Articles

Riches to Riches

 

UHNWIs: The Wealthiest People on the planet

Published March 2014 in the magazine: Macau Business

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 Wealth inequality is a potential cause of friction worldwide

 

Riches to Riches 

by André Ribeiro

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Wealth is a fascinating topic. The amount an individual owns impacts his or her everyday life in thousands of ways. It is a basic tool for survival in modern societies.

One of the most interesting things about wealth is how unequally distributed it is around the globe. A few people own a lot of it, while billions have barely enough to get by.

Consultants Cap Gemini SA and Royal Bank of Canada put together the World Wealth Report every year. The report coined the term “high net worth individual” to describe a person with investable assets of US$1 million or more, excluding his or her primary residence, collectibles, consumables and consumer durables.

The latest report, issued in June, has some interesting observations.

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It says there were 12 million high net worth individuals in 2012, and that together they had investable wealth of US$46.2 trillion, the most ever. North America had the most high net worth individuals, closely followed by the Asia-Pacific region. North America had 3.73 million of the super wealthy and the Asia-Pacific region had 3.68 million.

About 90 percent were “millionaires next door”, whose investable wealth ranged from US$1 million to US$5 million. Together they controlled about 43 percent of the wealth held by high net worth individuals.

About 111,000 people had investable assets worth more than US$30 million. They made up less than 1 percent of all high net worth individuals, but had 35.2 percent of the wealth held by high net worth individuals.

The Credit Suisse Global Wealth Report says an adult required net assets of just 4.000 US dollars to be one of the wealthiest 50 percent of people in the world in the middle of last year. An adult required at least 75.000 US dollars to be one of the wealthiest 10 percent, and 753.000 US dollars to be one of the wealthiest 1 percent.

The distribution of wealth is clearly uneven.

The Credit Suisse report says the poorest 50 percent of the world’s people owned less than 1 percent of the world’s wealth. At the top end, the richest 10 percent held 86 percent of the world’s wealth, and the richest 1 percent held 46 percent.

 

Flexing Rules


Wealth varies with geography.

Average household wealth across the globe was USD 51.600 for each adult in the middle of last year. In the richest countries, the figure was more than USD 100.000 an adult. In the richest country, Switzerland, it was more than USD 500.000 for each adult.

 

 

Putting together Oxfam’s data with Forbes magazine’s list of billionaires last year suggests that at least three of the of the world’s 85 richest people get a big chunk of their wealth from Macau.

 

They are Sheldon Adelson, the boss of gaming company Sands China Ltd; Li Ka-shing, owner of the ParknShop and Watsons retail chains; and Cheng Yu-tung, who owns the Chow Tai Fook chain of jewellery shops and has interests in gaming here.

 

Lui Che-woo, the founder of casino operator Galaxy Entertainment Group Ltd, was 98th in the Forbes list and is probably now among the world’s 85 richest people, having at least doubled his wealth last year.

 

At the other end of the scale, at the end of last year Macau had more than 25,000 workers earning less than MOP4,000 a month.

 

 

A report by the charity Oxfam, issued in January, says the wealth of the richest 1 percent of people in the world amounted to US$110 trillion last year. That sum was 65 times the combined wealth of the poorest 50 percent.

The poorest 50 percent, some 3.6 billion people, had as much wealth as the world’s richest 85 people.

It is an inequality that exacerbates social problems. “Concentration of income and wealth actually hampers the realisation of equal rights and opportunities because it makes political representation harder for disadvantaged groups, to the benefit of affluent groups,” Oxfam says.

Oxfam goes on to point specific practices that lead to a "rigging (of) the system," where money is funneled almost exclusively to the already-wealthy.

  

The Oxfam report found that over the past few decades, the rich have successfully wielded political influence to skew policies in their favour on issues ranging from financial deregulation, tax havens, anti-competitive business practices to lower tax rates on high incomes and cuts in public services for the majority. Since the late 1970s, tax rates for the richest have fallen in 29 out of 30 countries for which data are available, said the report.

 
 

 

André Ribeiro is the founder of ExtraCoaching. He develops strategies and solutions for coaching executives and other professionals.

ExtraCoaching.com

For more information about financial markets visit TaoInvestor.com

 

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