Investors in the UAE are increasingly becoming confident about economic perspectives in the region with 85 per cent expressing optimism for the current year, according to a new Investor Sentiment survey unveiled by a leading Swiss bank.
While opinions are split on when life will return to normal in the Middle East, a slight majority of 51 per cent think normal activity will resume before July 2021, while 49 per cent of those surveyed believe it will not happen until the second half of the year, according to UBS’s survey. The survey polled more than 4,000 investors and business owners across 14 markets globally in late December and January.
The confidence level among investors globally are also on the rise, with a majority of them optimistic about their regional economic outlook and the equity markets.
Investors in the UAE investors singled out Covid-19 (63 per cent), followed by climate change (56 per cent) and fear of a market downturn (55 per cent) as their top concerns.
Echoing the widespread concern of the uncertainty, a record nine out of 10 investors in the UAE said they needed more expert financial advice than ever. “They also see clear value in sustainable investing, with 86 per cent stating that the topic is important to them and 8 out of 10 expecting the same or even better return from sustainable investments when compared to more traditional portfolios.”
Ali Janoudi, head of Wealth Management for the bank in the Middle East and Africa, said the fact that nine in 10 investors in the UAE said they needed more financial advice now than ever clearly shows the challenges many are facing when navigating today’s volatile markets. “At the same time, it also emphasizes the opportunity for our clients to seek expertise and rebalance their portfolios now so they are in pole position to profit from future market movements.”
According to a survey by HSBC, investors in the UAE particularly emphasize risk and return factors in their responses. Fewer than one in five believe they understand the risks and opportunities of the transition to a low carbon economy sufficiently to be able to act on it, while almost half feel these are unclear or unknown. Investors also identify risk as the major obstacle to investing in the UAE’s green and sustainable economy.
Tom Naratil, president of UBS Americas and co-president of UBS Global Wealth Management, said the confidence among investors and business owners is rising globally, despite uncertainty over Covid-19 and political issues. “The decade ahead will present new opportunities, while geopolitical, economic and social challenges will remain. It is no surprise to see that eight in 10 investors tell us they need expert advice more than ever.”
Iqbal Khan, co-president of UBS Global Wealth Management, said three years ago the bank had around $1 billion invested in its 100 per cent sustainable portfolio for private clients. Today that figure is over $18 billion.
“We believe sustainable investing offers significant value for clients and for the world, which is why in September we became the first major global financial institution to make it our preferred solution for private clients investing globally.”
Globally, a majority of survey respondents (60 per cent) have a positive economic outlook over the next 12 months, compared with 55 per cent three months prior. Sixty-three per cent of investors don’t believe life will return to normal in the next six months. Of those respondents, only 48 per cent are optimistic about the economy. Among the 37 per cent of investors who expect life to return to normal in the next six months, economic optimism is much higher at 80 per cent, UBS said.
On a global scale, over the next six months, 61 per cent of investors are increasingly optimistic about the stock market, up six percentage points globally over the past quarter. Investors expect the market to benefit from progress on Covid-19 vaccines (72 per cent) and the potential impact of the US election results (62 per cent).
Among business owners, 72 per cent are confident in their own business over the next 12 months, up from 69 per cent in the third quarter, due to business momentum (45 per cent), vaccine progress (43 per cent) and favorable monetary policy (40 per cent). Nearly a third of business owners (32 per cent) plan to hire workers, up from 30 per cent three months prior. However, the proportion of business owners who plan to downsize increased as well, up two percentage points.
Investors expressed particular interest in sustainable investing, with 54 per cent looking to increase their allocations. Half of investors expect sustainable investing to yield the better returns relative to traditional investing, while 29 per cent expect equal performance.