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Alex Kimani

Alex Kimani

Writer, Divergente Research LLC

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Divergente Research LLC and Safehaven.com. 

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A Weaker Dollar Is Creating More Global Millionaires

Cash

The world's rich are not only getting richer, but they’re accumulating wealth at a record pace.  

Personal wealth around the globe clocked in at US$201.9 trillion last year, according to a report by Boston Consulting Group (BCG). That’s a 12-percent gain compared to the previous year and the fastest pace over the past five years.

In fact, that total is about 2.5x bigger than the world's GDP for the year ($81 trillion), and more than double the previous year's rate of 4 percent.

The swelling ranks of the super-rich now own almost half of the world's personal wealth compared to less than 45 percent in 2012.

(Click to enlarge)

Source: Boston Consulting Group

Anna Zakrzewski, the report's lead author, however pointed out that the rich are not getting richer at the expense of the poor—rather, everyone is generally getting richer but the rich are doing so faster than everyone else.

Booming Equity Markets and Weak Dollar

The super-rich can mostly thank booming equity markets and a weak dollar for their swelling fortunes. Money in publicly traded equities and investment funds gained the most, while bonds were the worst performer, falling 7 percent.

Non-U.S. markets got a nice exchange-rate bonus after most major currencies appreciated against the greenback. In fact, global personal wealth growth would have dropped to just seven percent without the boost from the weakening dollar. Western Europe benefitted the most from appreciation of regional currencies, where a 15-percent advance in wealth in dollar terms shrinks to a mere three percent in local currencies.

North America holds 40 percent of global personal wealth followed by Western Europe with 22 percent.

North America had $86.1 trillion of total wealth, with 42 percent of investable assets held by people with a net worth of more than $5 million. Investable assets include stocks, bonds, investment funds and cash. North America's wealthiest held 62 percent of their wealth in equities and investment funds while in Western Europe the emphasis was on currency and deposits.

Asia and Eastern Europe had the greatest concentration of wealth at the top, with billionaires holding nearly a quarter of total investable assets. Hong Kong, closely associated with China, also has a high concentration of the super-rich, with individual's with a net worth of more than $20 million owning nearly half of total investable assets. Related: VW Emissions Scandal Claims Another CEO

Meanwhile, the Middle East has the highest proportion of investable assets with $3.1 trillion out of a total personal wealth of $3.8 trillion belonging to that class.

China Rising

Asia recorded the strongest growth of personal wealth of anywhere in the world--19 percent--thanks to roaring growth in China.

Personal wealth in the region clocked in at $36.5 trillion with 57 percent held by Chinese residents. China now ranks second globally in terms of personal wealth after overtaking Japan over the past five years.

The Middle Kingdom also has the second highest number of millionaires and billionaires behind the U.S. However, it's the mass affluent segment, individuals with $250,000 to $1 million in investable assets, that drive most of the wealth creation in the country.

China is expected to create more wealth than the U.S. over the next five years.

Global Outlook

BCG said that personal wealth is likely to grow at a seven-percent compound annual growth clip from 2017-2022 if the last few years are any indication.

Geopolitical uncertainties and major stock market corrections might knock that down to around four percent, while a major economic crisis could take it as low as one percent.

By Alex Kimani for Safehaven.com

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