According to the new quarterly Investor Sentiment poll from UBS, the world’s largest global wealth management, high-net-worth investors in the UAE and throughout the world are concerned about the impact of the war in Ukraine on the global economy and growing inflation.
While 85% of UAE investors expect the war to raise inflation, compared to 92% globally, 43% of those polled in the UAE believe inflation will endure longer than a year.
More than half of the 2,500 investors and 1,000 business owners polled across 14 markets with at least $1 million in investable assets anticipate inflation will endure longer than a year, according to the survey.
Geopolitics, market downturn, and global trade conflict are top concerns for UAE investors. Due to concerns about the impact of inflation, 52% of UAE respondents indicated they are delaying a major purchase, while 57% are extremely concerned about the impact of inflation on their retirement savings, and 56% are extremely concerned about the impact on the amount of wealth transferred.
In the event of further stock market falls, 33% of UAE investors will increase their stakes, while 30% will shift their investments to different sectors. Real estate and healthcare are the most appealing industries and themes for investors based in the UAE in the current market environment.
“Investors around the world are plainly concerned about the personal and economic consequences of one of the world’s worst humanitarian crises in decades,” said Iqbal Khan, president of UBS Europe, the Middle East, and Africa and co-president of UBS Global Wealth Management.
“While the long-term economic consequences of the Ukraine conflict are impossible to predict, most investors remain positive about the stock market’s prospects and confidence in their well-diversified investment portfolio.”
“After managing the consequences of the pandemic on their business, the impact of the crisis in Ukraine and growing inflation has forced business owners to adapt to an unexpected and uncertain environment,” said Tom Naratil, head of UBS Americas and co-president of UBS Global Wealth Management.
“In a tight labour market, business owners are collaborating with their financial advisors on employee wellness programmes like UBS’ Workplace Wealth Solutions to provide more value to their employees.”
Market volatility is more than usual, according to half of the investors polled globally. Most investors predict the battle to have a negative economic impact, with 66% anticipating higher oil costs, 64% expecting more global instability, and 60% worried about more cyber-attacks. However, investors aren’t yet altering their portfolios, but they will if the market continues to fall. In the current market situation, many people are more likely to contemplate buying gold, local equities, and oil, while technology and energy remain the most appealing sectors.
“Geopolitical volatility joined growing material costs, tax rises, heightened regulations, and supply chain concerns as sources of anxiety for business owners this quarter.” As a result, their confidence in their own company for the coming year fell 11 percentage points. According to the study report, “business owners are limiting their hiring and investment goals and focusing on increasing employee perks, IT spending, and upgrading personnel.”
