Abu Dhabi, UAESunday 25 October 2020

Four in 10 rich UAE investors plan to invest more in next 6 months, UBS says

The world’s wealthy are largely optimistic about the long-term economic outlook for their region despite Covid-19, according to the findings of a survey by the Swiss bank

UBS is setting aside hundreds of millions of dollars for a new venture fund, which will hold stakes in FinTech businesses for up to five years. Bloomberg
UBS is setting aside hundreds of millions of dollars for a new venture fund, which will hold stakes in FinTech businesses for up to five years. Bloomberg

Most wealthy investors in the UAE are either retaining their current stock portfolios or planning to invest more over the next six months, despite the economic effects of the coronavirus, according to a survey by Switzerland's UBS bank.

In the UAE, 33 per cent of investors don’t plan any adjustments to their portfolio and 43 per cent plan to invest more, according to the quarterly Investment Sentiment survey from the world’s largest wealth manager.

“Covid-19 has clearly had an impact on the local economy and understandably clouded our clients' shorter term view on economic perspectives. However, we also know that our local clients and prospects are resilient and fundamentally optimistic, with 43 per cent even considering investing more,” said Niels Zilkens, head of UBS Global Wealth Management for the Arabian Gulf.

The survey, which polled 4,100 wealthy investors and business owners in 14 markets in April, found that 47 per cent of global investors expect to keep their stock market investments the same and 37 per cent of investors plan to invest more.

The respondents comprised investors with at least $1 million (Dh3.76m) in investable assets and business owners with at least $1m in annual revenue.

Globally, 23 per cent of those surveyed said now is a good time to buy stocks, while 61 per cent see an opportunity to buy if stocks fall by another 5-20 per cent.

In the UAE, 13 per cent said it is a good idea to buy stocks now, but 69 per cent of those polled are waiting until stocks drop further.

The pandemic has led to $17 trillion being wiped off stock markets worldwide, while lockdowns and business closures have resulted in millions of job losses and a recession reminiscent of the Great Depression.

Despite the dismal picture, 70 per cent of the UBS survey respondents said they are optimistic about the long-term economic outlook for their region, virtually unchanged from the previous quarter.

Still with the spread of the coronavirus globally, a sharp dip in short-term confidence ensued, with just 46 per cent expressing optimism for the short-term outlook, compared to 67 per cent in the prior three months.

The share of investors expressing short-term optimism fell most sharply in the US – where there are 1.3 million of the 4 million Covid-19 cases – from 68 per cent to 30 per cent.

In Europe, optimism fell from 58 per cent to 50 per cent; in Asia, from 71 per cent to 55 per cent; and in Latin America from 60 per cent to 49 per cent. Switzerland saw a drop from 47 per cent to 28 per cent.

Business owners are largely positive on the longer-term outlook, with 61 per cent optimistic about their businesses, down from 73 per cent last quarter. Around 27 per cent of owners are aiming to hire more, although 17 per cent plan to downsize.

Covid-19 is the top concern for 57 per cent of investors and 60 per cent of business owners, the survey found.

However, they have “diverging views on when the worst of the crisis will be over, with a third citing June, a third citing the fall, and a third citing the end of the year or beyond”, said Paula Polito, division vice chairman of UBS Global Wealth Management.

The 14 markets surveyed by UBS included Argentina, Brazil, China, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Switzerland, the UAE, the UK and the US.

UBS, which has offices in 50 markets and employs over 67,000 people, has largely been able to weather the crisis due to its core wealth management business.

Last month, the bank reported a 40 per cent rise in quarterly profit to $1.5 billion. Although invested assets declined to $2.3tn on the back of falling asset valuations, revenue grew across all main lines, helping operating income rise 14 per cent.

Updated: May 10, 2020 02:01 PM

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