Asians drive boom in global billionaire wealth

Singapore

BILLIONAIRE wealth posted its "greatest ever" increase last year, rising 19 per cent to US$8.9 trillion, thanks to robust growth in the Asia-Pacific - in particular, China.

The global wealth is shared among 2,158 individuals, according to the UBS/PwC Billionaires Report 2018. In China alone, there were 373 billionaires last year. Asia is home to 814 billionaires, who grew their net worth by a third to US$2.7 trillion, driven mainly by China; Chinese billionaires' wealth expanded by 39 per cent to US$1.12 trillion.

Wealth creation this year is unlikely to match last year's, thanks to market volatility, equity rout and uncertainty over the trade war. As at Thursday, the S&P 500 was still clinging to a year-to-date return of 1.2 per cent, but China stocks were down by 21 per cent based on the Shanghai Shenzhen CSI 300 index.

Kelvin Tay, UBS Global Wealth Management managing director and regional chief investment officer, said: "If you're an entrepreneur looking to list a company to generate wealth, it is likely hard to get attractive valuations next year. Rates will be higher; we expect the Federal Reserve to hike rates three times next year, so the risk premium is higher. Definitely, there will be an impact on billionaires."

He added: "The first step for wealth creation is usually the equity market; Asia and the US share the same characteristics. It's difficult to become a billionaire through sheer organic growth."

More than three new billionaires were minted weekly in Asia last year, and China led the way by creating two new billionaires a week, the report found. This meant that Asia accounted for more than half of new billionaires worldwide

At the current rate, UBS and PwC expect Asia-Pacific billionaires to be wealthier than their US peers in under three years.

UBS head of ultra-high-net -worth Ravi Raju said: "(Asia's) remarkable wealth creation presents an immense opportunity for UBS, which currently has a relationship with three out of five billionaires in Asia."

The number of billionaires in Singapore has remained stable at 22, with just one new addition - Min-Liang Tan , co-founder of gaming hardware company Razer Inc. His wealth is listed at US$1.1 billion, and he is the youngest at 40. He is also the only one who made his wealth in entertainment and media; most Singapore billionaires are in real estate and financial services.

Total billionaire wealth in Singapore grew by 9 per cent to reach US$64.5 billion. The top three industries driving the wealth were real estate, financial services and industrials. Nearly two thirds of Singapore billionaires are self-made, slightly below the 68 per cent in the US.

Ng Siew Quan, PwC Singapore Asia-Pacific entrepreneurial and private business leader, noted the rising entrepreneurial spirit among those who inherit a family business, compared to those who simply inherit wealth. He said the trend "helps to perpetuate the relevance of family business" and is likely to help families preserve and grow wealth past the third generation.

Of those who inherited a family business, 62 per cent globally went on to start entrepreneurial ventures, compared to 42 per cent of those who inherited assets.

Mr Ng said: "Asia is one of the most fragmented and diverse regions. In some parts, we observe the potential for more and more family businesses to create longer-lasting legacies, given the strong ambitions of the next-gens, and more importantly the current and next gen's deeper appreciation for family governance and succession planning. This positive shift of mindset for greater preparedness sets Asian family businesses in the right direction for successful transitions and sustainable growth."

The report said billionaires have a "transformative" effect on the world, having driven 80 per cent of the 40 main breakthrough innovations in the last 40 years.

But billionaires in Asia are challenging the US' traditional dominance in technnology. In 2017, they equalled the US' level of venture capital funding for start-ups, and registered four times as many artificial intelligence-related patents, and three times as many blockchain- and crypto-related patents as their US counterparts.

Meanwhile over the next 20 years, an estimated US$3.4 trillion in wealth is expected to be handed over to a new generation. The younger billionaires are expected to drive the growth in philanthropy and sustainable investing; 38 per cent of family offices are now engaged in sustainable investing; 45 per cent aim to step this up over the next 12 months.