The world suffers from the coronavirus pandemic and global economic tremors, but the billionaires’ riches are booming for the Swiss bankers. Swiss private banks — depositors like Lombards Odier, formerly a Napoleon lender — have seen their customers’ reserves rise this year. More specifically, in a decade, UBS, which operates in Zurich and has the largest private bank globally, recorded its highest trimester revenue. Next week, they will forecast the success of their competitor Credit Suisse.
” [Our clients] did not panic during the sell-down,” Sergio Ermotti, UBS’s chief executive, said. “Instead, they used it to build up positions.”
According to the IMF, they expect the global economy to contract 4.4 percent this year, which is the sharpest contraction in modern history — throwing millions into poverty. However, according to data from UBS, the world’s billionaires have emerged richer than in 2019. The global trend, observed across regions from Brazil and China to the US and Germany, suggests the COVID-19 crisis is widening financial inequalities.
Most bankers claim that 2009, after the big financial meltdown, was the last time the wealthy people had this good. As then, the recession is as much an incentive for investment as it is threatened. This time, the payday scale is far greater, thanks to governments and central banks’ quicker reaction to cushion the blow.
“Compared to ’08, ’09, there was a huge stimulus coming into the system straight away,” said Mr. Ermotti, who stepped down this week after nine years leading the bank. “And there was already plenty of liquidity, with few places for it to go. As a result, asset prices across financial markets have held up very well.”
Who Became Richer During this Coronavirus Pandemic?
Amazon’s chief executive, Jeff Bezos, raised a net worth of 73 billion USD from mid-March to mid-September, boosted by his business holdings, a US think-tank, as shown in a survey by the Institute of Political Studies.
Mark Zuckerberg, Facebook CEO and Elon Musk, Tesla’s Chief Operating Officer, and SpaceX experienced net growth in value of over $45bn during the same period, respectively.
This year 257 individuals became billionaires in China, the fastest-growing country for the super-rich. It was no less fortunate to existing tycoons in the nation.
Jack Ma, the founder of commerce platform Alibaba, increased his net worth by 45 percent over the past ten months. The Hurun study reveals that he is now worth US$58.8 billion. In the 22 years, there has never been a year in which rich people’s wealth increased so much.
How the Rich Are Becoming Richer During this Coronavirus Pandemic
Half of the illustration is the eye-catching achievements of celebrity billionaires. The pandemic has expanded the wealthiest around the globe. The secret for many was the suggestion they got from their bankers at the beginning of the Coronavirus pandemic crisis: “don’t sell.”
“If you panicked and sold out in February or early March, it would have been challenging to come back because the market recovered so quickly,” says Nicole Curti, head of wealth advised Stanhope Capital’s Swiss arm.
Ms. Curti relates the story of two rich brothers whom Stanhope had advised: one sold down his portfolio as the pandemic gripped. The other kept his risk while the second has seen his assets grow 7 percent this year. The first has trod water.
“It’s been hard economically, but the key to performance this year was to remain invested,” Ms. Curti says.
Lombard Odier, who takes control of SFR 287 billionaires in the country, started advising its buyers in February to buy in the panicked markets.
In January, the bank asked virtually all the statistical analysts to collect as many public statistics on economic measures as possible: from traffic data in Asian cities to hospital numbers in the US.
“It showed us very early on that despite lockdowns and some economic sectors being disrupted — such as airlines — there was life in other sectors,” says Frédéric Rochat, one of Lombard Odier’s seven managing partners.
“We have been very consistent with that since February. Don’t get out. Build hedges.”
Where Was the Most Success Recorded?
Many Swiss bankers and wealth advisers pushed one hedge in particular to their clients with outstanding success this year — gold. The valuable metal struck a record high in August of $2.073 an ounce. That was the product of extensive government efforts to purchase financial prices. This was the counterpoint. And like the wealthy gained from government’s expenditure that kept steady stock price assessments, they benefited from the uncertainty and fear that the tremendous Government borrowing induced them.
The theme is that many of the wealthiest people are expecting to continue as the pandemic’s actual economic costs become more apparent. The “short-term” trading of the recession, says Rochat, increases stock prices in the electronics and other niche industries.
Many investors found that they began experimenting with these emerging fiscal economies far more than 2007 and 2008. There are now also doubts about what lies ahead. Will inflation make a comeback?