UAE investors are the most optimistic in the world - UBS survey

Despite challenges to the global economy, wealthy individuals and entrepreneurs are bullish

epa07025683 Traders gather at the stock exchange at the Dubai Financial Market, in Dubai, United Arab Emirates, 16 September 2018. Dubai Financial Market General Index (DFMGI) dropped by 1.27 percent.  EPA/ALI HAIDER
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The majority of UAE investors are optimistic about the local and global economies, according to a study by Swiss bank UBS, which found the Emirates the most bullish of all regions surveyed.

According to the bank's new quarterly Investor Sentiment study from its global wealth management team, 83 per cent of UAE investors are optimistic about the local economy, while 78 per cent hold similar views towards the global economy. The survey of 3,600 wealthy investors and entrepreneurs was carried out in 17 countries, including the UAE, in March.

"It is encouraging to see such optimism paired with a strong desire to invest from UAE respondents,” said Ali Janoudi, head of Central and Eastern Europe, Middle East and Africa at UBS Global Wealth Management, who said the UAE is considered a growth region for the bank’s business.

Investor expectation that the global economy was on track for a recovery this year was dented this month following the latest US-China trade talks development. The US hiked tariffs on $200 billion (Dh734.6bn) of Chinese imports to 25 per cent on May 10, as talks between the two countries broke down without a resolution.

Despite the ongoing trade war, UBS said business owners and the wealthy across the globe are looking for opportunities to invest after markets rebounded in the first three months of 2019 from the late-2018 slump.

UAE investors are particularly optimistic on equities, with 80 per cent of respondents to the UBS survey in favour of local stocks. They are also among the most likely to have plans to invest more with 62 per cent looking to part with their cash, second only to Latin American investors at 66 per cent.

Globally, only 51 per cent of respondents held a positive outlook towards the world economy versus 21 per cent who had a pessimistic view. Investors were also bullish on stocks, with 56 per cent expressing optimism for equities in their own regions versus 49 per cent on global assets.

In addition, almost three quarters saw the recent market volatility as an investment opportunity, compared with the 67 per cent still concerned about the market turbulence witnessed in the fourth quarter of last year.

While four in 10 (42 per cent) planned to invest more in the next six months, 17 per cent planned to invest less.

Sustainable investing was cited as a growing interest, making up 27 per cent of portfolios versus 22 per cent five years ago.

For investors concerned about issues closer to home, 44 per cent cited their country’s politics as a top worry while 40 per cent pointed to national debt.

In the UAE, investors' top concerns were the possibility of a global trade war, market volatility and inflation.

In its latest global data watch JP Morgan said the global economy entered 2019 facing headwinds that it “expected to weigh on growth at least through midyear” including the ongoing uncertainty around the US war on trade that has dampened business sentiment and spending.

“Our baseline is that the rise in tariffs will damp gross domestic product growth by 0.2 per cent in the US this year and by a cumulative 0.4 per cent in China over this year and next,” the bank said.

Investors' cash holdings also remained high across the globe, UBS found. On average, 32 per cent of portfolios globally and in the UAE were allocated to cash, with cash holdings highest in Asia and Latin America.

"Cash is a safe asset for a liquidity strategy but a risky one for longevity. Right now, we see high levels of cash globally. This is a good time for investors to consider a more diversified portfolio," said Paula Polito, client strategy officer at UBS Global Wealth Management.