In 27 years, since 1997, the date of the first study conducted by Cap Gemini, the number of millionaires-- High Net Worth Individuals (HNWIs), defined as people with investable savings of more than $1m--has quadrupled (from 5.2m to 21.7m), as have their assets, which reached $83trn by the end of 2022.
2022: no mercy for the poor, or for the less poor...
The end of an era? In 2022, the number of millionaires worldwide fell by 3.3%. This is a first after a decade of continuous growth. Their wealth on a global level fell by 3.6%. It’s the sharpest decline since 2013, according to Cap Gemini.
The reason is simple: the war in Ukraine, inflation and rising interest rates have affected both the poor and the very rich. The latter were the main victims of stock market volatility. In 2022, the stock markets burned up to the tune of $18trn. The result has been an explosion of cash in the wealth of the very rich. Cash, which accounted for 24% of their assets in 2021, had risen to 34% by the end of 2022. Conversely, the share of equities has fallen from 30% to 23%. It’s a record level.
Despite this context, Cap Gemini notes that ESG investments remain a priority. 41% of survey respondents consider ESG impact investment to be an absolute priority. 63% of HNWIs say they have requested ESG scores for their assets. However, few asset management companies consider ESG data analysis (52%) and traceability (31%) to be a top priority, the study also shows.
Luxembourg millionaires penalised by real estate
From a geographical point of view, the wealth of North Americans fell the most in 2022 (-7.4%), a victim of the downturn in technology stocks, highly prized investments that have long boosted their fortunes. Europe saw a fall of 3.2% and Asia a fall of 2.7%, mainly due to the effect of lockdown in China. South American millionaires saw their assets grow by 2.1%. Cap Gemini reports an increase of 1.6% for African millionaires and 1.5% for their Middle Eastern counterparts. These increases are due to soaring commodity prices.
The shock was also felt in Luxembourg, where the number of millionaires fell by 0.7% to 45,800. By way of comparison, the number of French millionaires fell by ‘only’ 0.5%, while assets rose by 0.4%, driven by real estate and luxury goods, which are highly prized investments in the country.
The overall wealth of Luxembourg millionaires fell by 1.6% to $135.5bn. Wealth is falling faster than the number of millionaires. According to Cap Gemini, this trend can be explained by the current pressure on property prices this year.
The average fortune of a grand ducal millionaire is $2.95m.
This story was first published in French on Paperjam. It has been translated and edited for Delano.