High net worth individuals in the GCC will continue to keep their assets closer to home as they have become more optimistic about economic situation in the region and across the globe, according to a report released on Sunday by Emirates Investment Bank.
Higher oil prices and increased investment opportunities in the region are among key factors boosting their confidence. Nearly half (45 per cent) of GCC respondents in a survey believe the global economic situation is improving, and more than three quarters of HNWIs (85 per cent) are optimistic about the economic prospects for the global economy over the next five years.
Three quarters of HNWIs believe that investment opportunities in their home markets are more lucrative than diversifying abroad. In addition, a large proportion of the 84 per cent of respondents who said that they have changed their investment approach as a result of geopolitics, have decided to focus more on investing in their local markets.
GCC Wealth Insight Report said in addition to the optimism towards global economic growth, confidence in local and regional growth is more prominent and is strengthening in 2019.
"Views of an improved economic and business environment in the GCC more than doubled among HNWIs leaping from 31 per cent to 71 per cent of respondents, with just three per cent instead of last year's 41 per cent feeling that the situation is worsening. The vast majority of HNWIs (96 per cent) surveyed are optimistic that stabilised oil prices, upcoming high-profile events, and the benefits of economic diversification and reforms will induce a robust environment for businesses," said the report.
This year's report shows a significant increase in HNWIs' tendency (91 per cent) to accumulate wealth, as opposed to preserving it, and yet 9 in 10 respondents categorise themselves as conservative investors.
Khaled Sifri, CEO of Emirates Investment Bank, said the size of home-grown wealth in the region and the entrepreneurial culture it is known for, gives the investment landscape in the region a unique characteristic. "This explains the increased optimism and confidence we saw in this year's findings, and the growing appetite among the region's wealthy to grow their wealth instead of preserving it, compared to last year where there was an increase in wealth preservation over previous years."
The survey shows that there has been a clear preference among the wealthy to deploy capital in their own markets and businesses. "In addition to economic diversification plans and reforms, the approaching launch of flagship events, such as the Special Olympics World Games Abu Dhabi 2019 and Expo 2020 Dubai, is driving positive sentiment among regional investors, particularly in the UAE, which is offering incentives to investors and to high caliber talent to partake in its transition to a knowledge-based economy" said Sifri.
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