Jeff Bezos, Amazon founder and the richest person in the world, was 2018’s biggest gainer for the second year running. EPA
Jeff Bezos, Amazon founder and the richest person in the world, was 2018’s biggest gainer for the second year running. EPA

Money

The biggest winners and losers in the billionaires club in 2018

Plenty of fortunes were made this year despite a market rout

Bloomberg

December 31, 2018

The markets may be tanking, but that hasn’t stopped plenty of mega-fortunes from being unearthed in 2018.

The popularity of Fortnite, the phenomenon that inspired video-game obsessions, gave gamemaker Tim Sweeney a $7.2 billion (Dh26.4bn) fortune this year. Autry Stephens has $11.4bn after his closely held Endeavour Energy Resources attracted bids that valued the oil company at as much as $15 billion.

“It was a good year for wealth creation,“ said Michael Zeuner, managing partner of WE Family Offices. “It was a tough year in financial markets, but for people who are creating wealth through companies, the economy itself is very strong.“

Mr Sweeney and Mr Stephens were just two of the 31 individuals who vaulted onto the Bloomberg Billionaires Index in 2018, even as increasing global trade tensions and a downdraft in the markets saw half a trillion dollars of wealth on the ranking wiped out.

Denise Coates, the British founder and chief executive officer of online bookmaker Bet365 Group, is another addition. Ms Coates is nearly 10 times richer than Queen Elizabeth II, according to the ranking.

While Ms Coates had a good year, market turmoil pushed many wealthy people into the red. The world’s 500 richest people lost $451 billion this year. That’s a sharp reversal from 2017 when they added $1 trillion to their fortunes.

Here are the billionaires who gained and lost in 2018.

Winners

Singaporean billionaires fared the best in dollar terms, gaining $2.5 billion. That pushed the wealth of the country’s richest to a collective net worth of $38 billion.

Jeff Bezos, Amazon founder and the richest person in the world, was 2018’s biggest gainer for the second year running. His net worth grew about $24 billion to $123 billion. But even he was a loser in the second half of the year as stock markets were routed. From a September peak, Mr Bezos has since seen his fortune drop $45 billion.

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Despite Chinese billionaires’ total loss of nearly $76 billion this year, some of the country’s richest still came out ahead, including Lei Jun, founder of Chinese smartphone maker Xiaomi. Mr Jun trailed only Bezos among the biggest gainers of 2018, adding $8.6 billion to his fortune.

Losers

American billionaires saw the biggest loss this year, collectively dropping $76 billion, largely because of December’s market rout. Mark Zuckerberg saw the sharpest drop in 2018 as Facebook veered from crisis to crisis. His net worth fell nearly $20 billion, leaving the 34-year-old with a $53 billion fortune.

China’s Wang Jianlin, Jack Ma and Ma Huateng made up three of the 10 biggest losers this year. Fifty people dropped off the index, including 11 from China or Hong Kong, nine from the US and four from Russia.

Among those who fell off the list were Andrej Babis, the prime minister of the Czech Republic whose fortune is derived from his chemical and agricultural company Agrofert, and Russian tycoon Oleg Deripaska, whose net worth plunged to a record low as stock of Rusal fell on concern that the aluminium giant could halt some production because of US sanctions.

And 13 billionaires on the ranking died this year, including Microsoft’s Paul Allen, Hong Kong real estate developer Walter Kwok and Vichai Srivaddhanaprabha, owner of Premier League football club Leicester City.

UAE currency: the story behind the money in your pockets

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”