Billionaires get richer, while many millionaires lose ground

September 17, 2012

Research company Wealth-X said on Monday in a report that many millionaires got poorer in the last year, but billionaires did just fine, using their heavyweight money management teams to ride out market and economic turmoil. – Reuters pic

SINGAPORE, Sept 17 – Many millionaires got poorer in the last year, but billionaires did just fine, using their heavyweight money management teams to ride out market and economic turmoil that hit the lesser rich, research company Wealth-X said today.

The ranks of people with at least US$30 million edged up to 187,380 but their total wealth fell 1.8 per cent to US$25.8 trillion – still a sum bigger than the combined size of the US and Chinese economies, Wealth-X said in a report.

Hardest hit globally were those in the US$200 million to US$499 million range, whose numbers dropped 9.9 per cent and whose fortunes shrank 11.4 per cent, the World Ultra Wealth Report said, using data for the year through July 31.

But the really, really rich got even richer as the number of billionaires rose 9.4 per cent to 2,160 people and their wealth grew 14 per cent to US$6.2 trillion.

“Even at a billion or two billion, they have a much larger entourage, they have much more in the way of investment advice. They certainly get the attention of every major bank,” Mykolas Rambus, Wealth-X’s chief executive officer, said.

As Europe struggles and the US economy recovers fitfully, the affluent are shifting away from speculative investments into private companies, commodities and property, said Wealth-X, a Singapore-based firm that provides intelligence on the ultra-rich to banks, fundraisers and luxury retailers.

Asia suffered the worst regional loss of wealth, with a fall of 6.8 per cent to US$6.25 trillion due to weaker equity markets and lower export demand from the West, it said.

While wealth also shrank in Europe, Latin America and the Middle East, the rich saw their fortunes grow in North America (up 2.8 per cent to US$8.88 trillion) and Oceania (up 4.4 per cent to US$475 billion) – much of that in Australia.

But Asia’s rich cannot be discounted, Wealth-X said, as the fall in wealth in Japan, China and India – home to 75 per cent of ultra high net worth (UHNW) Asians – will reverse, based on the strength of the region’s financial systems and economies.

“Total Asian UHNW wealth is forecast to surpass the US combined wealth by 2020,” it said. – Reuters

Keeping it in family breeds billionaires

Matt Wade

December 6, 2011

Samsung ... identified as Asia's biggest family business. Photo: Reuters

It must be tough keeping tally of billionaires in China.

The Hurun magazine, which ranks China's wealthy, counted 271 US dollar billionaires in this year's rich list, more than double last year's total. Liang Wengen, a 55-year-old construction equipment magnate from Hunan, topped the rankings with an estimated fortune of $US11 billion. At this rate it won't be long before China surpasses America's billionaire count of about 400.

India lags China in billionaire numbers - 57 according the latest rich list published by Forbes - but it boasts more tycoons in the world's top 100. India-born businessmen fill seven places on that list compared with just one from China - the internet entrepreneur Robin Li, who came in at number 95. India even had two citizens in the Forbes top 10 - the London-based steel magnate Lakshmi Mittal and industrialist Mukesh Ambani, owner of the world's most expensive house.

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Asia's bulging cohort of billionaires is one indicator of the region's growing economic might - it now has more billionaires than Europe.

But another factor is the success of Asia's big family-owned companies. Credit Suisse studied more than 3500 listed family-controlled firms with market capitalisations of more than $50 million in 10 major Asian economies and found they made up about half of all listed companies.

The total market capitalisation of the family firms studied was equal to 34 per cent of Asia's total nominal gross domestic product.

The biggest family business identified in the study was South Korea's Samsung, which accounted for 10.3 per cent of the country's market capitalisation. Second was Mukesh Ambani's conglomerate Reliance.

The researchers concluded family businesses "are the backbone of the Asian economies". They found listed family firms outperformed local benchmarks in seven of the 10 countries studied and that total market capitalisation of Asian family businesses expanded about six-fold between 2000 and 2010.

Asia's big family companies have some common traits. Many are large conglomerates like India's Tata Sons, which controls more than 100 companies across a host of sectors including steel, vehicles, telecoms, beverages and IT.

Credit Suisse said Asia's family businesses avoided high-risk investment strategies and favoured borrowing from banks rather than issuing corporate bonds.

Many management decisions were also underpinned by "Asian values", especially the tradition of passing on leadership to heirs.

But the study also identified some significant differences.

In the Philippines family businesses accounted for 83 per cent of total market capitalisation compared with just 11 per cent in China, where state-owned enterprises dominate the economy.

In India family firms with market capitalisation of more than $50 million made up 67 per cent of listed companies, the highest proportion in Asia. China had just 13 per cent.

Tax payments underscore the influence of big family businesses in India. They contribute about 40 per cent of corporate tax and 18 per cent of all tax revenue collected.

The Godrej Group is typical of many family-owned conglomerates in India. Its core business is consumer products, especially whitegoods, but it also has an array of spin-off businesses including engineering, agribusiness and a fast-growing property development business. The chairman, Adi Godrej (net worth nearly $US7 billion), says big family conglomerates make sense in a country like India.

"It creates financial stability and the opportunity to introduce the best business management practices," he told me in a recent interview. "We have married best practice with very focused companies within a group that is able to add a lot of value in a developing country."

Will Asia's dynasties be able to maintain their clout?

The complexity of international finance means they are relying increasingly on professional managers. Inheritance is difficult to manage and many big family firms struggle with succession.

The influence of family-controlled businesses is likely to fade eventually. But they will produce plenty more billionaires in the meantime.

Read more: http://www.smh.com.au/business/keeping-it-in-family-breeds-billionaires-20111205-1ofem.html#ixzz1fl5ATTRE

US Debt Crisis (Video)

One Billion Dollars

It is really impossible for someone to burn through even one billion dollars.

That is the equivalent of spending $25,000 per hour for ten years.

Investing that amount in T-Bills (1-2%) would guarantee you about $60-120k/day in living expenses.

What that means is that every hour you sleep, relax, shave, poop, or somehow fail to spend money, you delay running out of your $1B.


http://tpmmuckraker.talkingpointsmemo.com/2008/12/almost_since_the_news_broke.php