Wealthy investors worried about 2020 but optimistic about future: UBS

Geopolitical events are weighing on investors globally and causing widespread uncertainty, according to UBS’s Investor Watch report, but beyond 2020, investors are far more confident about the major changes they foresee in the new decade.

Investors see good reasons to be cautious in 2020. Almost eight in ten feel markets are moving towards a period of higher volatility, and more than half expect a significant drop in the markets at some point in the new year. As a result, the report said, 52 percent are unsure if now is a good time to invest; nearly three in four investors say the investment environment is more challenging than it was five years ago. The majority (58 percent) feel less in control of their portfolio’s performance than they used to be.

According to UBS, 82 percent of UAE investors expect more volatility, 88 percent think the investment environment is more challenging today than it was five years ago, and 59 percent see a big market drop before the end of 2020. 

Two in three global investors believe markets now are driven more by geopolitical events than business fundamentals such as profitability, revenue and growth potential, singling out the US–China trade conflict, the political environment in their markets and the 2020 US presidential election as the biggest threats to investment portfolio performance.

Globally, 44 percent of investors are highly worried the US-China trade conflict will impact their portfolios in 2020. While only 40 percent of investors in Asia are concerned about US-China trade conflict, in the US and EMEA, that figure rises to 45 percent. According to the UBS report, 83 percent of UAE investors think that geopolitics are driving markets more than business fundamentals.

Looking to the decade ahead, investors are expecting a number of “mega-trends” to fuel returns, most notably an aging population, developments in technology and diminishing natural resources. As many as seven in ten investors feel optimistic about their portfolio returns over the next decade.

Investors expect the technology, healthcare and energy sectors to benefit the most from these mega-trends in the decade ahead. A full 88 percent are interested in aligning their portfolios accordingly. Sixty-nine percent of US investors are optimistic about their long-term returns, as compared with 65 percent Asia investors and 72 percent of EMEA investors. In the UAE, 85 percent of investors are optimistic about returns in the next decade, and 98 percent will align their portfolios with future trends.

UBS surveyed more than 3,400 high net worth investors for the report, and the global sample was split across 13 markets: Brazil, mainland China, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Switzerland, Taiwan, UAE, the UK and the US. The UAE sample of UBS Investor Watch consisted of 184 investors, and the research was conducted between August 2019 and October 2019.

 (Reporting by Seban Scaria; Edited by Daniel Luiz)

(seban.scaria@refinitiv.com)

© ZAWYA 2019