The wealthy saw their fortunes soar during the pandemic but those gains are now being eviscerated by anxiety over inflation and rising rates.
The 500 wealthiest people in the world have lost a combined $1.4 trillion this year, including $206 billion on Monday alone, according to the Bloomberg Billionaires Index, as global financial markets buckle under the weight of higher interest rates and inflation anxiety.
It is a stark contrast to last year, when soaring markets boosted the world’s population of high-net-worth individuals (HNWIs) by about 8 per cent, including 13 per cent in North America, according to a Capgemini World Wealth report released on Tuesday.
The data shows that the ranks of the wealthy in the Asia-Pacific increased by only 4.2 per cent — trailing Europe and falling further behind North America after dominating the growth of rich people for the past decade.
China’s clamp down on technology companies and a cooling property market was partly the cause, but it also reflected the ferocious gains in the US stock market, which helped to inflate everything from cryptocurrencies to property values.
That is now rapidly reversing as inflation has spiralled upwards, prompting concerns over how sharply the US Federal Reserve will raise rates.
Five of the world's richest people — Tesla chief executive Elon Musk, Amazon founder Jeff Bezos, French luxury group LVMH chairman Bernard Arnault, Microsoft founder Bill Gates and Berkshire Hathaway chairman Warren Buffett — have lost more than $345bn this year combined.
Still, the Capgemini report illustrates how much the Covid-19 pandemic and monetary response benefitted the elite and where they predominantly reside.
The US, Japan, China and Germany remain among the top countries where most of the world’s wealthy live. The four are home to about 64 per cent of HNWIs globally, Capgemini’s report showed.
What’s more, even among the world’s HNWIs, the very rich saw the most benefits. People with investable assets of $30m or more saw their wealth expand 9.6 per cent compared with 2020, the fastest pace among the cohorts studied by the report.
Those with $1m to $5m — defined as “millionaires next door’’ — had the slowest wealth growth at 7.8 per cent.
The report also highlighted how women across all brackets are set to inherit 70 per cent of global fortunes over the next two generations. The massive wealth created from sky-high valuations of technology companies and start-ups also gave rise to more young and rich people, including in the cryptocurrency space.
That rapid ascent is now under siege as Bitcoin, Ether and other cryptocurrencies tumble and technology start-ups find raising new capital is about to become a lot more costly.
