NEW YORK--(BUSINESS WIRE)--Globally, billionaire wealth enjoyed its greatest-ever increase in 2017, rising 19 percent to USD 8.9 trillion among 2,158 individuals. While the Americas and Europe maintained a healthy growth rate, Chinese billionaires led the way, expanding their wealth by 39 percent to USD 1.12 trillion.
These findings were published today in UBS and PwC’s annual Billionaires Insight Report: New Visionaries and the Chinese Century. Now in its fifth edition, the report draws on UBS and PWC’s extensive client network and access to data, and aims to promote a deeper understanding of the billionaire population globally.
Among the report’s findings on U.S. billionaires:
The U.S. continues to lead in overall billionaire wealth, but its dominance as an innovator is challenged by China:
- The U.S. is still home to the largest concentration of billionaire wealth, which in the U.S. grew by 12 percent to USD 3.1 trillion, powered by the technology and consumer & retail sectors
- There are currently more billionaires in Asia than in the U.S., and if Asia continues to grow at the current rate, it will also have a larger concentration of wealth in three years
- Globally, billionaires have driven 80 percent of the 40 main breakthrough innovations over the last 40 years; 80 percent of the companies behind these innovations are based in the U.S.
- The U.S. has a bigger footprint in the tech industry, with 70 tech billionaires accounting for USD 707.6 billion of wealth
- China is catching up with the U.S. – from 2016 to 2018 the country gained 67 companies with unicorn status versus 119 in the U.S.
- Last year, China not only minted more self-made, billionaire entrepreneurs (89 for the first time), but saw a faster rate of growth, with 17% of these new Chinese billionaires founding businesses less than 10 years ago, compared to 7% in the U.S.
- Billionaires in Asia and especially China's city of Shenzhen are now challenging the U.S.’s traditional dominance in technology entrepreneurialism. In 2017, they equaled America’s level of venture capital funding for start-ups, registered four times as many Artificial Intelligence-related patents, and three times as many blockchain and crypto-related patents as their U.S. counterparts
- The Chinese cohort is 97% self-made, with many of them in sectors such as technology and retail. 89 Chinese entrepreneurs became billionaires in 2017, roughly three times more than in the U.S. and EMEA
John Mathews, Head of Ultra High Net Worth Americas at UBS Global Wealth Management, notes: “The U.S. is a country where visionaries have pioneered the world's technology revolution, and the majority of breakthrough innovations have been driven by companies based in the Americas. However, U.S. billionaires are now global citizens, and the unprecedented growth in China opens up opportunities that can benefit both countries.
“We are experiencing a new wave of entrepreneurship worldwide, with billionaires at the vanguard of innovation. They are creating jobs and prosperity and their impact goes beyond economics. A new generation is emerging, and they see an opportunity to tackle some of the greatest environmental and societal challenges facing us today.”
The report also examines the look of the new modern, wealthy family:
- Younger billionaires are the driving force behind growth in philanthropy and sustainable investing, as they use their wealth to create positive social impact. More than two thirds (38 percent) of family offices are now engaged in sustainable investing, and almost half (45 percent) plan to increase their sustainable investments in the next 12 months
- Young billionaires are also looking to create their own economic value. Nearly two thirds (62 percent) of billionaires’ sons and daughters who inherited the family business in 2017 sought to become entrepreneurs, compared with 42 percent who inherited assets
- Globally, over the next 20 years, 40 percent of current billionaire wealth (USD 3.4 trillion) will transition to a new generation. Last year alone, 25 U.S. heirs inherited more than a billion dollars each
Billionaires' wealth management planning is entering a new stage:
- When looking at inheritors of billionaires’ wealth, 69% took on the family business in 2017, with 31% inheriting assets
- The report outlines five principles for a successful transition of wealth, including: Involving the next generation early; preparing women to excel; embarking on a family project together; encouraging entrepreneurship; and thinking about sustainability
Thomas J. Holly, Partner PwC U.S., U.S. Asset & Wealth Management Sector Leader notes:
“Our latest data confirms our original conclusion that it is wisest to keep the original business. It is the most effective method of preserving wealth through the generations. In our most recent report, we now see that holding on to the original business has the extra benefit of sustaining a family's entrepreneurial spirit. Helping the next generation to understand the business early and supporting them in setting up new businesses, is key to an enduring fortune.”
Despite the positive overall growth, UBS sees risks on the horizon for U.S. billionaires:
- Looking ahead, UBS sees ongoing risks for businesses and asset values due to a range of factors, including the maturing business cycle in the U.S. and escalating U.S./China trade tensions
- If trade tensions escalate, UBS foresees significantly lower economic growth in both countries, with U.S. and Asia ex-Japan equities falling by more than 20% from their mid-summer 2018 levels
- While a trade war or any other source of significant instability might slow the structural transition of China’s economy, it would be unlikely to halt the plans of its new generation of entrepreneurs.
Mike Ryan, Americas Chief Investment Officer, UBS Global Wealth Management, notes:
"Global growth persists and the fundamentals of the economy are strong, yet trade frictions are heating up between the U.S. and China, and we need to consider how a maturing economic cycle could affect investors, including billionaires specifically."
"We expect the bull market to continue, but we need to pay close attention to global dynamics that could pose disruptions in coming months, such as further rate hikes, slowing growth in China, and trade disruptions. Billionaires and other ultra-wealthy investors who wish to protect their portfolios can consider targeted hedging strategies, as well as diversifying their portfolios globally and by asset class.”
Notes to Editors
Billionaire wealth in numbers:
- Global billionaire growth of 19 percent was lower than growth in the MSCI World Index, which rose by 25 percent. The biggest growth sectors were consumer & retail, which rose by USD 360 billion, technology (USD 250 billion) and materials (USD 180 billion)
- The Americas region is still home to the largest concentration of billionaire wealth, which in the U.S. grew by 12 percent to USD 3.1 trillion, powered particularly by the technology and consumer & retail sectors. But wealth creation is slowing, with the U.S. creating just 53 new billionaires in 2017, compared to 87 five years ago
- In Europe, wealth grew 19 percent to USD 1.9 trillion. This was largely due to currency appreciation in the euro versus the dollar. In fact, the number of billionaires in the region only grew by 4 percent. Wealth transition from just five families accounted for 30 percent of the continent’s wealth expansion
- APAC’s share of billionaire wealth rose to USD 2.7 trillion, 30 percent of the global total, with the consumer & retail, technology and real estate sectors leading the way
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UBS Global Wealth Management
As the world's largest wealth manager, UBS Global Wealth Management provides comprehensive advice, solutions and services to wealthy families and individuals around the world. Clients who work with UBS benefit from a fully integrated set of wealth management capabilities and expertise, including wealth planning, investment management, capital markets, banking, lending and institutional and corporate financial advice.
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