Far from Equal: Previously disadvantaged groups account for only 14% of South Africa’s Ultra Wealthy at the end of 2011

This press release is part of WealthInsight’s report on South Africa, entitled: South Africa – The Future of HNWIs to 2016: The Rise of African Wealth.

According to the report’s author, WealthInsight analyst Andrew Amoils: “Despite strong transformation efforts by the ANC government since 1994, South Africa’s wealth distribution at the top end remains far from equal”

“WealthInsight research shows that there were 75 South African ultra high net worth individuals from previously disadvantaged groups at the end of 2011, which equates to only 14% of South Africa’s total UHNWI population of 543 individuals. This is a relatively low percentage considering that these groups make up 90% of the national population.”

“Things were slightly more equitable at the lower end of the high net worth spectrum, but still far from equal. Among all high net worth individuals (otherwise known as millionaires), WealthInsight research shows that there were approximately 12,500 South African millionaires from previously disadvantaged groups at the end of 2011, which equates to a healthier 28% of South Africa’s total millionaire population of just over 44,700 individuals.”

Definitions:

·         “High net worth individuals” otherwise known as “millionaires” or “HNWIs” refer to individuals with net assets of US$1 million or more excluding their primary residences

·         “Ultra high net worth individuals” or “UHNWIs” are individuals with net assets of US$30 million or more excluding their primary residences

·         “Core high net worth individuals” or “Core HNWIs” are individuals with net assets of between US$1 million and  US$30 million, excluding their primary residences

·         ‘Previously disadvantaged groups’ include Black Africans, Cape Coloreds, Indians and Chinese citizens. These individuals were restricted from voting in national elections until 1994 and were forced to live in different areas to the white population in a system known as ‘apartheid’ (racial separation).

As the UK Government sets out plans to increase the number of visiting Chinese tourists, WealthInsight research suggests lesser-known centres like Hangzhou, Wuhan and Chongqing could be the places to target for high net worth tourists in the years ahead.

On Wednesday, Jeremy Hunt, culture secretary, set out plans to “turbo-charge” the UK tourism industry, announcing an £8 million marketing campaign focused on tripling the number of tourists coming from China. “By 2030, China should have around 1.4bn middle class consumers – creating a potential market four times bigger than America.” Mr Hunt said.

Indeed WealthInsight finds that China will be fertile ground for the creation of High Net Worth Individuals (HNWI) in the coming years. According to our analysis more than 845,000 Chinese will join the ranks of HNWIs between 2011 and 2015 – equivalent to about 24 every hour (see chart). During this period, growth in billionaires will lead the way with an increase in volume of over 450% and an increase in total wealth of 600%.

China is experiencing rapid growth in the number of people with assets >£1m

Source: WealthInsight

With this rapidly expanding wealth, Chinese tourists are a lucrative market. In 2010 Chinese tourists spent £1,677 each per visit to the UK according to Visit Britain, three times more than the average. And the latest UNWTO World Tourism Barometer shows that Chinese expenditure on international tourism increased by 32% in 2011; reaching $73bn (see below). Mr Hunt’s strategy is intended to ensure the UK doesn’t lose out to other European countries like Germany and France, who currently attract more visitors from China.

China was the 3^rd top source market for international tourism expenditure in 2011

Source: UNWTO World Tourism Barometer

To do this the government will increase marketing and airline connections in cities beyond traditional wealth centres like Beijing and Shanghai. Recent WealthInsight research could be of help. Our analysis sheds light on some of China’s lesser known centres for growth in ultra-HNWIs (those with assets over >$30m), highlighting Tier II and Tier III cities like Hangzhou, Wuhan, Chongqing, Chengdu and Fuzhou, as growing wealth hotspots. These are the places high spending Chinese tourists will be coming from in the years ahead.

City	Growth in UHNWI's (2011-2015)	UHNWI's, 2011	Predicted UHNWI's, 2015
Fuzhou	90-100%	50-100	100-150
Chongqing	85-95%	50-100	150-200
Hangzhou	75-85%	500-600	950-1050
Chengdu	75-85%	100-150	200-250
Wenzhou	75-85%	100-150	150-200
Wuhan	70-80%	100-150	150-200
Tianjin	65-75%	150-200	250-300
Changsha	60-70%	100-150	150-200

Source: WealthInsight

Analyst Contacts:

Christopher Rocks

christopher.rocks@wealthinsight.com

020 7406 6711

Andrew Amoils

andrew.amoils@wealthinsight.com

020 7406 6564

Facebook floatation to create 970 millionaires

Facebook’s pending IPO will create 970 millionaires including 165 super rich Ultra High Net Worth Individuals, according to new research by the wealth intelligence service WealthInsight.

In depth analysis reveals that the Facebook Elite UHNWIs (those worth more than $30m) will each have an average wealth of over $225m. Though the prospect of immediate and huge spending sprees is unlikely due to restrictions on the exercise of stock options and other shares.

WealthInsight has created a unique proprietary database of 160 Facebook employees, investors and other beneficiaries packed with data and biographical detail.

According to WealthInsight analyst Andrew Amoils: “This floatation will create an unprecedented number of new super rich people. And despite the success of the film The Social Network and the company’s media profile, no-one knows much about the Facebook Elite beyond the senior management leaders. That’s why we have pulled out all the stops to research these individuals”.  

The research is based on the valuation being placed on the floatation of Facebook which values the company at a multiple of 79-99 times earnings, compared with 13.7 and 18.6 for Apple and Google, respectively.

For more information on the Facebook Elite and to see how WealthInsight generated these findings please download our attached research paper:

http://www.vrl-financial-news.com/pdf/The%20Facebook%20Elite%20(2).pdf

WealthInsight releases latest global UHNWI numbers; UHNWIs hold 1.5% of wealth in boutique investment products such as art, wine and classic cars

Of the world’s 122,000 ultra-high-net-worth individuals (UHNWIs) China and India are home to 6.5% and 1.3%, respectively. The number of UHNWIs in India and China is increasing rapidly and will surpass the numbers found in leading European countries over the next decade, according to WealthInsight, the London based global wealth consultancy. 

WealthInsight has also found that the world’s 122,000 UHNWIs have an average wealth of US$121 million and together hold a remarkable US$14.8 trillion – almost equal to the US’s 2011 GDP.

Collectable assets – such as art, wine, classic cars, watches and jewellery – account for 1.5% of the total wealth of the world’s UHNWIs, or US$1.8 million per person. 

“We expect collectables to become an increasingly important part of the asset allocations of the world’s UHNWIs, especially in Asia, where there is robust growth in interest in this asset class. We’ve also seen an uptick in interest among Asian Ultras for yachts, super-yachts, private jets and private planes,” said Andrew Amoils, a senior analyst with WealthInsight.

While Asia is important and will increasingly be so, WealthInsight research underscores the importance of the developed world, home to the majority of the world’s UHNWIs: the US, with 40,000 UHNWIs, has one third of the global total and California’s 7,000 UHNWIs alone account for about 6%.

Similarly, the UK, France and Germany together are home to 21% of the world’s UHNWIs.

Ollie Williams, senior analyst and research manager of WealthInsight’s HNWI Database remarks: “Everyone is talking about China, India and Asia; it’s an amazing growth story and the Ultra wealth creation is truly impressive. But we believe Europe, Australia, Japan and the US will still be the pillars of the wealth industry and major consumers of big-ticket collectables and luxury goods. Furthermore, we see huge potential for the creation of large numbers of new UHNWIs in these countries. For example our early research shows that the Facebook IPO alone will generate scores of new UHNWIs.”