Aurelia Butler

It might seem logical that war in Ukraine, inflation, rising interest rates and market turmoil would make the outlook for stockpiling wealth just a little uncertain.Not so, say the experts at management consultants BCG, in the company’s annual report on global wealth. Far from staring into an abyss, they are looking upwards and see the world’s stock of financial wealth growing steadily over the next five years.In their base case, global financial assets are forecast to rise by 5.3 per cent annually to 2026. That assumes that Russia halts its invasion of Ukraine this year and geopolitical tensions ease, even though sanctions on Moscow would remain in place until 2025.Remarkably, a longer conflict in Ukraine has only a modest impact. Even if the fighting lasts well into 2023 and sanctions increase, the effects on wealth accumulation will likely be limited as long as there is no military escalation. Under these circumstances, BCG forecasts growth in financial wealth of 5.0 per cent. So almost the same.

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To be fair, the forecast does involve a substantial slow down in wealth accumulation compared with the recent past. Financial asset growth in the decade to 2021 was 7.2 per cent annually. But still, given the role of rising financial markets in boosting assets, it might be expected that a time when conditions are likely to be choppier would see wealth accumulation running into the sand.BCG points to the remarkable resilience of wealth accumulation during the 2008 global financial crisis and the 2020 pandemic shock. “While not immune to market volatility, global wealth portfolios have rebounded from recent shocks,” the authors write.On top of this, inflation may boost wealth for canny investors by driving up the shares of inflation-resistant companies — and by encouraging them to switch money out of fast-depreciating cash into securities.However, at the heart of the BCG forecast lies the increasing geographical diversification of the world’s wealth away from the Atlantic to the Asia-Pacific region. Even with its economy in the doldrums, China continues to accumulate money as do its neighbours. These are countries very far from the Donbas.The Asia-Pacific region is not immune to the impact of higher energy and food prices, but the effects are muted by distance and by its own economic dynamism. The same is true, if to a lesser extent, for Africa and Latin America. Oil producers everywhere are seeing a bonanza, not least the Gulf states.

One consequence for the rich — and their advisers — is the seemingly relentless rise of Hong Kong and Singapore as global wealth management centres. BCG forecasts that, by 2026, Hong Kong will overtake Switzerland as the world’s biggest centre for cross-border assets, a shift of historic proportions.And, say the writers, it will come despite a moderate exodus of money from Hong Kong to Singapore (and elsewhere) because of Beijing’s political squeeze — although there will still be bigger inflows from the mainland to Hong Kong.Does this spell the demise of traditional centres of wealth management? Not necessarily. BCG argues that high-tech wizards in Zurich, London and New York have every chance to capitalise on the digital revolution — and turn the sometimes-clunky tech services offered in wealth management into something genuinely appealing. That’s all very promising, especially if you are a tech-minded wealth management company with a decent client list.But, history suggests that BCG’s views should be read with a degree of caution. Wars have a habit of running out of control; inflation is not always as transitory as the authorities say; and a market upheaval can do lasting economic damage, as with the global financial crisis. It’s perhaps bad timing for rose-tinted glasses in the wealth industry. Stefan Wagstyl is the editor of FT Wealth and FT Money. Follow him on Twitter @stefanwagstylThis article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment More

SYDNEY (Reuters) – Australian home prices slipped for a second month in June as once red-hot markets in Sydney and Melbourne felt the chill from rising interest rates and a cost-of-living crunch.Figures from property consultant CoreLogic out on Friday showed prices nationally fell 0.6% in June from May, when they dipped 0.1%. Prices were still 11.2% higher for the year reflecting the huge gains made over 2021 and early 2022.The weakness was concentrated in the capital cities where prices dropped 0.8% in June, while annual growth slowed to 8.7% having been above 20% early this year.The retreat in Sydney gathered pace as values fell 1.6% in the month, while Melbourne lost 1.1%. Annual growth in Sydney is down to 6%, a long way from the heady days of 2021 when prices rose by a quarter.Most other cities were positive though again price growth is slowing. Adelaide led with a gain of 1.3%, but Brisbane eked out a rise of just 0.1% and Perth 0.4%.The regions continued to benefit from a shift to country living and greater space, and prices rose 0.1% in June to be 20% higher than a year ago.The slowdown in part reflects higher borrowing costs as the Reserve Bank of Australia (RBA) lifted rates in both May and June, and is considered certain to hike again next week in an effort to contain surging inflation. [AU/INT] “Considering inflation is likely to remain stubbornly high for some time, and interest rates are expected to rise substantially in response, it’s likely the rate of decline in housing values will continue to gather steam and become more widespread,” said CoreLogic’s research director, Tim Lawless.Markets are wagering the current 0.85% cash rate could reach 3.75% by the middle of next year. The major banks have also sharply raised borrowing costs on fixed-rate mortgages and tightened lending standards.A sustained drop in prices would be a drag on consumer wealth given the notional value of Australia’s 10.8 million homes had risen A$210 billion ($144.86 billion) in the first quarter alone to reach A$10.2 trillion.($1 = 1.4497 Australian dollars) More

The deal, executed through a unit, is expected to add to the company’s earnings per share by 1% to 1-1/2%, Costco (NASDAQ:COST) said in a statement.The membership-only retailer operates 833 warehouses globally, including 14 in Taiwan. It also runs e-commerce sites in the island.The purchase comes at a time when Costco’s margins are being squeezed by higher costs arising from supply chain disruptions and the impact of the Russia-Ukraine war. More

WASHINGTON (Reuters) – The U.S. Federal Communications Commission on Thursday authorized Elon Musk’s SpaceX to use its Starlink satellite internet network with moving vehicles, green-lighting the company’s plan to expand broadband offerings to commercial airlines, shipping vessels and trucks.Starlink, a fast-growing constellation of internet-beaming satellites in orbit, has long sought to grow its customer base from individual broadband users in rural, internet-poor locations to enterprise customers in the potentially lucrative automotive, shipping and airline sectors.”Authorizing a new class of terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move,” the FCC said in its authorization published Thursday, echoing plans outlined in SpaceX’s request for the approval early last year.SpaceX has steadily launched some 2,700 Starlink satellites to low-Earth orbit since 2019 and has amassed hundreds of thousands of subscribers, including many who pay $110 a month for broadband internet using $599 self-install terminal kits.The Hawthorne, California-based space company has focused heavily in recent years on courting airlines around Starlink for in-flight WiFi, having inked its first such deals in recent months with Hawaiian Airlines and semi-private jet service JSX.”We’re obsessive about the passenger experience,” Jonathan Hofeller, Starlink’s commercial sales chief, said at an aviation conference earlier this month. “We’re going to be on planes here very shortly, so hopefully passengers are wowed by the experience.”SpaceX, under an earlier experimental FCC license, has been testing aircraft-tailored Starlink terminals on Gulfstream jets and U.S. military aircraft.Musk, the founder and CEO of SpaceX, has previously said that the types of vehicles Starlink was expected to be used with pursuant to Thursday’s authorization were aircraft, ships, large trucks and RVs. Musk, also the CEO of electric car maker Tesla (NASDAQ:TSLA) Inc, had said he didn’t see “connecting Tesla cars to Starlink, as our terminal is much too big.”Competition in the low-Earth orbiting satellite internet sector is fierce between SpaceX, satellite operator OneWeb, and Jeff Bezos’s Kuiper project, a unit of e-commerce giant Amazon.com (NASDAQ:AMZN) which is planning to launch the first prototype satellites of its own broadband network later this year. More

Celsius earlier this month froze https:// withdrawals and transfers, citing “extreme” market conditions, leaving its 1.7 million customers unable to redeem their assets.The Hoboken, New Jersey, company hired restructuring consultants from advisory firm Alvarez & Marsal to advise on a possible bankruptcy filing, the Wall Street Journal reported last week, citing people familiar with the matter.The market for digital assets in recent months has been roiled by extreme volatility as investors dump risky assets due to fears that aggressive interest rate hikes to tame stubborn inflation could plunge the economy into a recession.The European Union has agreed on groundbreaking rules for regulating crypto assets, EU lawmakers said on Thursday, as the rout in bitcoin piles pressure on authorities to rein in the sector.Cryptocurrencies have lost more than $400 billion since TerraUSD, a major stablecoin pegged to the U.S. dollar, collapsed in May. Bitcoin tumbled another 6% to $18,866.77 late on Thursday, leaving it down over 70% from its peak last November.Similar to a bank, Celsius gathered crypto deposits from retail customers and invested them in the equivalent of the wholesale crypto market, including “decentralized finance,” or DeFi, sites that use blockchain technology to offer services from loans to insurance outside the traditional financial sector.Celsius promised retail customers huge returns, sometimes as much as 19% annually. The lure of big profits has led individual investors to pour assets into Celsius and platforms like it. More

Businesses said that rising costs and persistent material shortages led to a slower improvement in production levels, while new orders rose only fractionally in what could be a sign of growing fragility of overall demand.The final au Jibun Bank Japan Manufacturing purchasing managers’ index (PMI) slipped to a seasonally adjusted 52.7 in June from a final 53.3 in the previous month. The 50-mark separates contraction from expansion.”June PMI data pointed to a softer expansion of the Japanese manufacturing sector,” said Usamah Bhatti, Economist at S&P Global (NYSE:SPGI) Market Intelligence, which compiles the survey.”The health of the sector improved at the joint-slowest rate for nine months amid a broad stagnation in new order inflows and slowing output growth.”New overseas orders contracted for the fourth straight month, the survey showed. Input prices remained at elevated levels, again rising at a faster pace than output prices though firms increasingly passed on higher cost burdens to clients.Businesses commented in the survey that rising price and supply pressures held back activity in the sector, Bhatti said.”Substantial inflationary pressures, which dampened output and demand in the latest survey period, were attributed to severe material shortages and delivery delays,” he said.Those headwinds were also highlighted in official data released on Thursday, which showed factory output tumbling at the steepest rate in two years in May. More

BENGALURU (Reuters) – Australia’s central bank will deliver another half percentage-point interest rate hike on Tuesday as it fights to tame surging inflation, marking the first time it has ever raised the cash rate by that magnitude at consecutive meetings, a Reuters poll found.After raising its benchmark rate by 50 basis points in a hawkish surprise last month, the Reserve Bank of Australia’s Governor Philip Lowe has played down the chance of rates being hiked by a super-sized 75 basis points, dampening weeks of speculation it would match the U.S. Federal Reserve’s latest move.But with inflation already at a 20-year peak of 5.1% in the first quarter and expected to approach 7% by the end of 2022, markets are wagering the RBA will have to raise rates faster, to near 3% by the end of the year.All but one of 33 economists in the June 27-30 Reuters poll forecast the RBA would hike the cash rate by 50 basis points again at its July 5 meeting, taking rates to 1.35%. One economist expected a 25 basis-point hike.Since the cash rate was introduced in 1990 the RBA has never raised it by half a percentage point at two consecutive meetings.”The Reserve Bank looks to be playing catchup with accelerating inflation. The challenge for the RBA is to minimise the spillover into broader inflationary pressures. It seems awake to this challenge,” noted Felicity Emmett, senior economist at ANZ.All four major local banks – ANZ, Westpac, CBA and NAB – were expecting a 50 basis point hike on July 5.Economists have also brought forward rate hike expectations considerably from the last poll in June. Nearly 60%, or 18 of 31, now expect the cash rate to reach 2.00% or higher by the end of September, 75 basis points higher than predicted previously.Rates were then expected to reach 2.35% by the end of 2022, up from 1.75% predicted in the June survey. Most respondents who had forecasts until the end of next year, 21 of 26, saw rates hitting 2.60% or higher, where economists said the neutral rate lies. “The RBA has upped the ante on inflation and is working overtime to make up lost ground. But it’s not just actual price rises that are cause for concern. Philip Lowe knows he only has a small window to tame expectations,” said Harry Murphy Cruise, macroeconomist at Moody’s (NYSE:MCO) Analytics.”Lowe has stated the RBA will do ‘What’s necessary to get inflation back to 2-3%’. But for this to be believed, the board needs to put its money where its mouth is.”A handful of economists doubted the neutral rate would be reached or surpassed, given Australians are sitting on A$2 trillion in mortgage debt, making them very sensitive to borrowing costs amid the growing cost of living crisis.The poll showed inflation would remain well above the RBA’s target range of 2%-3% until mid-2023. It was expected to average 6.1% this year and slip to 4.0% in 2023, a substantial upgrade from 4.2% and 2.8% predicted in April.Australia’s economy was forecast to grow 4.0% this year and 2.4% in 2023.Andrew Ticehurst, economist at Nomura, forecasts a recession next year, the only respondent to the poll with three consecutive quarters of contraction. He said RBA rate hikes would “eventually bite, exposing Australia’s Achilles heel, an over-extended consumer and elevated house prices.” More

Central banks are looking towards the renminbi to diversify their foreign currency holdings in a sign that geopolitical flare-ups could chip away at the dollar’s dominance. The proportion of central bank reserve managers that have invested in, or are interested in investing in, the renminbi increased to 85 per cent this year, from 81 per cent last year, according to an annual survey by UBS of 30 leading central banks conducted between April and June 2022. “We’re seeing a gradual erosion of the dollar,” said Massimiliano Castelli, head of strategy for global sovereign markets at UBS. “The picture that emerges is one of a multipolar currency system.”The rising interest in China’s currency comes after western powers froze around $300bn of Russia’s foreign currency reserves in response to Moscow’s invasion of Ukraine in early 2022. While the move is seen by the majority of managers surveyed as a one-off event, it pits those western powers against Russia and complicates relations with countries not joining in sanctions, which include China. That accelerates a split between China and the US that had already begun during the Trump administration’s trade war. Four-fifths of the central bankers surveyed said that they believed that a move towards a multipolar world — away from a US-centric system — would benefit the renminbi. Less than half said it would benefit the US dollar. Concerns about high US inflation and the Federal Reserve’s efforts to fight it have also weighed on shorter-term sentiment towards the dollar. Central banks typically hold dollars through US government debt, which has sold off sharply this year as the Fed has tightened monetary policy. Reserve managers are seeking alternative assets such as equities, green debt and inflation-protected bonds in light of worries over holding US Treasuries, the survey showed. Nearly half of respondents said their portfolios are more diversified now compared to last year. While the dollar remains far and away the world’s top reserve currency, its lead has declined in recent years. It accounted for just under 60 per cent of allocated reserves at the end of the first quarter of 2022, down from 65 per cent in the same period in 2016, according to IMF data. China’s renminbi, however, still only accounts for a small sliver, at less than 3 per cent.

The majority of central bank reserve managers have so far this year added to their dollar holdings. Of the managers surveyed, 62 per cent added to their dollar reserves in the last year, while 54 per cent added to their renminbi holdings. “Eventually down the road we will see central banks and reserve managers thinking about what else they can have in their ammunition toolkit in order to fight volatility and macroeconomic events,” said Castelli. More