Most UAE investors think inflation will impact portfolios

Stocks and real assets gain popularity to preserve purchasing power

An investor looks up at electronic display boards at the Dubai International Financial Market, March 21, 2010. Image for illustrative purposes.

An investor looks up at electronic display boards at the Dubai International Financial Market, March 21, 2010. Image for illustrative purposes.

REUTERS/Ahmed Jadallah

Nearly half of UAE investors--46 percent--believe inflation will accelerate over the coming 12 months and plan to adjust portfolios by buying more stocks and real assets, according to UBS.

The majority, 92 percent, believe inflation will have an impact on their portfolios within the year.

The wealth management firm said its latest Investor Sentiment Survey showed that 35 percent plan to add stocks to their portfolios, 33 percent precious metals and 32 percent plan to add real estate.

In addition, 32 percent say they will add sustainable investments, and when it comes to business owners, 61 percent say they see the benefit of sustainable business practises, believing they could generate more revenue.

UBS said there was also strong confidence in the stock market, with 83 percent of UAE investors saying they had confidence in the market and 47 percent expressed their intentions as result to increase their allocation to stocks in the coming six months.

COVID-19 remains the top concern for investors, with 66 percent citing it as their biggest concern, followed by climate change and cybersecurity.

Iqbal Khan, president of UBS Europe, Middle East and Africa and co-president of UBS Global Wealth Management, highlighted the issue of the Delta variant but said that a return to national lockdowns was not expected. 

“The Delta variant is leading to renewed worries about lockdowns, inflation has proven to be higher and longer lasting than many – among them the Fed – thought, and US/China tensions are resurfacing.

“It’s no wonder that we see some nervousness and uncertainty amongst investors, particularly in the US and Asia. Our view is that there will be no return to national lockdowns and we’ll see inflation recede in the second half, meaning the Fed won’t need to withdraw stimulus. This should be positive for the re-opening of economies, recovery trades and many of the secular growth winners.”

Ali Janoudi, head of wealth management Middle East and Africa at UBS said: “Investors in the UAE are looking for investment opportunities to protect their purchasing power against inflation, with many eyeing real estate and sustainable investments.

“They are also optimistic about their own region’s economy. We believe a continued risk-on stance in equities is warranted and sustainable investing is our preferred approach to investing globally.”

(Reporting by Imogen Lillywhite; editing by Brinda Darasha)

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