About 43 per cent of affluent individuals in the UAE believe the Covid-19 pandemic weakened their confidence in their finances and prevented them from achieving new financial goals, according to a new survey by Standard Chartered.
Thirty-five per cent of affluent people surveyed said financial market volatility was the main cause of their diminished confidence, 30 per cent cited a fear of poor returns on investments, while 26 per cent said the complexity of developing an investment strategy was a deterrent, the British lender said.
Standard Chartered polled 15,649 emerging affluent, affluent and high-net-worth people across 12 markets, including India, China, Singapore, the UAE and the UK, between June 30 and July 26.
The total wealth of high-net-worth individuals globally rose 7.6 per cent in 2020 to about $80 trillion, driven by government stimulus measures and rising equity markets, according to Capgemini. The global number of HNWIs grew by 6.3 per cent in 2020 to surpass the 20-million mark, the global consultancy said in its World Wealth Report 2021 in June.
“The UAE affluents have become more risk averse and are actively adapting their finances to the global economic situation with eyes on global market volatility and interest rate levels,” said Owen Young, regional head of wealth management for Europe, Middle East and Africa at Standard Chartered.
“A sizeable percentage of the affluent sample in the UAE expect future returns to drop and are aligning their portfolios to this new normal.”
The UAE’s emerging affluent respondents to the survey disproportionately suffered a loss of confidence after Covid-19, with 46 per cent reporting they were less assured about their finances compared with 30 per cent of HNW individuals, the survey found.
About 88 per cent of affluent individuals in the UAE reset their life goals following the pandemic, according to Standard Chartered.
The global pandemic impacted both the investment perception and risk profiles of UAE affluents
Owen Young,
regional head of wealth management for EMEA, Standard Chartered
Forty-seven per cent set a goal to improve their health, while 39 per cent are setting aside more for their children’s future, including educational or financial support.
To meet these new goals, the UAE’s affluent need new strategies to grow their wealth. However, their current “confidence gap” has made many increasingly averse to risk, the survey found.
“A sizeable percentage of the affluent sample in the UAE expect future returns to drop and are aligning their portfolios to this new normal.”
“The global pandemic impacted both the investment perception and risk profiles of UAE affluents,” Mr Young said.
A significant proportion of the UAE’s affluent consumers are also at risk of a financial shortfall to cover their retirement, the lender said.
Thirty-one per cent of affluent people in the UAE do not currently save or invest for retirement, the survey found. Among those who do save, 50 per cent said investment income is the most common expected source of income in retirement, while 37 per cent cited cash savings and deposits.
Meanwhile, 53 per cent of UAE affluent consumers plan to retire before the age of 65, while 19 per cent have set a new financial goal in the past 18 months to retire earlier, the survey said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Saturday
West Ham United v Tottenham Hotspur (3.30pm)
Burnley v Huddersfield Town (7pm)
Everton v Bournemouth (7pm)
Manchester City v Crystal Palace (7pm)
Southampton v Manchester United (7pm)
Stoke City v Chelsea (7pm)
Swansea City v Watford (7pm)
Leicester City v Liverpool (8.30pm)
Sunday
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Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
