Record Number of Wealthy Individuals Driven by Stock Markets
There has never been a higher number of wealthy individuals, and their fortunes have never been greater, as shown by Capgemini in its “World Wealth Report.” According to the consulting firm, the wealthy are individuals whose available money (excluding primary residence) exceeds one million dollars. Their numbers increased by 5.1% over the past year, totaling 22.8 million people. Their combined wealth also saw an increase, with an estimated total wealth of $86,800 billion, representing a 4.7% increase over the year. In both cases, these figures represent record highs since Capgemini began publishing this annual study in 1997.
The Wealth Engine of AI
The growth in wealth is primarily attributed to the rise in global stock markets last year. In the United States, the Nasdaq surged by 43% and the S&P 500 by 24%, while in Paris, the CAC 40 increased by 16% and in Frankfurt, the DAX rose by 20%. “Stocks surged alongside the tech market, fueled by enthusiasm for generative artificial intelligence and its potential impact on the economy,” noted the firm in the study covering 71 countries. However, not all years are the same. In 2022, the wealthiest individuals saw the value of their assets experience its steepest decline in a decade due to a downturn in stock prices.
Alternative assets (commodities, hedge funds, etc.) now account for 15% of the wealthiest individuals’ portfolios (up 2 points in a year). Equity makes up 21% (down 2 points), real estate comprises 19% of their wealth (up 4 points), fixed income represents 20% (up 5 points), and the cash portion has decreased to 25% (down 9 points). “Despite the market’s persistent unpredictability, the wealthiest individuals are rebalancing their portfolios to achieve their growth objectives,” emphasized the study. They are also increasingly investing in cryptocurrencies.
Debate on Inequalities
It is in North America where the number of millionaires saw the most significant increase last year (7.1%), as did their wealth (7.2%), followed by the Asia-Pacific region (4.8% and 4.2%) and Europe (4% and 3.9%). The levels of wealth and the simultaneous rise in inequalities have sparked numerous debates in recent years on how to better tax the highest fortunes. At the G20, Brazil and France are advocating for a global minimum tax on the wealthiest individuals. This could generate an additional $250 billion if the planet’s 3,000 billionaires paid at least the equivalent of 2% of their wealth in income taxes, one of the proposals under discussion.
Source: AFP