Sunday, May 31, 2015

Dubai: Most investors in the UAE are optimistic of reaching their financial goals in 2015, although falling crude oil prices and rising inflation remain top concerns, a survey has revealed.

“We are encouraged by the overall sense of optimism that UAE investors are showing, but we are also cognisant of the fact that there is a seeming sense of uncertainty on the back of oil-price volatility, and also likely on the back of the wider geopolitical developments,” Dhiraj Rai, Gulf and eastern Mediterranean director at Franklin Templeton Investment Management, told Gulf News by email.

Investor sentiment for the year ahead is more bullish, with 64 per cent believing the market will continue to move upwards, a distinct possibility as the UAE’s GDP growth in 2015 is projected by the IMF to grow by 3.2 per cent, it said.

Investors would prefer to invest in real estate, stocks and precious metals, in that order, both for 2015 and over the next decade, the survey revealed.

“We find it particularly interesting that investors also ranked real estate and stocks as their top two riskiest asset classes: a clear indication that risk appetite amongst UAE investors is strong for these asset classes. Meanwhile, the third riskiest asset class listed was non-metal commodities, which we interpret as an indication of concern around the price of oil,” Rai said.

Conservative approach

The majority of the respondents are planning a more conservative approach to investing. Conversely, a notable minority of 29 per cent are planning on taking a more aggressive approach, the study revealed.

“Whether this is opportunistic or not, the fact that 94 per cent of investors, second only to India and on par with China, are confident about achieving their investment goals tells us that there is a feeling that this is very much a market that can support investor aspirations. [However], there are clear areas of concern,” Rai said.

Volatile oil prices

Rai feels that there won’t be any capital outflows from the region due to volatile oil prices.

Less than 2.5 per cent of the equity market cap in the UAE is in the oil and gas sector, a sector is very much in the control of regional governments.

“The survey showed us that the Middle East is considered to be the market expected to deliver the best equity and fixed-income opportunities this year, and over the next decade. A third of respondents felt that equities and fixed-income would provide the best returns this year and over the next 10 years,” Rai added.

In the UAE, oil accounts for less than 40 per cent of GDP — the lowest for any market in the GCC.

By Siddesh Suresh ?Mayenkar Staff Reporter

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