The world’s billionaires “did extremely well” during the COVID-19 pandemic, growing their already huge fortunes to a record high of US$10.2 trillion.
A report by Swiss bank UBS Group AG found that billionaires increased their wealth by 27.5 percent at the height of the crisis from April to July, just as millions of people around the world lost their jobs or were struggling to get by on government schemes.
The report found that billionaires had mostly benefited from betting on the recovery of global stock markets when they were at their nadir during the global lockdowns in March and April.
Photo: Reuters
UBS said that billionaires’ wealth had hit “a new high, surpassing the previous peak of US$8.9 trillion reached at the end of 2017.”
The number of billionaires has also hit a new high of 2,189, up from 2,158 in 2017.
“Billionaires did extremely well during the COVID crisis, not only [did] they ride the storm to the downside, but also gained up on the upside [as stock markets rebounded],” said Josef Stadler, the head of UBS’ global family office department, which deals directly with the world’s richest people.
Stadler said that the super-rich were able to benefit from the crisis because they had “the stomach” to buy more company shares when equity markets around the world were crashing.
Global stock markets have since rebounded making up much of the losses. The shares in some technology companies — which are often owned by billionaires — have risen very sharply.
Billionaires typically have “significant risk appetite” and were confident to gamble some of their considerable fortunes, Stadler said.
Luke Hilyard, executive director of the High Pay Centre, a think tank that focuses on excessive pay, said that the “extreme wealth concentration is an ugly phenomenon from a moral perspective, but it’s also economically and socially destructive.”
“Billionaire wealth equates to a fortune almost impossible to spend over multiple lifetimes of absolute luxury,” Hilyard said. “Anyone accumulating riches on this scale could easily afford to raise the pay of the employees who generate their wealth, or contribute a great deal more in taxes to support vital public services, while remaining very well rewarded for whatever successes they have achieved.”
“The findings from the UBS report showing that the super-rich are getting even richer are a sign that capitalism isn’t working as it should,” Hilyard said.
Stadler said the fact that billionaire wealth had increased so much at a time when hundreds of millions of people around the world are struggling could lead to public and political anger.
“Is there a risk they may be singled out by society? Yes,” he said. “Are they aware of it? Yes.”
“Wealth concentration is as high as in 1905, this is something billionaires are concerned about,” he said. “The problem is the power of interest on interest — that makes big money bigger and, the question is to what extent is that sustainable and at what point will society intervene and strike back?”
The UBS report did not rank the fortunes of the world’s wealth, but the richest person on the planet is Jeff Bezos, the founder and chief executive of Amazon, with US$189 billion.
Bezos’ wealth has increased by US$74 billion so far this year, the Bloomberg Billionaires Index showed, due to the surge in Amazon’s share price as more people turned to the company.
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