan continued to register stable wealth growth by 6.2% to USD 51.3 trillion in mid-2013. The USA, China and Germany were the top three contributors of global wealth growth in the past year. China's household wealth increased 6.7% to USD 22.2 trillion or USD 22,230 per adult, third highest in the world behind the US and Japan.
Along with most countries in the developing world, personal wealth in India is heavily skewed towards property and other real assets, which make up 86% of household assets. While wealth has been rising strongly in India, and the ranks of the middle class and wealthy have been growing, there is still a great deal of poverty. This is reflected in the fact that 94% of the adult population has wealth below USD 10,000. At the other end of the scale, just about 0.4% of the population has net worth over USD 100,000. However, due to India’s large population, this translates into 2.8 million people. India has 254,000 members of the top 1% of global wealth holders, which equates to a 0.5% share. There are 1,760 ultra high net worth individuals with wealth over USD 50 million and 770 more than USD 100 million.
Over the next five years, the Report forecasts global wealth to rise by 39% to USD 334 trillion by 2018 at an annual growth rate of 6.7%. Emerging markets are responsible for 29% of the projected global wealth growth of USD 93 trillion, with China accounting for nearly 50% of that. Supported by strong economic growth, Asia Pacific is expected to remain the largest new wealth contributing region in the next five years, with household wealth rising at 8.4% per annum to USD 110 trillion by 2018, up 49% or USD 36 trillion from the current USD 74 trillion (see Figure 1) with its share of global wealth projected to increase to 33% in 2018 from 31% in 2013. Asia Pacific is expected to overtake North America as the world's wealthiest region from 2017 onwards.
At the country level, the USA is expected to continue to have the highest aggregate wealth, of close to USD 100 trillion by 2018. Japan will likely remain the second wealthiest economy in the world until China overtakes it, probably in 2016. China’s household wealth is forecast to increase by 62% to USD 35.9 trillion in 2018, at 10.1% annual growth, representing 10.8% of global wealth, up from 9.2% in 2013.
The Report estimates the number of global millionaires could exceed 47 million in the year 2018, a rise of 50% or almost 16 million from 2013. The USA is expected to produce the largest number of new millionaires at 5.4 million. While the number of millionaires in emerging economies will remain far below the levels in the USA (18.6 million) or Europe (15 million) by 2018, it is expected to increase faster than that in developed countries. China (+88%), South Korea (+79%), Malaysia (+76%), India (+66%) and Hong Kong (+63%) are projected to post the highest growth in the number of millionaires in the next five years (see Table 3). Japan is forecast to see an 85% increase in millionaires in the next five years as the government’s reflationary policies and structural reforms are expected to improve its medium term wealth growth outlook.
Credit Suisse projects the total number of millionaires in Asia Pacific to rise 75% to 11.5 million in 2018, compared with 41% growth in North America and 47% growth in Europe. By 2018, 24% of the world's millionaires will be located in Asia Pacific, up from the current 21%. Within the region, China will be the largest contributor of new millionaires, with the number of millionaires projected to reach 2.1 million by 2018.
The Report estimates that worldwide there are 98,700 ultra high net worth (UHNW) individuals, those with net assets exceeding USD 50 million. Of these, 33,900 are worth at least USD 100 million and 3,100 have assets above USD 500 million. North America dominates the regional ranking, with 48,000 UHNW residents (49%), while the USA leads at the country level by a huge margin with 45,650 UHNW individuals (see Table 4). Europe has 24,800 UHNW individuals (25%), and 21,790 (22%) UHNW individuals reside in Asia Pacific. China ranks second after the USA with 5,830 UHNW individuals (5.9% of the global total).
The Report examines wealth mobility based on the Forbes lists of the world's billionaires during the period 2000 to 2010. The study finds that only 66% of the 2000-01 Forbes billionaires remained on the list in 2005 and only 52%in 2010. Among G7 countries, the USA has the highest percentage of billionaire "stayers", with 78% of the 2000-01 billionaires remaining in to 2005 and 65% in 2010. This may reflect that US billionaires have higher mean wealth, so their wealth has to fall further on average to drop out of the list. Also, they face little or no exchange rate risk versus other countries. The study finds that China saw a sharp increase in the number of billionaires from two in 2005 to 64 in 2010, reflecting high upward structural wealth mobility during the country's high growth phase during 2005-2010. By contrast, Japan had a lower percentage of billionaire “stayers” because its billionaire rank shrank considerably over the past decade.