The financial crisis led to a major downturn in the real economy. Unemployment is on the rise and households are under severe pressure to survive the crisis. Their retirement savings and net wealth have taken a turn for the worse. That much we know by glancing at the latest economic reports. But what about the rich?
Financial Times reported on the latest World Wealth Report compiled by Merrill Lynch and Capgemini:
The ranks of the world’s super-rich have been shredded by the credit crunch, putting paid to the theory that the wealthy are better at holding on to their money. The global population of “ultra high net worth individuals” – defined as those with at least $30m to invest – shrank by nearly 25 per cent in 2008. That leaves just 78,000 left worldwide after a year of bank crises, government bail-outs and stock market routs.
High net worth individuals – worth a mere $1m, excluding their homes – fared poorly as well, seeing around $8,000bn shaved off their bank balances.
The unprecedented declines wiped out two years of robust growth, reducing both the total number of rich people and their wealth to levels last seen in 2005.
“As markets recover, high net worth individuals will have the flexibility to readjust their strategies and reinvest in new, developing opportunities along the way.” China, unsurprisingly, is expected to drive much of this expansion. The world’s fastest-growing major economy surpassed the UK for the first time in the report’s rankings of the total number of rich people by country.
There are now an estimated 364,000 dollar millionaires in China, the fourth largest population in the world. Hong Kong, by contrast, lost 61 per cent of its millionaires in 2008, with India, Russia and the UK also suffering steep declines.
The economic uncertainty also took a hefty bite out of the luxury good markets. Perhaps the report’s most telling statistic? The number of used private jets available for sale worldwide hit an all-time high last November.
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