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Billionaires in China Are Struggling

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Billionaires in China, Jack Ma

Even before the Asian stock markets reacted to the US stock market plunge yesterday, the number of billionaires in China had become fewer in 2018. The richest individuals in China have also lost billions from their top line wealth this year.

Data compiled by Hurun Report says the number of “super-rich” in China has dropped below 2,000 for the first time since 2015. This list counts individuals with holdings worth the equivalent of around $209 million or more. The fall in number constitutes an 11% decline in 2017 figures.

According to the report, the number of China’s wealthiest, worth at least 2 billion yuan, fell from 2,130 in 2017 to 1,877. The new figures also include 219 new names.

Rupert Hoogewerf, chairman and chief researcher of Hurun Report, said:

“A 20% drop in the mainland stock exchanges, on the back of a slowing economy and the US-China trade war, resulted in 456 drop-offs this year, the highest since records began 20 years ago.”

In US dollars, China has 620 billionaires.

Who Are the Top Billionaires in China?

Jack Ma – Alibaba – Net Worth $39 Billion

Jack MaAlibaba chairman Jack Ma is of course top of the list. At 54, he has a net worth of around $39 billion driven higher recently by the increased worth of Ant Financial.

Ma and his second-in-charge Joe Tsai, who also runs the Alibaba owned South China Morning Post, believe the US will also suffer from current trade disputes. Tsai said recently:

“We are so integrated that the pain is going to be felt all over the world. Everybody is going to feel the pain.”

Hui Ka-yan – Evergrande Group – Net Worth $36 Billion

Hui Ka YanKa-yan has lost the equivalent of $6 billion since last year and is second on the Hurun Report list. His company, the Evergrande Group is the second-largest property developer by sales in China. In 2018, Evergrande became the world’s most valuable real estate company.

Evergrande committed $2 billion worth of investment to electric car startup Faraday Future and has already spent $800 million on the new company. Now, the deal is in a dispute over shareholder rights.

Pony Ma Huateng – Tencent – Net Worth $35 Billion

Pony Ma TengThird on the list is Huateng, CEO of web technology and Chinese social media giant Tencent. He’s currently worth $35 billion and Tencent is diversifying into entertainment, artificial intelligence, and other technologies.

Tencent is officially the world’s largest gaming and social media company, owning messenger platform Tencent QQ and WeChat. Tencent Music Entertainment has 700 million users and 120 million paying subscribers.

Tencent was worth at least $500 billion USD in 2017.

When the US Sneezes…

Stock sell-offs in the US this week also impacted Asian markets with China’s main indexes falling 5%. According to Reuters, analysts at ANZ said:

“Equity markets are locked in a sharp sell-off, with concern around how far yields will rise, warnings from the IMF about financial stability risks and continued trade tension all driving uncertainty.”

Shanghai’s SSEC drop was its most severe since early 2016 and overall was at its lowest level since 2014.

Like many, one Chinese analyst is pointing to technology stocks having oversold, UBP strategist Koon Chow said:

“I think what happened was that we were a maximum elevation of risk appetite and maximum valuation of (U.S.) large caps and tech, so when you have that situation you are always vulnerable.”

To quote CNN yesterday and many before, if the U.S sneezes, the rest of the world catches a cold. Although, Asian markets rallied this morning showing signs of a speedy recovery.

Featured image by World Economic Forum.

Melanie Kramer is a freelance fintech, blockchain, and cryptocurrency journalist/writer with a background in business and economics and an avid interest in global politics and money markets.

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Billionaires

Atlassian’s Mike Cannon-Brookes Buys Australia’s Most Expensive Home

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Mike Cannon Brookes

Despite all the worry over Australian home prices, it didn’t take Mike Cannon-Brookes long to spend a pile on the Fairwater estate in Sydney’s Point Piper. The home was recently vacated by Mary Fairfax, who died a little over a year ago. The home has been in the Fairfax family for more than 100 years, and now it looks like Mike Cannon-Brookes will be raising his family in the 11,000+ square-meter property.

The actual sales price for Fairwater hasn’t been disclosed, but it is thought to have sold for more than $100 million USD. That would make it the highest price paid for a home in Australia by a wide margin.

The previous record was set when the house next door to Fairwater sold to the other Atlassian co-founder, Scott Farquhar, last year. Mr. Farquhar paid $71 million USD for the property, called “Elaine,” which had also been the property of the Fairfax family.

Unlike Elaine, Fairwater has sat unoccupied for the last 25 years or so and was seldom used by Lady Fairfax. Despite the remodeling that is sure to begin soon, Mike Cannon-Brookes is happy to have made the purchase. In a statement, he said that:

“We are delighted with the purchase of Fairwater for our young family and look forward to continuing the legacy of this beautiful Sydney home… We love the idea of raising our four young children in this historic property.”

Fairwater

Fairwater, image by Wikipedia

Big Money in Sydney

Atlassian has been a massive success for Mike Cannon-Brookes and Scott Farquhar. The pair met while attending the University of New South Wales. In 2002 they used $10,000 in credit card debt to found Atlassian. The company has grown into a global presence, and in 2017 Atlassian created revenues in excess of $600 million USD.

Their most popular product is Jira, which was introduced in 2002. Jira started life as a bug tracking software that is still used by software developers all over the world. According to Atlassian, more than 75,000 companies in 122 countries use Jira. It has evolved into a project management tool that has expanded beyond software development.

Given the taste in real estate the founders have, Atlassian will have to keep doing well. The property taxes on a $100 million dollar property have to be eye-watering. The two co-founders have made off like bandits in the wake of Atlassian’s IPO in late 2015.

Like many companies in the tech space, equity investors can’t seem to get enough of Atlassian shares. Even after the shares fell sharply earlier this week on a revenue disappointment, they are still up by more than 100% over the last 12 months at the time of writing. They saw their adjusted quarterly earnings rise by more than 50% YOY, which may help to justify their current valuation.

Investors Love Atlassian

Last year Atlassian lost around 50 cents a share, which makes paying nearly 20 billion dollars for their platform a little rough. Despite the increasing competition from other project management platforms, most notably Slack, there are many in the investment world that see Mike Cannon-Brookes’ company as a herald of things to come.

Atlassian stock 6 months

Atlassian stock 6 month period

Tim Garratt is a partner at Bailie Gifford, a Scottish fund that owns hundreds of millions of dollars worth of Atlassian’s equity. He told the Sydney Morning Herald that:

“Mike Cannon-Brookes has a focus on the next coming decades rather than the next quarter or two. He’s prepared to invest for the long term and we are strongly supportive of that approach… We see the long-term potential for Atlassian to service a hundred million users across the world […]So it is still early days for this exciting business and we’re looking forward to seeing how it develops over the next decade and beyond.”

Despite the optimism that Mike Cannon-Brookes has generated from investors who are already riding high on triple digits yearly gains, his company has something of a spotty record when it comes to gender issues.

A few years ago, one of Atlassian’s employees decided to compare a new piece of software to a complaining girlfriend, which did nothing to sure up the image of an industry that is constantly being accused of a latent gender bias. While Mike Cannon-Brookes scolded the employee after the presentation went viral, he actually gave the offending presentation himself at a conference!

The gaffe clearly hasn’t dented investor confidence in the company, and Atlassian remains one of the biggest software development tools out there today. If Mike Cannon-Brookes’ luck holds up, he may be able to hold on to his brand new house on the water in Sydney.

Featured image by TEDx Sydney

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