Credit Suisse publishes Global Wealth Report 2010

Last week, Credit Suisse announced the publication of the Global Wealth Report 2010.  It’s an inaugural study which aims to “provide the most comprehensive study of the world wealth”. In contrast with other traditional studies more focused on the very top levels of the wealth pyramid, the 48 pages of the CS Study analyzes the distribution of 200 Trillion USD along geographical regions, demographic groups, men and women, and asset classes.

The study highlights some rather counterintuitive aspects of the wealth distribution, like e.g. the dynamic growth of wealthy individuals on the lower echelons of the wealth pyramid (which corresponds to the emerging economies) where wealth per adult tripled in Australia, China, New Zealand, Poland and Romania, and is estimated to have risen by a factor of almost five in Indonesia and Russia. As well as the quite prosperous situation for the world wealth accumulation in the past decade, with the understandable exceptions of Iceland and Argentina, whose wealth fell by 30%. Unsurprisingly, the performance of Japan was also unremarkable, rising by only 5% in US dollar terms, all attributable to appreciation of the yen. Last but not least, the remark that the United States had modest gains by international standards.

The Definition of Wealth

In opposition to the classical Banks definition,  where Wealth is considered as the amount of “investable assets”, Credit Suisse defines household net worth or “wealth” as the value of financial assets plus non-financial assets (principally housing) owned by individuals less their debts. In the study, the results are expressed in terms of the global population of adults, which totaled 4.4 billion in 2010.

According the methodology and segmentation followed by the Credit Suisse’s study, to be among the wealthiest half of the world, an adult needs only USD 4,000 in assets, once debts have been subtracted. However, each adult requires more than USD 72,000 to belong to the top 10% of global wealth holders and more than USD 588,000 to be a member of the top 1%.

Other staggering observation of the specialists from Credit Suisse is the fact that Wealth still is unevenly distributed. The bottom half of the global population possesses less than 2% of global wealth. In sharp contrast, the richest 10% own 83% of the world’s wealth, with the top 1% alone accounting for 43% of global assets.

The future clients of the Banks

In my point of view, one of the most important findings of this study is the current situation of the Middle of the pyramid:  The billion adults in the USD 10,000–100,000 range. Representing USD 32 trillion of the total world wealth, it certainly carries economic weight. This tier has the most regionally balanced membership, although China now contributes almost a third of the total. The wealth range would over the median person over most of his adult life in high income countries. In middle income countries it would apply to a middle class person in middle age.