Investors entered 2024 knowing that rate cuts were coming, it was simply a question of when. Consensus that central banks had reached the end of their tightening campaigns fuelled big bets on risk assets like equities and crypto. The US’s S&P 500 index rose more than 20% for the second consecutive year as investors clamoured for a piece of AI powerhouses like Nvidia. Bitcoin surged 120%, helped in the latter weeks of the year by the election of Donald Trump, who pledged to loosen regulatory standards. That made it another good year for the wealthy. According to our Wealth Sizing Model (page 14), the global population of HNWIs expanded by 4.4% to more than 2.3 million people. The population of individuals worth at least US$100 million climbed 4.2%, surpassing the 100,000 mark for the first time. “Rates coming down has clearly played a role in supporting risk asset prices,” says James Pomeroy, a global economist at HSBC. “You could also park capital in cash at the beginning of last year and get 5% in most parts of the world. That plays a huge role in keeping wealth growing for people who have been able to accumulate it historically.” WEALTH HUBS America’s position as the world’s primary hub for wealth creation remains unchallenged. Almost 40% of the world’s HNWI population live in the US, compared with 20% for its nearest rival, China. Japan is the only other nation to boast a share of wealthy individuals larger than 5%. It’s perhaps unsurprising, then, that the US led the world in wealth creation during 2024, with a 5.2% expansion in its population of HNWIs. Asia was close behind with growth of 5%, followed by Africa, which saw a 4.7% surge, albeit from a much lower base. Australasia’s HNWI population rose 3.9%, helped by its access to both Asian and North American markets. Appetite for risk assets like equities has expanded rapidly in emerging markets like India, while European and Japanese attitudes to investing tend to be more conservative, Pomeroy says. India now has 85,698 HNWIs, which puts it fourth behind the US, China and Japan.
EMERGING ENTREPRENEURS But this is not just about the rich getting richer. An explosion in smartphone access in emerging economies has created “a very entrepreneurial population that is able to grow businesses internationally more quickly than they otherwise would have done,” Pomeroy explains. “This has created a start-up culture that’s been a big part of the growth story in places like India and the Philippines,” he adds. “These entrepreneurs can then become super wealthy, so we’re seeing a broadening out from that old Asia driven by manufacturing into a new Asia with a high-tech enterprise culture.” This economic dynamism is vital for wealth creation. Regional economies lacking it tend to occupy lower positions in our Wealth Sizing Model. The population of individuals worth at least US$10 million in the Middle East rose 2.7% last year, placing the region fifth. Almost 10% of its population of HNWIs fall into our US$100 million-plus category, a far larger proportion than any other region, which hints at the scale of wealth generated by legacy energy economies. Many of the region’s largest economies, most notably Saudi Arabia, are seeking to diversify away from oil and gas by investing heavily in tourism and hospitality, technology and innovation, biotechnology and renewable energy. Whether they are successful will show up in our numbers in the years ahead. DEMOGRAPHIC HEADWINDS Europe occupies the final place in our rankings, with 1.4% growth, behind Latin America. A September report by Mario Draghi, Italy’s former prime minister, said the EU lacked competitiveness with comparable economies, in part due to its complex and bloated regulatory system. The bloc issued approximately 13,000 new regulations in the five years to 2024, compared with just 5,500 in the US, for example. “Europe is overburdened with regulation,” says Kallum Pickering, Chief Economist at Peel Hunt. “Just compare it with places like Singapore, which are so pro-business. Investors know where they are likely to get better returns.” Demographic headwinds arguably pose even more complex challenges. Unlike Asia, where many working age populations are growing at a rate well in excess of 3%, Europe’s working age populations are generally declining, and business sentiment remains weak. “Anything growing at all in Europe is incredible when you consider the demographics,” Pomeroy says. “You’re also looking at a market with relatively subdued growth prospects, which takes away a lot of that willingness to invest and take risks, certainly compared with other, more dynamic economies.”
