London The wealth of the world’s billionaires reached a new record high in the middle of the pandemic as a rebound in tech stocks boosted the fortunes of the global elite.
Billionaire wealth increased to $10.2 trillion at the end of July, up from a previous peak of $8.9 trillion in 2017, according to a report from Swiss bank UBS and PwC. The total number of billionaires has increased by 31 to 2,189 since 2017.
Some billionaires are getting richer much faster than others, however. The pandemic has accelerated a growing divergence in wealth between innovators in technology, healthcare and industry, and entrepreneurs in areas such as entertainment, financial services and real estate, the report said.
That contrasts with most of the past decade “when steady growth and buoyant asset prices lifted billionaire wealth in all sectors,” it added. Now, billionaires “on the wrong side” of technological and social trends are becoming relatively less wealthy.
This polarization between “innovator billionaires” and the rest comes at the end of a decade in which the number of billionaires has doubled and total wealth almost tripled. “In the last two years those using technology to change their business models, products and services have pulled ahead. The Covid-19 crisis just accentuated this divergence,” the report said.
During 2018, 2019 and the first seven months of 2020, technology billionaires’ total wealth increased 43% to $1.8 trillion, while healthcare billionaires enjoyed a 50% surge to $659 billion. Billionaires as a whole saw an increase of 19% over the same period, with those in financial services, entertainment, materials and real estate recording increases of 10% or less.
Geographically, mainland China has seen the biggest increase in billionaire wealth over the past 10 years, up nine times compared with a doubling in the United States. China’s shift towards the digital economy has seen the likes of Alibaba (BABA) founder Jack Ma and Pony Ma of Tencent (TCEHY) become enormously wealthy, as manufacturing and construction tycoons fall behind.
The report comes amid rising concerns that the pandemic is only going to deepen economic inequalities, including in areas such as income, education and healthcare.
A recent report from the Institute for Policy Studies, a think tank, finds that over the past two decades the growth in US billionaire wealth has been 200 times greater than the growth in median wealth.
The 643 wealthiest Americans, including entrepreneurs such as Amazon’s (AMZN) Jeff Bezos and Tesla’s (TSLA) Elon Musk, raked in $845 billion in combined assets between March and September, growing their wealth by nearly a third, the report said.
There are also fears that the ranks of the world’s poorest will swell this year. The research arm of the United Nations has warned that global poverty could increase this year for the first time since 1990, reversing a decade of progress.
According to the UBS report, billionaires are giving away more of their wealth than ever before. Some 209 billionaires publicly pledged $7.2 billion between March and June, including in financial donations and manufactured goods.
“It’s early days, but billionaires may well be at a turning point, putting renewed energy and wealth into tackling the environmental and social problems that the pandemic and recent natural disasters have highlighted,” the report said.
How billionaires structure their financial affairs is coming under increased scrutiny, as governments tighten laws that allow entrepreneurs and investors to pay less tax, and seek to regulate platforms such as Amazon and Facebook (FB).
According to the Institute for Policy Studies, the tax obligations of America’s billionaires measured as a percentage of their wealth decreased 79% between 1980 and 2018.