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Capital Markets, Financial

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Categorized | Currencies

Currency movements weigh on global wealth in 2016: Credit Suisse

Posted on November 22, 2016

Asia Pacific and North America have been the primary drivers of wealth creation in what has been an otherwise limited year for growth, according to Credit Suisse.

Currency movements played a big part in some of those changes, with Japan achieving the highest growth in total wealth and the UK suffering a drop of $1.5tn in response to June’s Brexit vote, the Swiss bank said in its annual Global Wealth Report.

Total global wealth rose by $3.5tn, or 1.4 per cent, to $255.71tn this year. That rate is 3 per cent if exchange rates are held constant, but as Credit Suisse notes, the growth rate, in general, has been decelerating in recent years and over the medium-term, “only moderate acceleration is expected.”

Wealth in Asia Pacific grew by $3.42tn, or 4.5 per cent, to $79.96tn, followed by an increase of $1.8tn, or 2 per cent, to $92.38tn in North America. Africa, Europe and Latin America all saw wealth decrease this year.

In terms of individual countries, Japan saw the highest growth in total wealth of $3.9tn to $24tn, followed by the US, where wealth increased by $1.7tn to $85tn. The UK saw a “significant drop” in wealth of $1.5tn in response to the nation’s decision in June to leave the EU, “which triggered a sharp decline in exchange rates and the stock market”, Credit Suisse said.

The bank also noted that currency movements also caused noticeable differences in household wealth in China, which fell 2.8 per to $23tn this year, but was up 4.1 per cent in local currency terms. China’s total household wealth ranks third in dollar terms behind the US and Japan.

Despite China’s slowdown in growth, the country’s wealth “will likely remain on a strong upward trajectory in the next five years at a rate of 9.2 per cent annually, to reach $36tn in 2021, though growth rate is expected to be lower than the 11 per cent from 2000-2016,” Credit Suisse said.

The bank also notes that the number of ultra-high-net-worth individuals in China has increased 100-fold since 2000, with a 6.2 per cent increase in 2016 to 11,000.