In the time of the COVID-19 pandemic, when an economic crisis is just gaining speed, and when hundreds of thousands are losing their lives, and many more are losing their livelihoods, it’s not all so grim.
Especially if one refers to transnational corporations, including (but not limited to) – Big Tech, Big Pharma, various large-scale social services, as well as companies that accumulate data and process it (intelligence, in a way).
The global fortune of the world’s dollar billionaires rose 27.5% during the global pandemic, reaching $10.2 trillion at the end of July 2020 (up from an estimate of $ 8 trillion in early April).
This is a new maximum that surpassed the previous record – $ 8.9 trillion at the end of 2017, follows from the Billionaires Insights 2020 report prepared by UBS and PwC.
The standard cutoff point for assessing the size and wealth of UBS and PwC billionaires is April 7th, but this year the study decided to extend it to the end of July to cover the “transformative effect of COVID-19” and the stock market recovery from the March flop.
As of April 7, there were 2,058 billionaires in the world – 43 fewer than in 2019. Their total fortune was estimated at $8 trillion.
By the date of completion of the study, July 31st, the number of billionaires had risen to 2,189, and their fortune reached $10.2 trillion.
“The fortune of billionaires reached a new high thanks to the V-shaped jump in the stock market in April-July 2020,” the report outlined.
In the first half of the year, the pandemic practically stopped part of the global economy, “causing a storm in the stock markets.”
In just a few weeks in February and March, the fortune of billionaires decreased by 6.6% compared to 2019, by $564 billion. However, by the end of July, their wealth exceeded last year’s level.
2019, by contrast, was marked by the first decline in wealth in five years.
But overall, over the 2010-2020 decade, the fortune of billionaires has nearly tripled, from $2.8 trillion to $ 8 trillion, and their number has more than doubled from 969 at the end of 2009.
The US, expectedly has the most billionaires.
Next comes China, then Russia, India and Germany in that order. Sixth position comes for Hong Kong, it should be mentioned that even if Hong Kong was considered as part of China, their wealth wouldn’t be near that of the US’ billionaires.
The situation in Russia was analyzed in a report by RBC, citing data from Forbes and other sources.
The combined fortunes of Russian dollar billionaires increased by 15.8%, from $392 billion to $454 billion, from late March to late May, according to Forbes Real Time counter.
During this period, the main owner of Norilsk Nickel, Vladimir Potanin, who took the first place in the Russian part of the Forbes rating this year, became the most wealthy over this period.
During this period, his fortune increased by 32.4%, from $19.7 billion to $26.1 billion.
However, subsequently, due to the accident near Norilsk with a fuel spill and claims brought against Norilsk Nickel, the businessman’s fortune decreased by $3.6 billion.
The global billionaires’ philanthropic spending also hit a record, according to UBS and PwC. They have committed more to the fight against the pandemic than ever before in history.
About 209 billionaires have publicly pledged to spend $7.2 billion on direct financial investments, the purchase of goods, equipment, etc.
“Our research shows that this is the largest amount that billionaires have donated in a short period of time, even after adjusting for inflation,” the report says.
Representatives of the United States donated the most (almost $ 4.6 billion), followed by China ($ 678.8 million). The authors do not exclude that in reality the distribution may look different, because in the United States, charity is a part of business culture and it is more often announced publicly than in Europe or Asia.
Philanthropists were divided into three camps: financial donors (175 billionaires, or 84%) donated $5.5 billion; manufacturers (24 billionaires) converted their factories to produce protective equipment; entrepreneurs (ten billionaires) helped solve specific problems.
What field was the most profitable?
For most of the past decade, the wealth of representatives of different industries grew in comparable volumes. However, in the last two years, representatives of technology and health have taken the lead, and the coronavirus has only widened the gap.
In terms of wealth growth, billionaires in technology (up 41.1% from April to July) and healthcare (up 36.3%) are noticeably ahead of the rest.
The quarantine has accelerated the growth of digital business, and the pandemic has boosted the wealth of equity holders in drug and medical device companies developing coronavirus vaccines, therapeutic drugs, and medical devices such as mechanical ventilators.
The most modest growth was observed in finance (12.8%) and the real estate market (12.9%).
At the same time, the fortune of billionaires has become less stable than at the beginning of the decade.
Of those whose fortune reached $ 2billion at the end of 2009, 153 people have already lost this status. Nearly half of them, 70, have dropped out of the billionaire category in the past two years.
Europe, the Middle East and Africa suffered the most “wealth erosion”, followed by the Asia-Pacific region and the Americas.
2020 was a pivotal year, accelerating the transition towards a more digital economy.
To assess the “evolution of wealth”, analysts developed the concept of “innovators and revolutionaries.”
Based on financial statements and open data, they studied the business models of companies – how much they introduce high and new technologies in the development of products, services and business development.
Innovators include the majority of billionaires in technology (94%) and healthcare (71%).
The innovators increased their fortune by 17%, to $5.3 trillion, in the previous two years and the first seven months of this year.
At the same time, the wealth of traditional billionaires grew almost three times slower – by 6%, to $3.7 trillion.
Some industries have shown their “backwardness”. Analysts ranked as innovators only 37% of billionaires in financial services and 17% in real estate.
In addition, PwC interviewed 84 of its partners with billionaire clients.
Thus, the majority (66.3%) of the latter expect a U-shaped scenario of the crisis development – a slow recovery.
The top 5 worries of billionaires are as follows: recession (20.1%), growing political polarization (18.1%), market volatility (15.1%), financial crisis due to the global recession (14.1%), government restrictions (12.6%).
Seeing the scale of state support, billionaires understand that states will look for ways to make up for budget losses.
55% expect an increase in taxes on luxury, 46% – an increase in direct taxes (on profit, property, income), 36% – an increase in transparency requirements, 33% – an increase in indirect taxes (VAT, excise), 28% – an increase in control and supervision.
Wealthy families expect tax hikes, Yekaterina Lazorina, partner of PwC tax and legal practice, said:
“It is possible that countries will revise their approach to tax payments, stimulating investment in the economy and introducing a tax on luxury and windfall profits.”
This is, indeed, partially worrisome for billionaires, but these issues appear much less significant than those of the general population, regardless, analysis such as these show who actually suffered the brunt of the pandemic, and continues doing so.
Not that it was any secret.
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