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UAE investors optimistic about regions economy

Investors and business owners globally have grown more upbeat on the economy and stock market

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UAE investors optimistic about regions economy

According to UBS’s new Investor Sentiment survey, globally, investors are increasingly optimistic about their regional economic outlook and the equity markets, which polled more than 4,000 investors and business owners across 14 markets globally in late December and January.

A majority of survey respondents (60%) have a positive economic outlook over the next 12 months, compared with 55% 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% are optimistic about the economy. Among the 37% of investors who expect life to return to normal in the next six months, economic optimism is much higher at 80%.

In the UAE, investors feel confident about their region’s economic perspectives, with 85 per cent expressing optimism for the current year. However, opinions are split on when life will return to normal. 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.

Asked about their top concerns, UAE investors singled out COVID-19 (63%), followed by climate change (56%) and fear of a market downturn (55%). In such uncertain times, a record 9 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.

On a global scale, over the next six months, 61% of investors are increasingly optimistic about the stock market, up 6 percentage points globally over the past quarter. Investors expect the market to benefit from progress on COVID-19 vaccines (72%) and the US election results (62%).

Among business owners, 72% are confident in their own business over the next 12 months, up from 69% in the third quarter, due to business momentum (45%), vaccine progress (43%) and favourable monetary policy (40%). Nearly a third of business owners (32%) plan to hire workers, up from 30% three months prior. However, the proportion of business owners who plan to downsize increased up 2 percentage points.

Investors expressed particular interest in sustainable investing, with 54% looking to increase their allocations. Half of the investors expect sustainable investing in yielding the better returns relative to traditional investing, while 29% expect equal performance.

Tom Naratil, President of UBS Americas and Co-President of UBS Global Wealth Management, said: “We are encouraged that 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.”

Commenting on the finding that most investors plan to increase sustainable allocations within their portfolios, Iqbal Khan, Co-President of UBS Global Wealth Management, said: “Three years ago we had around USD 1 billion invested in our 100% sustainable portfolio for private clients. Today that figure is over USD 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.”

Ali Janoudi, Head of Wealth Management for the Middle East and Africa, said: “The fact that 9 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. Hence, they are in pole position to profit from future market movements.”

US 

The national debt has surpassed COVID-19 to become the top concern among those surveyed (60%). Fifty-nine per cent believe the US election results will be good for the economy, while 31% believe they will hurt the economy. Stock market optimism has increased to 59% from 55% in the prior quarter due to vaccine progress and US elections.

Latin America 

Sixty-five per cent of Latin American investors are optimistic about their economy, higher than the average among global investors (60%). Similar to the global average, 61% of Latin American investors are optimistic about the stock market. Seventy per cent say sustainable investing will deliver better returns than traditional investing, the highest expectation globally. 

Europe 

European respondents, excluding Switzerland, have also grown significantly more confident in their own region’s economy and the stock market. Sixty-five per cent are optimistic about the economy, up from 58%, while 64% are optimistic about the stock market, up from 55% three months prior.

Switzerland 

Swiss respondents’ optimism about their own region’s economy held steady over the quarter. Confidence in the stock market also remained unchanged, with 54% expressing optimism.

Asia 

Asian investors grew more positive on their economic outlook in their own region. The proportion expressing optimism was up 7 percentage points to 62%. Their confidence in the stock market also rose 7 percentage points, to 61%.

About the UBS Sentiment survey 

For this edition, UBS surveyed 2,854 investors and 1,151 business owners with at least $1M in investable assets (for investors) or at least $1M in annual revenue and at least one employee other than themselves (for business owners), from December 29, 2020, to January 18, 2021. The global sample was split across 14 markets: Argentina, Brazil, France, Germany, Hong Kong, Italy, Japan, Mainland China, Mexico, Singapore, Switzerland, the UAE, the UK and the US.

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