Billionaires' wealth falls for first time since 2015

ZURICH - The world's richest people became a little less well off last year, according to a report by UBS and PwC, as geopolitical turmoil and volatile equity markets reduced the wealth of billionaires for the first time since 2015.

Billionaires' wealth fell by 4.3% globally to $8.5 trillion last year, the UBS/PwC report found, with a sharp decline in Greater China, including Hong Kong, and the Asia-Pacific region more broadly.

Private wealth in Hong Kong fell 4% in 2018 to $319.8 billion, the report showed, with months of anti-government protests in the Chinese-ruled city and an economic recession clouding the outlook this year.

Some Hong Kong tycoons have begun moving personal wealth offshore, Reuters reported in June, as concerns deepen over the protests.

"We haven't seen any significant outflows, we have been tracking some of these numbers on a regular basis," said Amy Lo, UBS co-head of Asia Pacific wealth management. "Our clients have been diversifying all along, it's not in the last one year."

Private banks including the world's largest wealth manager UBS have felt the effects of U.S.-China trade tensions and global political uncertainties, as clients last year shied away from trading and taking on debt in favour of hoarding cash.

The net worth of China's richest dropped 12.8% in dollar terms on the back of tumbling stock markets, a weaker local currency and a slowdown in growth, the report found, knocking dozens off the billionaires list.

Despite the drop, China still produces a new billionaire every 2-2.5 days, UBS's head of ultra-high net worth clients, Josef Stadler, said in the report released on Friday.

Worldwide, the number of billionaires fell everywhere except in the Americas, where tech entrepreneurs continued to buoy the ranks of the United States' wealthiest.

"This report shows the resilience of the U.S. economy," where there were 749 billionaires at the end of 2018, said John Matthews, head of private wealth management and ultra-high net worth business for UBS in the United States.

While a stock market recovery from a steep drop in late 2018 has helped wealth managers increase their assets, the world's richest families remain concerned about global affairs from trade tensions and Brexit to populism and climate change and are keeping more of their money in cash.

"It is likely that billionaire wealth will go up again this year," said Simon Smiles, UBS's chief investment officer for ultra-wealthy clients, adding it would likely be a more muted increase than the wider financial market rally might suggest. 

source: news.abs-cbn.com

World's rich grow richer as bull markets roar on - study

ZURICH - The pool of money held by the world's wealthiest people grew by 12 percent last year to nearly $202 trillion as bull markets and the dollar's weakening against most major currencies boosted global fortunes, an international advisory firm's study released on Thursday said.

Adjusted for exchange rate swings, wealth rose 7 percent, the Boston Consulting Group (BCG) survey found.

While residents of North America held the greatest share of personal wealth at almost 43 percent, the fastest growth came in Asia, Latin America and the Middle East. Most super-rich individuals lived in the United States, China and Japan.

The business of providing advice to those super-rich is still strong in North America.

However, legacy retail brokerages such as Morgan Stanley , Bank of America Merrill Lynch Wealth Management, UBS AG Group's Wealth Management in the Americas and Wells Fargo Advisors lost market share as less wealthy clients went elsewhere.

Legacy brokerages' market share fell to 37 percent in 2016 from 41 percent in 2012, while the portion held by direct channel firms such as Charles Schwab and Fidelity grew modestly to 21 percent from 20 percent.

More than 35 million Americans now have between $250,000 and $1 million, a wealth bracket the industry calls mass affluent. BCG senior partner Brent Beardsley said that many mass affluent savers hold a lot of their money in a retirement account, like a 401(k), which oftentimes are managed by a company like Schwab or Fidelity.

"(They have) a natural structural advantage" over legacy brokerages, Beardsley said.

BCG's annual study also showed Switzerland remained the world's biggest centre for managing offshore wealth with $2.3 trillion, followed by Hong Kong with $1.1 trillion and Singapore with $0.9 trillion.

The two Asian centers have grown at yearly rates of 11 and 10 percent respectively over the past five years, more than three times the 3 percent rate Switzerland has posted.

It is in the fast-growing markets that large wealth managers including Swiss banks UBS and Credit Suisse are casting wider nets.

The Swiss banking secrecy from which they long profited has been weakened, meaning rich people from around the world can no longer easily use the Alpine Republic to stash wealth away from tax authorities at home.

The changes have put Switzerland in fierce competition with faster-growing centres like Hong Kong and Singapore. 

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Number of billionaires worldwide jumps 10 pct: study

The number of billionaires worldwide rose above 1,500 last year, a 10 percent jump from 2015, due largely to a surge in Asia, Swiss banking giant UBS and auditors PwC said Thursday.

In an annual report, UBS and PwC said that last year marked the first time it recorded more billionaires in Asia (637) than in the United States (563), crediting the rise of China's entrepreneurs.

Europe took third spot in the report's billionaire database with 342.

The total wealth controlled by the ultra-rich group also shot up to $6 trillion (5.1 trillion euros), marking a 17 percent rise on the previous year when billionaire wealth actually shrank, the report said.

The group of 1,542 billionaires either owns or partly controls companies that employ 27.7 million people, it added.

While the chasm between the world's rich and poor remains a burning political issue across the continents, UBS and PwC said that billionaire assets are increasingly likely to benefit the needy.

"Looking further forward, we estimate that $2.4 trillion (2.1 trillion euros) of billionaire wealth will be transferred in the next two decades as billionaires age, with a significant amount going to philanthropic causes," the report said.

Three quarters of those who newly became billionaires in 2016 were from China and India, the findings showed.

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Here come the robots: Davos bosses brace for big tech shocks

DAVOS, SWITZERLAND - Implantable mobile phones. 3D-printed organs for transplant. Clothes and reading-glasses connected to the Internet.

Such things may be science fiction today but they will be scientific fact by 2025 as the world enters an era of advanced robotics, artificial intelligence and gene editing, according to executives surveyed by the World Economic Forum (WEF).

Nearly half of those questioned also expect an artificial intelligence machine to be sitting on a corporate board of directors within the next decade.

Welcome to the next industrial revolution.

After steam, mass production and information technology, the so-called "fourth industrial revolution" will bring ever faster cycles of innovation, posing huge challenges to companies, workers, governments and societies alike.

The promise is cheaper goods and services, driving a new wave of economic growth. The threat is mass unemployment and a further breakdown of already strained trust between corporations and populations.

"There is an economic surplus that is going to be created as a result of this fourth industrial revolution," Satya Nadella, chief executive of Microsoft, told the WEF's annual meeting in Davos on Wednesday.

"The question is how evenly will it be spread between countries, between people in different economic strata and also different parts of the economy."

Robots are already on the march, moving from factories into homes, hospitals, shops, restaurants and even war zones, while advances in areas like artificial neural networks are starting to blur the barriers between man and machine.

One of the most in-demand participants in Davos this year is not a central banker, CEO or politician but a prize-winning South Korean robot called HUBO, which is strutting its stuff amid a crowd of smartphone-clicking delegates.

But there are deep worries, as well as awe, at what technology can do.

A new report from UBS released in Davos predicts that extreme levels of automation and connectivity will worsen already deepening inequalities by widening the wealth gap between developed and developing economies.

“The fourth industrial revolution has potentially inverted the competitive advantage that emerging markets have had in the form of low-cost labor,” said Lutfey Siddiqi, global head of emerging markets for FX, rates and credit at UBS.

“It is likely, I would think, that it will exacerbate inequality if policy measures are not taken.”

An analysis of major economies by the Swiss bank concludes that Switzerland is the country best-placed to adapt to the new robot world, while Argentina ranks bottom.

WINNERS AND LOSERS

There will be winners and losers among companies, too, as new players move into established industries with disruptive new technologies.

That is something uppermost in the minds of Davos attendees such as General Motors CEO Mary Barra, who is confronting the threat of driverless cars - another science fiction that has become science fact - or bank boss Jamie Dimon at JPMorgan Chase, facing competition from digital "fintech" start-ups.

Such innovations, coupled with the rise of robots in both the manufacturing and service sectors, could automate vast numbers of jobs. Oxford University researchers predicted in 2013, for example, that 47 percent of U.S. jobs were at risk.

Such fears about technology destroying jobs are not new. The economist John Maynard Keynes famously cried wolf in 1931, by issuing a warning of widespread "technological unemployment".

The question is whether this time will be different, given the speed to change and the fact that machines now offer brain as well as brawn, threatening professions previously seen as immune, such as entry-level journalism or routine financial analysis.

Pessimists fear this will hollow out middle-income, middle-class jobs on an unprecedented scale, with the WEF itself predicting that more than 5 million jobs could be lost in 15 major economies by 2020.

But ManpowerGroup CEO Jonas Prising is more upbeat for the long term. "If history is any indicator, we'll have more jobs being created in the end than are going to be destroyed," he said.

However, beyond the Davos talking-shop there are doubts about how well business leaders will actually plan for the future.

"When you have these very big levels of disruptive change you need some pretty serious thinking and action," said Ian Goldin, professor of globalization and development at Oxford University.

"But the CEO who really looks years ahead and looks at broader social issues is rare, even in Davos."

source: www.abs-cbnnews.com

Technology replacing schmoozing?

ZURICH - No longer is schmoozing over long lunches and fine wines enough; Swiss private bankers are turning to video games and virtual reality to attract a new generation of skeptical clients and see off digital rivals.

Technology is likely to appeal to multi-tasking millionaires with little time to spare. However, wealth managers must also win the trust of younger investors who have experienced two downturns during their formative years plus a furore over Swiss banks' involvement in tax evasion.

In a fifth floor office just off Zurich's main shopping street, researchers at UBS are testing dozens of technologies to see what could make the world's biggest wealth manager more appealing as fortunes pass to the next generation.

"How do you get under the skin of clients today, because they often work on their mobiles and they manage their wealth in their spare time," said Dave Bruno, head of UBS's innovation lab. "It might be in the bathroom, it might be waiting for a flight."

Bruno and his team are designing video games, including a prototype puzzle for iPads and smartphones, and looking at virtual reality simulations to help people visualise what are often complex investment portfolios.

They are also working on technologies that allow clients to log into their accounts using their voice patterns and facial features, doing away with the time consuming and frustrating need to answer security questions.

UBS has opened a second research lab in London and plans another for Singapore later this year. It is also exchanging ideas with financial technology start-ups as well as Google and Amazon.

FACEBOOK, NOT FERRARI

UBS Chief Operating Officer for wealth management Dirk Klee said clients need investment advice and performance. "It's not just being a 'concierge service'," he said.

Many millionaire and billionaire customers, whose ages average more than 65, still welcome the concierge service - such as sorting out the paperwork on their new Ferrari.

But in the next few years private banks must deal increasingly with clients who are perhaps 30 years younger as what is often family wealth passes down to the next generation. These people grew up with the tech bubble bursting around the turn of the century, followed by the 2008 financial crisis.

This is shaking things up at Switzerland's private banks, which are already reeling from a U.S.-led campaign against tax cheats. This has effectively ended the industry's secrecy rules and encouraged publicity-shy customers to withdraw hundreds of billions of francs from Swiss accounts.

Meetings are increasingly held over video links instead of in banks' wood-panelled rooms overlooking Lake Geneva, while clients will look to social networks for investment advice and to compare portfolio performance.

Some of the technology being investigated is less familiar than simple video conferencing. It includes Facebook-owned virtual reality goggles Oculus Rift, which can present clients' portfolios as a city.

"Which pieces of your city are missing? You don't have a water system in place, which might be your investments into a certain area in the alternates market," UBS's Bruno said.

"Your skyscrapers are too tall, you're invested too high here. There are ways to use the new technology to do things in finance that are quite cool and interesting for our business model."

DIGITAL RIVALS

Cool technology notwithstanding, banks still need to get the basics right, according to Felix Wenger, a director at the Zurich office of the McKinsey consulting firm.

"The industry is still in the process of making sure things run smoothly and don't break down," said Wenger, who compared the technology wave in private banking today with the motor industry in the 1950s when it needed to ensure cars ran safely and reliably.

New digital wealth managers, such as British-based Nutmeg and U.S.-based Wealthfront, are keen to play up the trust issue. "Almost universally, every study is showing that investors under 35 have grave mistrust of existing banks and brokerages, and are seeking a solution from the technology industry," Wealthfront Chief Executive Adam Nash said.

Sometimes called "robo advisers", these online services ask customers questions about who they are and what they are saving for, just like conventional advisers, but then they use an algorithm to devise an investment strategy.

Wealthfront, which was launched in 2011, has over $2.4 billion in client assets but it is dwarfed by established private banks where managed assets can top $1 trillion.

While the robo advisers can target people with a minimum to invest of $5,000, many wealthier individuals still want a tailor-made service with a well-established name.

"Trust is the fundamental problem for online players," McKinsey's Wenger said. "You don't wire $1 million to 'onlinewealthmanager.com', but you would to a well-known banking brand."

Ultimately, Klee believes banks which offer added value to clients will survive, just as Internet pages full of medical advice did not make doctors redundant.

"That's what's happening in banking. You need a highly qualified adviser who navigates you through all the data that is available," he said.

source: www.abs-cbnnews.com

How Wall Street came out on gay marriage

WASHINGTON - On March 6, the day of the U.S. Supreme Court's deadline for legal briefs backing same-sex marriage, gay rights activists quietly celebrated a victory on Wall Street.

Twenty-eight of the country's biggest financial firms had made an unprecedented show of unity in support of gay marriage by urging the court to strike down state laws banning same-sex unions.

That was double the number that signed on to a similar effort in 2013, signaling how the traditionally conservative financial industry has come to publicly embrace gay rights. Then, the Supreme Court struck down a federal law that denied benefits to same-sex couples.

"Together, we pushed Wall Street to a place our industry has never gone before," Daniel Maury, a managing director at UBS Group AG, wrote in a celebratory email to his fellow members of Open Finance, a group of gay and lesbian Wall Street employees that lobbied hard for banks' signatures.

The 28 included major U.S. investment and retail banks, the "big four" accounting firms and financial information firms Thomson Reuters Corp, which owns Reuters, and Bloomberg LLP.

Wall Street's evolution on gay rights mirrors a broader shift on the issue in corporate America and society. But in some ways it has been a more difficult transition for a financial industry known for a macho culture famously portrayed in the 1987 movie "Wall Street" and where homophobic sentiment has in the past been widespread.

Peter Staley, who worked at J.P. Morgan in the 1980s before becoming a high-profile HIV/AIDS activist, recalled constant homophobic comments when he was a bond trader.

"For a closeted gay man, it was probably the worst environment I could have chosen," he said. "It was very infuriating and humiliating for someone who had a dark secret like I had."

Wall Street has become a far less hostile environment for gay and lesbian employees, most workers say.

In the brief, banks and other companies said they face additional costs and administrative headaches due to the patchwork of state marriage laws that help determine how benefits are administered and taxes calculated.

Wall Street also has particular cause to embrace gay rights as part of its sharp competition for top young talent with more openly liberal Silicon Valley firms, several banking sources said.

Support from high-profile bankers, such as Goldman Sachs Group Inc CEO Lloyd Blankfein, has helped accelerate the change in attitudes.

"It's fair to say it's kind of a night and day difference" when compared with tales of the trading floor from decades past, said Mark Lane, director of media relations at Barclays Plc in New York and head of a gay and lesbian employee group.

James Gorman, CEO of Morgan Stanley, said the problem had not entirely gone away, particularly in the traditionally boisterous atmosphere of trading floors.

"It is there in subtle ways and probably in unsubtle ways, for example, on trading floors I'm sure," Gorman said at a summit this week organized by Out on the Street, a gay and lesbian networking group that focuses on senior executives.

Morgan Stanley, Barclays and Goldman Sachs all signed the brief.

A number of banks, including Barclays, have rolled out so-called "straight ally" programs over the past five years in which employees act as supporters of gay and lesbian colleagues. Participants generally post a sign on their desks identifying them as allies so gay and lesbian workers can easily spot them.

NOT ALL BANKS SIGNED

In a ruling due by the end of June, the Supreme Court will decide whether states can ever restrict marriage to heterosexual couples. Same-sex marriage is currently legal in 37 states.

After the court said on Jan. 16 that it was taking up the cases, Open Finance was tasked by gay rights group Freedom to Marry with signing up Wall Street firms to the "friend-of-the-court" brief that was ultimately signed by 379 companies and business groups.

Although the nine justices aren't required to focus attention on the briefs, dozens of which have been filed on either side, they can influence how cases are decided.

Maury and others involved in the campaign said the main obstacle to winning the banks' support was bureaucratic rather than any opposition to gay marriage.

The effort in 2013 to sign Wall Street firms up to that year's brief was an ad hoc move led by Maury. This time there were weekly meetings and a spreadsheet that showed the status of each firm.

Their challenge was to get approval from different departments, including legal and public affairs, before chief executives made the final decision by the March 6 deadline.

Gay marriage opponents, who lack any support from the business community in briefs filed at the Supreme Court, say well-funded activists have intimidated companies into supporting their cause.

Nine Wall Street companies that are members of Open Finance did not sign the brief. Seven were foreign firms and some said they were not asked to join.

One of the nine, which Maury declined to identify, questioned whether employees would ask the firm to take a stance on other divisive social issues, such as abortion.

Bank of America Corp proved to be a challenge for Open Finance. It had not signed on to the 2013 brief and does not generally speak out on issues like gay marriage.

Todd Sears, the founder of Out on the Street, helped close the deal.

Sears called on Mark Stephanz, an openly gay vice-chairman at the bank and a member of Out on the Street's leadership committee.

"We gave him as much information and ammunition as he needed," Sears said. That included the list of other banks that were poised to sign. Bank of America signed up on March 2, four days before the deadline, Maury said.

Bank of America declined to comment on its internal deliberations. "Our decision to sign the brief is consistent with our HR policies and the way we treat our employees," the bank said in a statement. (Additional reporting by John McCrank in New York; editing by Stuart Grudgings.)

source: www.abs-cbnnews.com

Metrobank prices $723-M rights offer at discount

MANILA - Metropolitan Bank & Trust Co (Metrobank) priced on Tuesday its rights issue at P73.50 ($2) per share, a discount of about 21 percent to the stock's average price since the start of the year.

The Philippines' second-largest lender in terms of assets could raise as much as P32 billion ($723 million) from the share offer running from March 23 to March 27, the country's largest equity offering in two years.

The bank is offering one rights share for every 6.3045 common shares held as of March 18, it said in a filing to Manila stock exchange.

Shares of Metrobank rose as much as 0.7 percent to hit P94.50 in a largely flat market.

Analysts said the discount was aimed at attracting as many subscribers as possible. "I think it's more of an incentive for the shareholders to exercise their right," said April Lee Tan, research head at COL Financial in Manila.

The bank is seeking to raise Tier 1 capital to comply with Basel III standards, keeping pace with loan growth while bracing for stiffer competition after the Philippines enacted a law allowing foreign banks to take full control of domestic lenders.

JPMorgan and UBS AG are joint global coordinators, joint international lead managers and joint book runners for the issue. The Philippines' First Metro Investment Corp is the sole domestic lead manager and HSBC is the transaction's co-manager.

source: www.abs-cbnnews.com