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UAE investors concerned about war impact, rising inflation

While 85 per cent of those surveyed expect the war to increase inflation vis-a-vis 92 per cent globally, 43 per cent believe inflation will last longer than 12 months

High-net-worth investors in the UAE and across the world remain deeply concerned about the impact of the war in Ukraine on the global economy and rising inflation, according to the new quarterly Investor Sentiment survey from UBS, the world’s leading global wealth manager.

While 85 per cent of the UAE investors expect the war to increase inflation vis-a-vis 92 per cent globally, 43 per cent of those from the Emirates who took part in the survey believe inflation will last longer than 12 months.

The survey, which polled across 14 markets over 2,500 investors and 1,000 business owners with at least $1 million in investable assets, found more than half believe inflation will last longer than 12 months.

Top concerns for UAE investors are geopolitics, market downturn and global trade conflict. Due to concerns around inflation’s impact, 52 per cent of the UAE respondents said they are holding off on a big purchase while 57 per cent are highly concerned about inflation’s impact to their retirement savings with 56 per cent highly concerned about impact on amount of wealth transfer.

In case of further stock market declines, 33 per cent of UAE investors would add investments, while another 30 per cent would shift investments to different sectors. For investors based out of the UAE, most attractive sectors and themes in the current market environment are real estate and healthcare.

“Investors globally are clearly concerned about the personal and economic impacts of one of the largest humanitarian crises in decades,” said Iqbal Khan, president of UBS Europe, Middle East, and Africa and co-president of UBS Global Wealth Management.

“The long-term economic implications of the war in Ukraine are difficult to assess, but most investors remain optimistic on their outlook for the stock market and are confident in their well-diversified investment portfolio.”

“The impact of the war in Ukraine and rising inflation have forced business owners to again adapt to an unprecedented and unpredictable situation, after managing the effects of the pandemic on their business,” said Tom Naratil, president of UBS Americas, and co-president of UBS Global Wealth Management.

“In a tight labour market, business owners are working with their financial advisors on employee wellness offerings such as UBS’s Workplace Wealth Solutions, to bring greater value to their employees.”

According to half of investors surveyed globally, market volatility is higher than usual. Most investors foresee a negative economic impact from the war, with 66 per cent expecting higher energy prices, 64 per cent expecting more global instability and 60 per cent concerned about increased cyber-attacks. However, investors aren’t adjusting their portfolios yet, but are poised to do so should the market decline further. Many are now more likely to consider buying gold, domestic stocks and oil, while technology and energy remain the most attractive sectors in the current market environment.

“The sources of concern for business owners increased this quarter with geopolitical instability joining rising material costs, tax increases, heightened regulations, and supply chain issues. As a result, confidence in their own businesses for the next 12 months declined 11 percentage points. The survey found business owners tempering their hiring and investment plans and are focusing on increasing their employee benefits, IT spending and upgrading talent,” said the survey report.

— issacjohn@khaleejtimes.com