The fortunes of the super-rich, like Bill Gates and Jack Ma, are growing globally, and they can grow or tumble by billions in a matter of hours.
American writer F Scott Fitzgerald, that great chronicler of society’s foibles, was once asked whether the rich were different from the rest of us. “Yes,” he replied. “They have more money.”
These days, much more money – much, much more. According to the Bloomberg Billionaires Index, which keeps a running check, updated daily, on the super-affluent, the richest man in the world, Bill Gates, had US$90.8 billion on 15 August 2017. Second was Jeff Bezos, founder and largest shareholder of Amazon, with US$84.3 billion. Even the person who ranked 500, Yusaku Maezawa, a Japanese operator of internet shopping sites, comes in at US$3.89 billion.
The US dominates the billionaires list, although not to the degree it once did, and many of the American super-rich have much of their wealth invested in US stock markets. This means that market movements can have major impacts.
How to lose a billion in a day
In the course of one day, 16 May 2017, Gates’ wealth dropped by US$1 billion when Microsoft shares fell 2.8 per cent. Bezos lost even more, about US$3.7 billion, temporarily pushing him down to the number three slot.
He was overtaken, for a while, by Spanish retailing tycoon Amancio Ortega of Zara fame, who lost only US$355 million. Facebook founder Mark Zuckerberg was also hit hard, dropping US$2 billion to US$62.3 billion when the company tumbled by 3.3 per cent.
Related: Bill Gates gives A$5.8 billion to charity in biggest donation since 2000
As a group, the 500 richest people lost around US$35 billion. Political events caused the stock market tumult, with President Donald Trump’s ties to Russia and his 9 May firing of former FBI Director James Comey under scrutiny. However, the billionaires who lost staggering amounts seemed unconcerned. There were no public statements lamenting their losses or attacking Trump.
“When you look at this group you find that some are very involved with their investments, and some are less so,” says Alex Erskine, Principal of Erskinomics Consulting, a company aimed at promoting economic and financial development around the world.
“As you get more money you can spread your investments more broadly and take a longer view on returns. So daily movements don’t matter so much.”
However, if downward stock market movements can reduce the pile, it is equally the case that upward movements cause dramatic jumps. The net worth of Jack Ma, chairman of Chinese online retailer Alibaba, surged US$2.8 billion on 9 June 2017 when the company forecast sales growth that topped market estimates. The news pushed the Alibaba share price up 13 per cent to a record high.
By mid-August 2017 Ma was Asia’s richest person, with a net worth of US$43.6 billion, a gain of more than US$10 billion in a year. Earlier in 2017 he had been briefly bumped by Pony Ma of Chinese instant messaging service Tencent, who was worth US$33.2 billion by August 2017.
Fading resources boom dents Australian fortunes
In Australia, the fading of the resources boom saw an end to wealth figures massively inflated by commodity prices, although mining riches still play a major role. Gina Rinehart, chairman of Hancock Prospecting and Australia’s richest person, comes in at number 85 on the Bloomberg list, with US$14 billion.
Fellow iron ore miner Andrew Forrest, founder and largest shareholder of Fortescue Metals Group, has seen his wealth reduced markedly since the start of 2017 but he still has US$4.59 billion (408 on August’s Bloomberg list).
James Packer’s wealth slid A$600 million one day in October 2016 when his Crown Resorts announced some of its staff had been arrested in China. Crown’s share price fell 14 per cent on the day but has since recovered.
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Do billionaires ever retire?
Many billionaires continue to work, often putting in exceptionally long hours and taking on ever-increasing responsibilities, even after they have made enough money to be able to spend their days sitting on a tropical beach – or even buy their own tropical island.
“They often see it as an opportunity to make the world a better place,” says Erskine. “Many continue to work well after the usual retirement age, from a sense of duty or for the personal satisfaction. And some move into philanthropic activities. When you look at George Soros or Bill Gates, for example, they show a strong sense of using their resources, and their energy, for larger social purposes. Efficiency and effectiveness become priorities.”
Billionaire ranks prepare for the next generation
The profile of the world’s billionaire population is undergoing major change, according to a 2016 report by UBS Group and PwC. The report, Are billionaires feeling the pressure?, noted that growth in the number of billionaires in the US and the other countries of the developed world is slowing, while it is growing in Asia, where someone enters the billion-dollar club every three days. China is leading the way but new billionaires are appearing in India and other countries as well.
Many self-made billionaires are now reaching the end of their working careers, however, and are planning to step back. Over the next two decades, approximately 460 of them will transfer an astonishing US$2.1 trillion to their heirs. For most of Asia’s young economies, this will be the first-ever handover of billionaire wealth, and the outcome of the process is not yet known.
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