Asian entrepreneurs identified as "innovators and disruptors" outpaced others in wealth creation this year, in line with a surge in investor demand for technology companies as the coronavirus pandemic hurt many traditional industries.
Billionaires who are active in sectors such as technology and healthcare grew their wealth by 23% to $1.4 trillion between early April and July, according to an Oct. 7 report by UBS Group AG and PricewaterhouseCoopers LLP. Other billionaires in the Asia-Pacific region saw their wealth increase by 13% to $1.2 trillion during the same period.
Most billionaires faced a dip in their wealth in the beginning of the year as the virus began spreading around the world and triggered stock market declines. However, most markets recovered in subsequent months, mainly led by companies involved with technology and innovation.
Globally, the total wealth of more than 2,000 billionaires in 43 markets rose to a record of $10.2 trillion in July, compared with the previous high of $8.9 trillion at the end of 2017, according to the report.
"If you look at the billionaire wealth it's also quite closely connected to indices and respective markets," Amy Lo, co-head of wealth management in Asia-Pacific at the Swiss bank and CEO of UBS Hong Kong, said at a press conference.
"[Mainland] China is very much skilled on the innovation technology sector, so that's why you see much higher growth in those markets, compared to the rest of the economy or the rest of the market, like Hong Kong, which is a much more traditional kind of market," she said.
The SSE Star 50 benchmark index of the technology-focused STAR board in Shanghai gained 41.8% in the first nine months of this year, compared with a 16.8% fall in Hong Kong's Hang Seng Index over the same period.
Tech stocks are likely to stay in focus this year as investors prepare for what could be the biggest ever IPO. Ant Group Co. Ltd., the fintech affiliate of Alibaba Group Holding Ltd., is planning a simultaneous initial share sale in Shanghai and Hong Kong that may raise as much as $30 billion, surpassing Saudi Arabian Oil Co.'s $29.4 billion IPO in 2019.
The UBS-PwC Billionaires Insights report only includes investments that are publicly recorded, which explains the relationship between the market performance and changes in wealth, Lo said.
New wealth in mainland China
Dominic Schnider from UBS Wealth Management said China has led economic recovery globally, and that also contributed to the overall economic rebound of Asia-Pacific.
Another factor driving wealth in the region is the presence of many healthcare and technology entrepreneurs. The Asia-Pacific region has 181 billionaires in the technology and healthcare sectors, the highest proportion in the world, representing 8% of the total global billionaire population, compared with 7% in the Americas and 4% in Europe, the Middle East and Africa.
In line with previous years, mainland China's billionaire wealth grew the fastest out of other Asia-Pacific regions. Between April and July this year, the region minted a net of 26 new billionaires. By the end of the period, the 415 Chinese billionaires shared a total wealth of $1.7 trillion.
Mainland Chinese billionaires represent 50% of APAC billionaire wealth and 17% globally, up from 11% in 2018, according to the report. Within the region, the top sectors are health, materials, and entertainment and media. In particular, online gaming was a sub-sector that grew the most within the entertainment and media bucket.
Mainland China is expected to see more billionaires next year as well due to the growing market and its link to wealth. The U.S.-China tensions will likely not influence the emergence of new billionaires. The report also predicts that the Greater Bay Area will be an increasingly important source of innovation, change, and wealth creation in the coming years.