Saturday, December 29, 2018

Pakistan Among Top 10 Countries With Fastest Growing Ultra-Rich Population

Pakistan is among the countries with top 10 fastest growing population of ultra-high net-worth  (UHNW) individuals over the last 5 years. Bangladesh with 17.3% UHNW growth tops the list followed by China (13.4%), Vietnam (12.7%), Kenya (11.7%), India (10.7%), Hong Kong (9.3%), Ireland (9.1%), Israel (8.6%), Pakistan (8.4%) and United States (8.1%), according to World Ultra Wealth Report 2018.

Ultra-Rich Wealth Growth in 5 Years. Source: Wealth-X

Ultra-Rich Definition: 

The report compiled by Wealth-X defines ultra-high net-worth (UHNW) as an exclusive group of wealthy individuals located across the globe, each with a net worth of $30m or more. Only the top 1.1% of the world's 22.25 million millionaires qualify for inclusion in UHNW group.

Here's an excerpt of the Wealth-X report:

"According to Wealth-X estimates of global private wealth, the number of individuals with net assets of more than $1million totaled 22.3 million in 2017, with a combined net worth of $91.7 trillion. A breakdown by tier shows not only the considerable share of wealth held by the small cohort of UHNW individuals, but also that the ultra wealthy experienced faster growth in net worth than each of the three lower tiers. Almost 90% of all millionaires had a net worth of between $1m and $5m, with this group of 19.6 million individuals holding a 40% share of global millionaire wealth. Exclusivity rises significantly above the $5m threshold, as does average net worth. For example, those individuals with net assets of between $10m and $30m – the closest to attaining UHNW status – held 14% of global millionaire wealth, while accounting for a 3.6% share of the population. Rising higher still, the global ultra wealthy population accounted for just 1.2% of the world’s millionaires but held 34% of the collective wealth. Whereas population growth rates across the different wealth tiers were very similar in 2017, an increase of 16.3% in total UHNW wealth significantly outpaced the average rise of around 12.7% in each of the other three tiers."

Global Wealth Tiers. Source: Wealth-X
Credit Suisse Wealth Report:

Wealth-X report ranks Pakistan 9th in terms of ultra-rich individuals' growth while Bangladesh is ranked first and India ranked 5th. The relatively slower growth of ultra-rich in Pakistan is supported by other wealth reports as well. For example, data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Wealth Inequality:

Inequality is measured in terms of Gini index. It ranges from 0% for perfect equality (when everyone has the same wealth)  to 100% for total inequality (when all of the wealth is owned by one person).  On this scale, Pakistan’s Gini index is 52.6%, Bangladesh’s 57.9%, Sri Lanka’s 66.5%, Nepal’s 67.3%, China’s 78.9% and India's 83%.

Data Source: Credit Suisse Graph: Counterview


Household Wealth:

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

Ownership of Appliances and Vehicles: 

Growing household wealth in developing nations like India and Pakistan is reflected in  ownership of consumer durables like computers, home appliances and vehicles. This data is sourced from periodic household surveys like NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Durables Ownership in India and Pakistan. Source: KSBL


India-Pakistan Comparison:

Dr. Jawaid Abdul Ghani, a professor at Karachi School of Business Leadership, has recently analyzed household surveys in India and Pakistan to discover the following:

1.  As of 2015, car ownership in both India and Pakistan is about the same at 6% of households owning a car. However, 41% of Pakistani household own motorcycles, several points higher than India's 32%.

2. 12% of Pakistani households own a computer, slightly higher than 11% in India.

3. Higher percentage of Pakistani households own appliances such as refrigerators (Pakistan 47%, India 33%), washing machines (Pakistan 48%, India 15%) and fans (Pakistan 91%, India 83%).

4. 71% of Indian households own televisions versus 62% in Pakistan.

Durables Ownership Growth in Pakistan. Source: KSBL
Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Income/Consumption Growth in Pakistan. Source: KSBL

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014.  The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Summary:

Pakistan is among the countries with top 10 fastest growing population of ultra-high net-worth  (UHNW) individuals over the last 5 years. Bangladesh with 17.3% UHNW growth tops the list followed by China (13.4%), Vietnam (12.7%), Kenya (11.7%), India (10.7%), Hong Kong (9.3%), Ireland (9.1%), Israel (8.6%), Pakistan (8.4%) and United States (8.1%), according to World Ultra Wealth Report 2018. Credit Suisse wealth data for 2017 shows that Pakistan has the lowest wealth inequality in its region as measured by Gini index. Lower inequality can be seen in terms of rising percentage of households that can afford to buy durables like appliances and vehicles as reported by Dr. Abdul Ghani of Karachi School of Business and Leadership (KSBL).

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Wealth Inequality Lowest in South Asia

2018 Year-end Review of Science and Technology in Pakistan

Remittances From Pakistan Diaspora Jumped 21X Since Year 2000

Pakistan's Middle Class Larger and Richer Than India's

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor

11 comments:

Abid F. said...

I am not sure if this is necessarily a good thing. I would rather see the bottom tiers rising up faster.

Riaz Haq said...

Abid: "I am not sure if this is necessarily a good thing. I would rather see the bottom tiers rising up faster."

The share of income of the poorest 20% of Pakistanis has risen at the fastest rate in Asia Pacific region, according to UN


The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015. It's the highest share of income for the bottom income quintile in the region.

The countries where people in the poorest income quintile have increased their share of total income include Kyrgyzstan (from 2.5 per cent to 7.7), the Russian Federation (4.4 per cent to 6.5), Kazakhstan (7.5 per cent to 9.5) and Pakistan (8.1 per cent to 9.6). India's bottom income quintile has seen its share of income drop from 9% to 7.8%.

http://www.riazhaq.com/2017/12/rising-share-of-income-for-poorest-20.html?m=1

Rashid A. said...

So,

The filthy rich are become more filthy.

Dirt poor are becoming less dirty.

Is the middle class becoming less dirty or more filthy?

Anonymous said...

The Credit Suisse Report 2017 (your link is from a secondary source) is reliable but you have not looked at the 2018 report!

In it Pakistan is one of the very few countries where the wealth of average adult fell to $3816 from $4272! India rose from $6974 to $7024

https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report/tables.html

…...and the KSBL report is a slide show lacking references! Therefore a crosscheck data evaluation cannot be made.

Riaz Haq said...

Anon: "the KSBL report is a slide show lacking references! Therefore a crosscheck data evaluation cannot be made."

KSBL data derived from periodic household surveys used by researchers to measure such data include NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Dr. Jawaid Abdul Ghani teaches at KSBL that has been established in collaboration with Cambridge University's Judge Business School. Prior to his current faculty position, Dr. Abdul Ghani taught at MIT's Sloane School of Management and Lahore University of Management Sciences (LUMS). He has a computer science degree from MIT and an MBA from Wharton Business School.

Anon: In it Pakistan is one of the very few countries where the wealth of average adult fell to $3816 from $4272! India rose from $6974 to $7024


Pakistan's and several other countries' 2018 wealth decline is caused by currency exchange rates and stock market declines as explained by the CS Wealth Report 2018 as follows:

Much of the year-on-year variation in wealth levels
can be traced to changes in asset prices and
exchange rates. Exchange-rate movements usually
underlie the biggest gains and losses. During the
past 12 months, exchange rates have been
relatively stable compared to recent history. Among
the countries listed in Figure 2 (the G7 countries
plus China and India), exchange-rate changes
versus the US dollar did not exceed 3%, apart from
a 6% depreciation in Russia and India. This was
broadly true of the rest of the world, except for the
large depreciations recorded for Pakistan and Brazil
(both 14%), Turkey (23%) and Argentina (42%).

https://www.credit-suisse.com/media/assets/private-banking/docs/uk/global-wealth-report-2018.pdf

Riaz Haq said...

Rashid: " Is the middle class becoming less dirty or more filthy?"


Here's the data showing how Pakistan's middle class is doing:

https://www.riazhaq.com/2017/05/comparing-ownership-of-appliances-and.html

Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014. The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Pakistani Middle Class:

Only 5% of Pakistanis in $2-$4 per day per person income group have college degrees. But 20% of those in $4-$10 have college degrees, according to the survey results.

Credit Suisse Income and Wealth Data:

Average Pakistani adult is 20% richer than an average Indian adult and the median wealth of a Pakistani adult is 120% higher than that of his or her Indian counterpart, according to Credit Suisse Wealth Report 2016. Average household wealth in Pakistan has grown 2.1% while it has declined 0.8% in India since the end of last year.

Median wealth data indicates that 50% of Pakistanis own more than $1,180 per adult which is 120% more than the $608 per adult owned by 50% of Indians.

Anonymous said...

As communicated on your blog the first CPEC social uplift package has been announced. 20000 scholarships have be confirmed. Training for bureaucrats (though not in the news) is part of the package. The next package is tipped to involve KPK, followed by Sindh and Punjab. When the package implementation is complete, Pakistan is likely to jump 20-30 places in UN social attainment indicators. Thanks to our friends in China, we owe them our admiration.

https://www.dawn.com/news/1453086

Watch out for Saudi news agencies shortly.

Amjad M. said...

Middle class is the backbone and a stabilizing force of any society. Russia has many billionaires but average Russian is poor and a big majority lives below poverty level. Is that a measure of success of a country?

Same goes for many countries. In this case so called "Socialist" countries in Europe have much higher index in terms of quality of life index but lagging behind in number of billionaires.

The traditional Red China or Communist Russia are more capitalistic than most of the Western countries now.

Riaz Haq said...

Amjad: " In this case so called "Socialist" countries in Europe have much higher index in terms of quality of life index but lagging behind in number of billionaires."

Russia is not among the top 10 fastest growing ultra rich populations (worth $30 million plus) nor are EU economies except Ireland. The reason is simple: European economies are growing much more slowly. Europe’s best days are over. Little Ireland is thriving because of American tech companies setting up their European HQs there.

Riaz Haq said...

Where is the gold stock coming from?
Afshan SubohiUpdated December 24, 2018


https://www.dawn.com/news/1453328


According to a document forwarded by Iqbal Tabish, CEO, Pakistan Gems and Jewellery Development Company, the annual value of the national jewellery market is worth $10 billion or Rs1.4 trillion at the current exchange rate.

The annual consumption of gold is stated to be 170 tonnes. The WGC document claims that the sector employs 0.53 million people in about 90,000 units countrywide. It reports $4.058bn export of jewellery over 10-year period (2006-07 to 2016-17) that comes to around $400m of export per annum.

Mr Tabish clarified that the company is vested with the task of promoting the sector by providing skills training facilities and working towards globally accepted standardisation of gold quality in the country, to build brand credibility in the international market.

Defending the company that was launched in 2006, he said it has since established five training centres, five gem identification labs, two assaying and hallmarking centres, two gem exchanges and organised various trade shows.

“We have made these facilities operational but do not have a mandate to force gold traders to register or trade locally and globally only in gold hallmarked by the competent agency,”

Riaz Haq said...

Investment in prize bonds more than doubles to Rs814bln in last five years

https://www.thenews.com.pk/print/329778-investment-in-prize-bonds-more-than-doubles-to-rs814bln-in-last-five-years

Investment in prize bonds more than doubled to Rs814 billion during the past five years of Pakistan Muslim League (Nawaz) government, the central bank's data showed, as tax-saving investors preferred the avenue alternative to banking deposits.

The State Bank of Pakistan’s (SBP) latest data showed that investment in prize bonds stood at Rs814 billion as of March compared with Rs388 billion in June 2013. Investment in prize bonds sharply rose to Rs518 billion in June 2015 after the government slapped taxes on all the banking transactions, especially on non-filers to increase documentation of the economy.

A senior financial analyst said investment in prize bonds sharply increased after the past government enhanced withholding tax scope to broaden tax base.

In June 2015, the withholding tax rate on cash withdrawal of Rs50,000/day by non-filers of tax returns increased to 0.6 percent, while it was kept unchanged at 0.3 percent for filers. The government brought down withholding tax to 0.4 percent from 0.6 percent on non-filers following strong protest by small business men, retailers and wholesalers.

The SBP’s statistical bulletin showed that investment in prize bonds were around Rs130 billion during the first two years (2013 to 2015) of the previous government, which appeared to be a normal trend.

“But since June 2015, parking of funds in bearer certificates increased sharply, which showed that dealers, traders, small business men and other retailers shifted their focus to trade in government securities and prize bonds,” an analyst said. Analysts said the act of the government to document the economy was a step in the right direction.

“It will take a long time; although it aroused interest in prize bonds, especially the big ticket prize bonds,” an analyst said. The central bank’s data showed that investment in prize bond of Rs40,000 increased to Rs229 billion from Rs99 billion during the last five years. Prize bond of Rs25,000 attracted Rs141 billion as compared to Rs40 billion. Prize bond with face value of Rs15,000 saw an increase in investment to Rs145 billion from Rs70 billion. Prize bond of Rs7,500 received inflows of Rs76 billion as compared to Rs48 billion and prize bond of Rs1,500 witnessed an increase in investment to Rs92 billion from Rs56 billion during the period under review.

Analysts said growth of investment in prize bonds was interplay of tightening measures of the government to increase documentation as well as rise in per capita income and economic growth.

An analyst said banking deposits would have surpassed Rs12 trillion if taxes were not introduced.

“Usually, middle class community buys prize bonds to get rich overnight, but now it has appeared to be safe haven for the people thanks to the policies of the previous government which introduced several measures to arrest ever-increasing black economy,” an analyst said.