The world’s richest individuals have seen the biggest annual decline in the size of their wealth for a decade, new research has revealed, in signs even internationally mobile billionaires are taking a knock from soaring inflation and a slowdown in economic growth.
The global high net worth individual (HNWI) population declined by 3.3% 21.7 million in 2022, according to a report by Paris-based consulting firm Capgemini, while the value of its wealth slipped by 3.6% to $83 trillion (£67 trillion).
Those based in North America suffered the steepest wealth decline with a 7.4% fall, while Europeans suffered a more modest drop of 3.2%. By contrast, HNWIs in Africa, Latin America and the Middle East saw their wealth rise as they benefitted from rising oil and gas prices.
“Unprecedented government stimulus, low-interest rate environments, increased liquidity and stock market rallies accelerated high net worth individual wealth and population growth in 2021 and as a result, HNWIs entered 2022 in a position of strength, only to be confronted by geopolitical crises, a steep market decline, and unprecedented inflation, imposing a bleak ending to 2022,” Capgemini said.
Tech billionaires have been among the hardest-hit by plummeting valuations, with giants Mark Zuckerberg and Elon Musk both shedding tens of billions from their wealth since 2021, with the share prices of Meta and Tesla falling by around 30% and 35% respectively over the same period, while more than two in five of the wealthiest one hundred Brits in tech have seen their wealth fall since the start of the year, an Evening Standard analysis shows.
Capgemini said many rich individuals have been shifting their investments away from equities in order to escape sinking share prices, with HNWI asset allocation for stocks falling to nearly 23% from 32% in the previous year. Billionaires were also moving out of bonds, with fixed-income allocations falling from 18% to 15%. In their place, the world’s richest sought to de-risk, with cash and cash equivalents taking up a greater portfolio share, from 25% to 34%, as rising interest rates made returns more attractive. Private equity has become more attractive to HNWIs, with almost half of wealth managers reporting increased interest from their clients.
Melanie Aimer, global head of client experience at Barclays Private Bank, said: “Many HNWIs and international banking clients are concerned about economic, social and political volatility in their countries and want to access global markets in order to achieve jurisdictional diversification.
“One of their main objectives is to preserve their wealth for future generations.”
The wealthiest in the UK also appear to have suffered a blow from turbulent macroeconomic conditions. Data compiled by the Sunday Times shows the number of billionaires in the UK fell for the first time since the financial crash, dropping from 177 in 2022 to 171 in 2023.
