Stock markets up global financial assets by 9.7%

Worldwide gross financial assets have grown by 9.7 per cent to €192tn, leaving a wealth gap between rich and poor countries, according to ‘Allianz Global Wealth Report 2020’ released on Wednesday.

It showed that the asset class of securities increased in 2019 by a whopping 13.7 per cent.

According to the data, in 2019, central banks saved the day and gave stock markets around the globe strong tailwinds, bestowing households with the fastest growth in financial assets since the Great Financial Crisis.

Amid the social unrest, escalated trade conflicts and industrial recession witnessed in 2019, the gross financial assets clocked the strongest growth since 2005.

Further analysis of the report showed that the increase was widespread, with both emerging and advanced countries growing in sync.

However, while advanced markets clocked the strongest growth since the turn of the century, it was only the fastest growth for emerging markets since 2016.

The regional growth league table, used to be dominated by emerging markets, was led by North America and Oceania, as their gross financial assets of households increased by a record 11.9 per cent each.

Consequently, for the third year in a row, emerging markets were not able to outgrow their much richer peers stalling their catch-up process.

The data also showed that the growth rates of the other two main asset classes, though lower and still impressive, were the insurance and pensions, which reached a plus of 8.1 per cent, mainly reflecting the rise of underlying assets, and bank deposits increased by 6.4 per cent.

In fact, all asset classes clocked growth significantly above their long-term averages since the Great Financial Crisis.

On the contrary, the data also revealed that global debt is inching up.

It stated that worldwide household liabilities rose by +5.5 per cent in 2019, a tad below the previous year’s level of +5.7 per cent, but also well above the long-term average annual growth rate of +3.9 per cent.

It showed further that as debt grew slightly faster than Gross Domestic Product, the global debt ratio (liabilities as a percentage of GDP) inched up to 65.1 per cent.

“Over the last decade, the distribution of global debt has changed. While the share of advanced markets is in decline, emerging markets account for an ever rising portion of global debt, first and foremost Asia (excluding Japan): its share has trebled over the past decade to 23.9 per cent. In terms of liabilities per capita, however, the region remains a minnow: with slightly above €3,000, it stands at a fraction of the levels seen in the advanced markets (€33,550),” the data added.

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