Thursday, October 18, 2007

The Global Millionaire Boom

Interesting and fascinating stats from BusinessWeek regarding the growth of millionaires worldwide - "The Gilding Age of the Globe"
  • Household wealth is hitting record heights, and not just in the U.S. There are more millionaire households on the planet than ever before, particularly in Europe and in China, where growth rates are highest.
  • The total number of world millionaire households—those with assets of $1 million or more—grew by 14% in 2006, to 9.6 million, representing the richest 0.7% of all households and owning $33.2 trillion, or about a third of the world's wealth.
  • The U.S. had, by far, the highest number of millionaire households, with nearly 4.6 million, and the highest number of $100 million-plus households, with 2,300. The number of millionaire households increased by a steady 10%, while $100-million-plus households grew by 7%
  • Japan, Britain, Germany, and China round out the rest of the top five countries with the most millionaire households, in that order. The number of millionaire households increased the most last year in China (up 39%), Spain (up 32%), and Britain (up 30.5%).
  • In Europe, the number of millionaire households grew by 26.4% in 2006, the highest of any region in the study, helped by its strong currency against the weakening U.S. dollar. In North America, millionaire households grew by just 9% in 2006.
  • The United Arab Emirates and Switzerland led the ranking for highest density of millionaire households, with millionaire households accounting for 6.1% of all households in each country—almost nine times the global average.
  • Japan, Britain, Germany, and Italy have the most households in the $100 million-plus bracket, and in terms of growth, China (up 74%), Brazil (up 27%), and Russia (up 26%) saw the highest rates last year.
  • "China is a force to be reckoned with," says Holley, noting that the country's total assets under management have grown at an annualized rate of 23% over the past five years. China's newest billionaire residents will find themselves in the company of powerful businessmen like Suntech Power's (STP) Shi Zhengrong, who lives in the city of Wuxi.
  • But some see a darker side to all this new wealth. "What these number disguise is the globalization of inequality everywhere in the world," says Charles Derber, professor of sociology at Boston College and author of Corporation Nation. "This is the phenomenon of the rich getting richer. And it's not a phenomenon to be happy about—that's my reaction."
  • According to new Internal Revenue Service data announced last week, income inequality in the U.S. is at its worst since the 1920s (before the Great Depression). The top percentile of wealthy Americans earned 21.2% of all income in 2005, up from 19% in 2004, while the bottom 50% of wage earners earned 12.8% that year, down from 13.4% a year earlier.
  • As of 2006, the U.S. held about 40% of the world's wealth and 50% of its millionaire households, according to the Boston Consulting Group. Now in China and India (which ranks 15th in BCG's list of countries with $100 million-plus households but, interestingly, does not appear in the top 15 nations for millionaire households), it's clear a substantial upper class is emerging. But rural poverty numbers are also on the rise, according to Derber.
  • Whether you're for it or not, "this is the name of the game in any part of the world," he says. "It's the Gilding Age of the globe."
Takeaway: Fascinating stats. Hard to argue against the concentration of wealth (worldwide) into fewer and fewer hands. It is mind boggling to see that less than 1% of the world's population owns 1/3rd of its wealth. Also, was surprised to see the ranks of Italy and Spain show up strongly in these numbers. Last, fascinating to know that 6 out of every 100 households in UAE and Switzerland are millionaires. Talk about a tough neighborhood to keep up with the Joneses. The U.S. still holds 40% of the world's wealth - I'd like to revisit that number in a decade to see how much it has fallen; not because the top % in the US is faltering but because of wealth being created worldwide.

Long Suntech Power in fund; no personal position

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