The big bounce back

This afternoon’s release of the 2010 edition of the BRW Rich 200 is likely to be dominated by two main headlines: the unveiling of a new person at the top of the list (we’re tipping it will be Frank Lowy) and an impressive bounce in the total wealth of the members of this list.

Last year the members of the Rich 200 lost more money in dollar terms that at any other time in the list’s history, with total wealth plunging 18% to $114.1 billion.

Clearly, the wealth of Australia’s business elite is going to bounce back strongly, but the question is, by how much?

Overseas rich lists compiled earlier this year suggest we could be looking at a big turnaround. The total wealth of the members of Forbes’ billionaires list increased by 50% from $SU2.4 billion to $US3.6 billion, thanks mainly to an impressive jump in sharemarkets in the United States, Asia and Europe.

Britain’s main rich list, produced annually by the Sunday Times Rich List, showed total wealth of the UK’s richest grew by 30%, the biggest jump in 22 years.

However, don’t expect to see this big a jump on the Australian rich list, mainly because of the time of its release.

Shares price calculations for the BRW list are likely to have been finalised in mid-May, and the recent volatility in Australian markets – the ASX 200 fell 4% between May 1 and May 15 – will have resulted in a few last-minute revisions.

The ASX 200 has been a reasonable guide to the movements in the total wealth of the Rich 200 in recent years, although the members of the list do tend to slightly outperform the market. Over the past six years, the Rich 200 has broadly tracked the ASX 200 in every year other than 2008, when the total wealth of the Rich 200 increased by 8.8% compared with a 6% fall in the ASX 200.

In the last 12 months, the ASX has risen around 18%. Allowing for a little bit of outperformance by the Rich 200 members, we’re probably looking at an increase of 20% in the total wealth on this year’s list.

That would see the total wealth increase by about $22 billion to $137 billion, and lift the average wealth of the members of the list to about $685 million.

To put that into perspective, CommSec’s recent analysis of Federal Treasury figures of total private wealth suggest that that per capita wealth stood at $253,600 at the end of 2009, after rising 11.4% in the previous 12 months (thanks mainly to rising house prices and share prices).

Yes, the rich have done very nicely for themselves, but average Joes aren’t travelling too badly either.