Where do the Russian rich people disappear and what is the reason for the reduction in their total capital?
In 2016, the number of Russian ultracheits (ultra-rich citizens with at least $ 30 million) fell by 7.2% to 3,780 people, and their total capital decreased by 6.2%, to $ 666 billion. The total number of super-rich people around The world grew by 3.5% last year to 226 450 people, while the total assets owned by them increased by 1.5% to $ 27 trillion. This is evidenced by the data of the annual study of the World Ultra Wealth Report, prepared by the consulting company Wealth-X, which specializes in studying the financial behavior of ultrastrong investors. Her reports are regularly quoted in leading financial publications, including The Wall Street Journal and the Financial Times.
Geography of Wealth
The United States became the absolute leader in the number of dollar multimillionaires and billionaires in 2016. The number of super-rich Americans increased during the reporting period by 6.7%, to 73 110 people, and their combined state - by 6%, to $ 8.7 trillion. Japan ranks second in terms of the number of rich: over the past year, this indicator in the country increased by 14.7%, to 16,740 people. The total assets of Japanese ultracheits also increased - by 13.8%, to $ 1.5 trillion. China tops the top three, where the number of super-rich citizens showed an increase of 3.6%, to 16 040 people, and their welfare by 2.2%, to $ 1.9 trillion. Russia in this rating took only 13th place, losing to such countries as South Korea, India and Italy.
Among cities, the largest number of super-rich can boast of New York. According to Wealth-X, there are 8,350 ultracheets in this metropolis, and their number increased by 9% over the past year. Following is Hong Kong, home to 7650 rich people (an increase of 4.1%), and Tokyo, where the number of multimillionaires was 6040 people (an increase of 17.5%). Moscow got only 30th place: in the Russian capital, according to Wealth-X data, only 960 ultracheets live, which is 4% less than in the previous year. By the number of rich people, Moscow lost to such cities as Carlsbad (California, USA), Munich and Seoul. It is noteworthy that of the 32 cities listed in the rating, only Moscow (only 3,630 people, minus 14.6%) showed the fall of this indicator, except Moscow.
The Wealth-X study notes that the reduction in the condition of the super-rich in Russia (and also in the UK, Mexico and Brazil) was also due to the strengthening of the US dollar and the fall in commodity prices, which constitute a significant export item in these countries.
Exodus of the rich
Experts interviewed by RBC agree that the situation on financial markets is by no means the only reason for the decrease in the number of Russian rich. This may also be related to migration and the change in tax residency due to changes in tax legislation. In 2016, Russia joined the agreement on the automatic exchange of financial information in the framework of the OECD global plan to combat tax evasion. In addition, from January 1, 2015, there is a law on controlled foreign companies, which obliges Russians to declare their foreign business in Russia and pay taxes on income from it.
According to Grigory Sedov, deputy general director for work with private clients of Aton Aton, over the past two years, about 20-30% of ultra-strong Russians have changed their tax residency. This trend is confirmed by the partner of PwC Maxim Kandyba, who noted that his company records an increase in the number of requests from clients related to moving to a permanent place of residence or a change in the tax residency. The main directions for the move of Russian ultrasignettes are Great Britain, Cyprus, Switzerland, Monaco and Italy, RBC financiers told.
In addition to the tax policy, the deterioration of the economic situation in the country also affected the reduction of the number of super-rich Russians. Partner UFG Wealth Management Dmitry Klenov believes that the reduction in the number of ultrahinets reflects the general impoverishment of the Russian population as a result of the crisis. With him agrees the head of the investment fund UHNWI Anton Tolmachev. He notes that the decline in the well-being of the Russian population directly affects the ultranaints. "In order for rich people to appear in the country, they need to live and earn, but in our economy there is no reason for growing demand for their goods," the financier cites an example.
According to him, when the pace of economic growth slows down, and the economy falls into a state close to recession, the gap between the rich and the poor always increases. "In this situation, only those ultra-markets that have more than a billion dollars grow rich, which is not to say about customers with a fortune of up to $ 100 million. With the selection of Wealth-X, this could negatively affect the overall figure," the expert explains.
However, the Wealth-X study should not be taken as a dogma: the real situation may not be so unambiguous, adds the director of the Alfa Capital Wealth program Andrei Babiyan. "There are many studies on this subject, which show a contradictory dynamics. For example, some of them predict only an increase in the number of super-rich clients in Russia, "the expert says.
Where the rich are investing
According to Wealth-X, the world's ultracheaters prefer to keep the state in liquid assets, primarily in cash. Their share in the total portfolio of the super-rich is 35.4%, or $ 9.6 trillion. In second place - investments in private equity (Private Equity). They hold in the total portfolio of 33%, or $ 8.9 trillion. Shares and bonds account for 25% of the portfolio, or $ 6.7 trillion, while real estate and luxury goods - 6.6%, or $ 1.7 trillion.
Anton Tolmachev notes that such a portfolio is not typical for Russian ultracheets. According to him, most of the assets of Russians traditionally consist of real estate and bonds. "In some cases, the volume of assets related to real estate, even up to 50%," - said the expert. In addition, says Tolmachev, direct investment has not taken root in the Russian market, and their share in the portfolio of wealthy Russians is minimal.
In turn, Dmitry Klenov argues that most of the assets of Russian ultracheits are concentrated not only in real estate, but also in Private Equity. "Approximately 70-80% will be divided between these groups of assets. The rest is cash and liquid exchange instruments, "the expert says. At the same time, notes Klenov, more than half of the ultracheits ignore portfolio diversification and defensive assets.
Grigory Sedov adds that, in addition to real estate, private equity funds and securities, rich Russians are actively invested in various technological projects. A similar point of view is shared by Andrei Babiyan. "The trend of investing in high-tech and start-up projects is actively developing. Of course, this is a small percentage of the overall condition, but this type of investment is gaining more popularity among this category of investors, "- says the financier. According to him, Russian ultranaints still prefer conservative assets with maximum protection, like deposits and bonds with high credit quality.
Thus, there is no common opinion among Russian wealth managers about the behavior of Russian ultracheits. However, a recent study by Wealth Report: Russia of the Swiss bank Julius Baer said that 36% of the portfolio of assets of the average Russian millionaire account for own business, 26% for cash, valuable property, stocks and bonds, 20% for investments in other private Enterprises, 13% - for residential real estate. At the same time, the share of securities gradually grows as you acquire the skills of financial investment.