High net worth individuals (HNWI) across the Gulf Cooperation Council (GCC) have a sense of increased confidence on the prospects for the regional economy and prefer to invest closer to home, a survey by Emirates Investment Bank (EIBank) has revealed.
“The main reasons for optimism on the GCC economy are the stabilisation of oil prices and upcoming high-profile events in the region, as well as the benefits of diversification efforts and structural reforms,” Khaled Sifri, chief executive officer at EIBank told Zawya in emailed comments on the report, which was issued on Sunday.
The United Arab Emirates will soon see the launch of key events of Expo 2020 and Special Olympics World Games Abu Dhabi 2019, which is boosting the investment appetite among regional investors, according to EIBank. (Read more here).
But Sifri noted that regional geopolitics is impacting the investment decisions for the majority of the survey's respondents (84 percent), and he added that this figure has increased from 55 percent last year.
“There is also strong agreement across all GCC countries that the geopolitical situation in the region has made an impact on how HNWIs choose to invest. The main impact of geopolitics on investors is that they are looking to diversify their portfolio and they are showing caution when investing,” Sifir told Zawya.
“However, the impact has not been entirely negative, as some investors have decided to focus more on local investments as a direct result of geopolitics,” he added. (Read more here).
The survey showed a preference among HNWIs in the region to invest locally, with 75 percent of them seeing more lucrative investment opportunities in their home markets than in overseas investments.
"Amongst the HNWIs who prefer to keep their assets closer to home, the key factors are that they are confident that investments in the region are secure," Sifri said, adding that these HNWIs also believe that the region offers more attractive investment opportunities, in comparison to other regions.
“In addition, the majority of the respondents who prefer to invest in the region are entrepreneurs. Thus, it is clear to see through their asset choice, whether cash or investing in their own businesses, why they also prefer to keep their assets closer to home,” he added.
Of the sectors drawing regional HNWIs’ investment, Sifri said that “we see many investors currently having exposure to real estate, retail and oil & gas and they plan to continue to do so in the future.” (Read more here).
And while 70 percent of HNWIs currently have ‘considerable’ exposure to real estate and 50 percent have exposure to retail investments, the technology sector is gaining rising interest among HNWIs, with 25 percent of them already allocating assets to it and planning to increase their exposure to it this year, according to the survey.
(Reporting by Nada Al Rifai; Editing by Michael Fahy)
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