Hassouna Al Tayeb (Abu Dhabi)
The United Arab Emirates ranks fifth globally and first regionally in attracting global transnational wealth, with a value of $600 billion, according to the Boston Consulting Group’s 2021 report.
According to the report, Switzerland topped the list with about $2.5 trillion, followed by Hong Kong at $2.3 trillion, Singapore at $1.5 trillion, then the United States of America at $1.1 trillion, followed by the United Arab Emirates, while the United Kingdom came at the bottom of the list with about $500 billion. The report stressed that the global wealth sector continues to grow despite the Ukrainian crisis, high inflation rates and market turmoil around the world, especially as it is concentrated in areas far from the birthplace of the crisis, such as Hong Kong, which is expected to overtake Switzerland as the largest center for cross-border assets by 2026.
The report expects global wealth to grow by 5.3% annually until the end of 2026.
According to the report, the total value of financial and real estate assets around the world increased to about $530 billion at the end of 2021.
In the Foundation’s projections for the next five years until 2026, financial wealth alone is likely to grow by 5% annually, adding between $75 and $80.6 trillion to the total.
Despite the effects of the recent significant decline in financial markets, a recovery is likely in these markets, as an addition to the growth achieved last year at 10.6%, the largest increase in 10 years.
Economic growth
The report noted that economic growth may suffer in the short term, but it is expected to recover over the next year and beyond.
The Foundation’s report suggested that even if the Russian-Ukrainian war continues until 2023 and the severity of the sanctions imposed on Russia intensifies, the future of wealth accumulation will remain positive, but on the condition of non-military escalation and NATO intervention.
There is cause for optimism, that due to investors’ concern about inflation, individuals and institutions may convert more money into shares, to counter the effects that result from the rise in prices, and real estate prices may rise, for the same reasons as well, according to the same report. He pointed out that a large share of global wealth is concentrated in areas as far from the headquarters of the current crisis as North America and the rapidly growing region of Asia and the Pacific. The report finds that, while global wealth portfolios are not immune from market fluctuations, they have managed to recover from recent shocks, including from the economic recession and the repercussions of the Covid-19 epidemic.
Singapore and Hong Kong
As a result, the Foundation’s report expects the continued recovery of Singapore and Hong Kong, as centers of global wealth management, and Hong Kong overtaking Switzerland, as the largest center of transnational wealth in the world by 2026.
Hong Kong is also expected to witness significant financial inflows from China, according to the report.
private financing
Private financing for digital wealth management institutions set new records in 2021, and private financing invested in financial technology companies for wealth management increased from $3.2 billion in 2020 to $14.5 billion in 2021.
The report suggested that there is still an opportunity for old wealth management centers, such as New York, Zurich and London, to take advantage of digital technology and apply it in developing customer services, but at the same time others warned that, in order to implement this, these centers must move quickly to win these customers. .