Credit crunch takes toll on super-rich

moneyBy Megan Murphy

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, according to the latest World Wealth Report produced by Merrill Lynch and Capgemini.

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.

Nick Tucker, market leader for UK & Ireland in Merrill’s wealth management arm, said the report showed there were no “safe havens” for investors as markets across the world plummeted.

However, despite 2008’s negative results, overall wealth is expected to top $48,000bn by 2013, as global economies recover.

“Last year was about preservation, not appreciation,” Mr Tucker said. “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.

Copyright The Financial Times Limited 2009


One comment

  1. Mass amounts of wealth has been loss to the ongoing financial crisis.Uber rich individuals have fell victim to the crisis and began to shop less for luxury items.

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