The Poor Get Poorer And The Rich Get Richer

"It [amassed public data on economic indicators] showed us very early on that despite lockdowns and despite some economic sectors being clearly disrupted -- such as airlines -- there was life in other sectors."

"[Our clients] did not panic during the sell-down. Instead they used it to build up positions."

"Compared to 2008, 2009, you had a huge stimulus coming into the system straight away. And there was already plenty of liquidity, with very little places for it to go."

"As a result, asset prices across financial markets have held up very well."

Sergio Ermotti, chief executive, UBS Group AG, Zurich

"If you panicked and sold out in February or early March it would have been very difficult to come back because the market recovered so quickly."

"It's been hard emotionally, but the key to performance this year was to remain invested."

Nicole Curti, head, Stanhope Capital wealth adviser Swiss arm

"We were very consistent on that since February. Don't get out. Build hedges."

"Longer term many investors are realizing that [soaring equity prices represent the 'short-term' trade of the crisis] -- even more than in 2007 and 2008, when we started playing with these experimental fiscal economics."

"It is triggering a lot of questions now about what lies in the future -- how inflation might make a comeback."

Frederic Rochat, managing partner, Lombard Odier Group

Joe Cavaretta, South Florida Sun-Sentinel/AP Photos

 Even as the world pivots sideways on its economic axis with country after country making an effort to alleviate the unbearable stress of the financial cost of dealing with COVID-19 lockdowns leading to mass unemployment where administrations borrow money to establish emergency support programs for their hard-hit populations, their national industry base, the countless small-business operations that make the economy run, there are those whose wealth massively increases despite the global pandemic.

Private banks in Switzerland and elsewhere which act as depositories for investors, the truly wealthy of the world, have witnessed assets owned by their clients surge this year of 2020 which has been a financial disaster for everyone else. Zurich-based UBS Group AG reported its best quarterly earnings in a decade, and rival Credit Suisse Group AG is on the cusp of announcing a similar bonanza.

 

Even as the global economy, according to the International Monetary Fund, is expected to contract by 4.4 percent this year, throwing millions more people worldwide into poverty, the world's billionaires have become wealthier in comparison with 2019. This is a trend observed across regions from Brazil and China to the U.S. and Germany, as further indication that the pandemic has become a vehicle to deepen inequalities across the globe.

 

Following the great financial crunch of 2008, was the last time the super-wealthy had such a windfall. These crises have resulted in a windfall of investment opportunities for the wealthy, while posing as a threat to all others and this time the scale of the bonus is infinitely greater given governments' and central banks' swifter reaction to cushion the financial blow to their business sectors and the wider population at large.

 

As examples, the net worth of Amazon.com Inc. chief executive Jeff Bezos rose by $73 billion from mid-March to mid-September, given his holdings in the company according to a report by the Institute for Policy Studies, an American think tank The same period saw Mark Zuckerberg, chief executive at Facebook, and Elon Musk, chief executive at Tesla Inc. and Space Exploration Technologies Corp. each amassing a net worth increase of over $45 billion each.

 

In China, acknowledged as the globe's swiftest-growing nursery for super-wealth, 257 individuals became billionaires this year, reflecting the rising fortunes of China's already-established tycoons. Such as Jack Ma, founder of commerce platform Alibaba Group Holding Ltd. who increased his net worth by 45 percent in the past ten months making him worth $58.8 billion. What inspired many of the wealthy to weather the COVID storm was advice from their bankers immediately the crisis struck: don't sell.

 

Lombard Odier which cares for $316 billion of millionaire and billionaire money from across the globe began informing its clients as early as February they should be looking to putting capital to work in panicked markets. All of its quantitative analysts were tasked in January with a project to collect as much public data on economic indicators as possible: from traffic data in Asian cities to hospital figures in U.S. states.

 

Gold, in particular was recommended by many Swiss bankers and wealth advisers to their clients. In August the precious metal hit a record high of $2,073 an ounce and buying it was the corollary to the huge government stimuli buoying equity markets. The rich benefited from public spending that ensured stock markets valuations were kept stable and they benefited as well from the fear generated by huge government borrowing viewed as necessary to handle the threat of COVID-induced financial collapse.