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The fortune of billionaires around the world reached an unprecedented sum of 10,200 billion dollars during the health crisis, found a report by UBS bank and consulting firm PwC, published Wednesday, October 7. An increase in wealth which illustrates the extent to which financial markets play a role in accelerating inequalities during crises.
Elon Musk, the eccentric boss of Tesla or SpaceX, has benefited financially from the pandemic. While he railed on Twitter against social distancing measures, he quadrupled his fortune, which increased by $ 76 billion to $ 103 billion.
While he was the richest billionaire between April and June, he is far from the only one. Fortunes of the ultra-rich rose 27.5% to $ 10.2 trillion, Swiss bank UBS and consulting firm PwC found in their 2020 report on billionaires, published Wednesday, October 7. A record level of fortune for the 2,000 billionaires studied by the authors of the report, which provides a stark contrast to the millions of individuals who have lost their jobs due to the health crisis or the million French people who fell into poverty during this period.
The Kings of Tech
Like the boss of Tesla, executives of tech companies have made the most money in recent months, say the report’s authors. If UBS and PwC avoid naming names, just consult the Bloomberg Billionaires Index to see that Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Jack Ma (Alibaba) or Steve Ballmer (ex-CEO of Microsoft) are the big winners of the moment.
And these 2.0 ship captains didn’t get that rich by selling more. This great leap forward in the fortune of billionaires comes mainly from the financial markets, underlines the report.
On the one hand, tech moguls have benefited from the profound changes the health crisis and lockdown have brought about in consumption and work habits. The success of video conferencing apps like Zoom and online shopping platforms like Amazon have convinced investors to bet on anything that shines technologically. “Tech stocks were the first to rebound on the stock market, and they gained much more than the others, which accentuated their lead,” confirms Alexandre Baradez, head of economic analyzes for the financial consulting firm IG, contacted by France 24. And since these CEOs often own shares in their companies, they have benefited greatly from this tech rush.
Actions, what else?
On the other hand, “the financial markets have, as in every crisis, contributed to widening inequalities”, underlines Alexandre Baradez. At the start of the pandemic, the stock markets took the hit, registering drops of around 20%, which presented “an opportunity for investors,” notes the financial analyst. But to buy at the bottom of the wave – in the midst of the crisis – you need to be strong enough to take the risk of registering losses while the stock market recovers. In other words, only the richest could afford to invest heavily in the midst of the financial storm.
When the market environment started to improve from April, these billionaires profited more than the rest. “You have to admit that they have the guts to go there”, Josef Stadler told the Guardian, head of UBS Global Family Office, the department that manages relationships with high net worth clients.
Bravery ? Certainly, but there is also what Alexandre Baradez calls the effect… “Tina”, in other words “There is no alternative” (there is no alternative). These super-rich have wallets that need to be invested in order to make money … but where? Government bonds, that is to say sovereign debt, yield very little because central banks issue them at very low rates, in order to raise money to finance the stimulus packages.
Real estate is also not very attractive during this crisis “as buyers are increasingly looking to buy outside major urban centers to find fresh air,” said the analyst at IG. City centers, where luxury real estate is found, which is the investment par excellence for large fortunes, is therefore not popular at the moment. “So there are still actions”, concludes Alexandre Baradez.
In times of crisis, investments in equities – generally considered to be more risky – prove almost automatically to be very lucrative for those who have the means to play the game. “The structure of the mechanisms for safeguarding the economy and stimulating activity in times of crisis favors large companies ”, summarizes Alexandre Baradez. The public authorities will seek to save above all the banks and the large groups which employ the most people or whose economic weight is the most important. The financial markets know this, which means that when central banks set in motion their policy of safeguarding the economy, it is the actions of these large groups that rise the fastest.
And ordinary people cannot afford to take advantage of this windfall because even at the bottom of the wave, the share prices of these large groups remain expensive. This trend is only increasing for the benefit of the richest: since the 2008 crisis, “the holding of the number of shares by the wealthiest households has only increased”, points out Alexandre Baradez. .
This inequality amplifying effect of the stock market during crises does the business of billionaires to a certain extent. “There is a real risk that this accumulation of wealth at such a sensitive time will push some sections of the population to the limit,” admits Josef Stadler, the UBS banker. Today, the idea of a backlash – social, regulatory – against the richest seems entirely possible.
But beyond a hypothetical popular revolt against the ultrariches, this unprecedented increase in the fortune of billionaires is above all a democratic problem, Judge Alexandre Baradez. For him, this trend “pushes the electorate more and more into the arms of extremes.” And the fact that the UBS and PwC report notes that only one in ten billionaires have publicly pledged a share of their fortune to support efforts to save the economy is certainly not going to improve their image. eyes of opinion.