Billionaire fortunes hit record levels in pandemic
Collective wealth rose to $10.2tn following the summer markets rally
The world’s billionaires have seen their fortunes soar to record levels during the Covid-19 pandemic, as many doubled down on risk in choppy financial markets and profited from the tech boom.
Their collective wealth hit $10.2tn this summer, exceeding the previous high set in 2017, according to a widely followed annual study from Swiss bank UBS. The total number of billionaires reached 2,189, up from 2,158 in 2017.
While billionaires’ fortunes have fallen back since the statistics were collected in July — broadly in line with the late-summer correction in the equity market — the data suggest they are still far above their 2020 low, recorded in April, when their combined wealth fell to $8tn in the depths of the pandemic-linked global markets shock.
UBS said the pandemic had speeded a growing divide in wealth between innovative entrepreneurs invested mainly in tech, healthcare and industrial products, and other business people focused on less dynamic sectors such as property, entertainment and financial services.
“Fortunes are polarising as business innovators and disrupters deploy technology to be among the leaders of today’s economic revolution,” said the report, called “Riding the Storm”.
“During 2018, 2019 and the first seven months of 2020, entrepreneurs in the tech, healthcare and industrials sectors pulled ahead. The Covid-19 storm accelerated the divergence.”
The report comes at a time when growing economic inequality in the US, the UK and some other leading economies, has put the role of the rich — and, especially, of high-profile billionaires — in the spotlight. Critics question everything from regulatory regimes that allow tech companies rapidly to establish dominant market positions to the low tax rates imposed on capital in some jurisdictions, including the US and the UK.
UBS, which is unashamedly bullish in promoting billionaires, argues that wealthy tech-oriented investors can benefit the rest of society by advancing the digital revolution. “When the storm passes, a new generation of billionaire innovators looks set to play a critical role in repairing the damage” using emerging technologies, said the report. “Whether intentionally or not, this has the potential to help bridge financial social and environmental deficits.”
Billionaires have been quick to increase philanthropic gifts in response to the pandemic. The report recorded donations of $7.2bn from 209 people between March and June 2020. Well over half the total, $4.6bn, came in the US. UBS said the total appeared small compared with billionaires’ total net worth but the publicly-announced pledges “tend to understate the amount donated given a tendency towards discretion.” The bank said its research suggested the donations were still “the greatest amount” that billionaires have given in a short space of time.
Joe Stadler, head of UBS’s global family office unit, said that billionaires had done well in this year’s upheavals because they were “risk-takers” and had been “very disciplined” in their approach, for example in remaining heavily invested in equities even when markets were plunging.
However, the report also found that billionaires, like other people, have been spending time in the pandemic sorting out family matters. Some 59.5 per cent plan to accelerate succession planning in the next 12 months, compared with 16.7 per cent in the last 12, according to a survey of 84 partners working with billionaires at PwC, the accountancy firm.