UBS Investor Sentiment and ElectionWatch: UAE investors are concerned about COVID-19 but remain optimistic about region's economic outlook

Wealthy investors and business owners globally have grown more optimistic on the economic outlook over the next 12 months, according to UBS's quarterly Investor Sentiment survey

  
Ali Janoudi, Head of Middle East and Africa at UBS Global Wealth Management

Ali Janoudi, Head of Middle East and Africa at UBS Global Wealth Management

A close election contest would likely result in higher market volatility, according to UBS’s latest ElectionWatch report

For UAE investors, COVID-19 remains the top concern, but short-term optimism rises, and their long-term outlook remains positive

Security and safety, digital transformation and smart mobility are the top three longer-term investment themes for UAE investors

Dubai, United Arab Emirates: Most wealthy investors and business owners globally have said they plan to adjust their portfolios based on who wins the US election, with almost half seeing November’s vote as one of their top concerns, according to the new Investor Sentiment study by UBS, the world's leading global wealth manager.

According to the study, which polled more than 4,000 wealthy investors and business owners across 14 markets globally in late June and early July, optimism regarding the economy and the stock market rose compared with the same period three months prior, as the effects of COVID-19 eased.

  • Forty-six percent said they were optimistic on the global economy over the next 12 months, up from 40% three months prior
  • Thirty-eight percent were pessimistic, down from 45%
  • Fifty-two percent said they were optimistic on their own region’s economy over the next 12 months, up from 46%
  • Fifty-three percent said they were optimistic on stocks in their own region over the next six months, up from 45%

For UAE investors COVID-19 remains their top concern (67%), while 58% are concerned about the rising healthcare costs.

  • Seventy-three percent of the UAE investors said they were optimistic about the global economy over the next 12 months, whereas 14% were pessimistic.
  • Seventy-seven percent of the UAE investors said they were optimistic about their own region’s economy over the next 12 months.
  • For the long term, 80% of UAE investors said they were optimistic about their own region’s economy for the next 10 years.

However, a rising proportion of respondents (46%) globally ranked the US election among their biggest worries, up from 39% three months prior. Additionally, 51% expressed significant concern about their country’s politics, up from 44%.

A closely fought US election could indeed result in a higher degree of market volatility, according to UBS’s most recent ElectionWatch report, which examines the election’s global and regional implications. Nevertheless, the report does not envisage the levels of volatility that accompanied the onset of COVID-19.

Paula Polito, Divisional Vice-Chairman at UBS Global Wealth Management, says: “COVID-19 remains the top investor concern globally, yet there is significant divergence by region on the focus of post-recovery plans. While more Asians and Europeans see an opportunity for a ‘green’ recovery, US investors place more importance on a traditional economic turnaround.“

Ali Janoudi, Head of Wealth Management Middle East and Africa , says: “Naturally, UAE investors remain concerned about the risks of COVID-19. However, we are also seeing a slight uptick in economic optimism, with longer-term investment themes such as security and safety, digital transformation and smart mobility attracting particular interest from UAE’s wealthy investors.”

Solita Marcelli, Chief Investment Officer Americas at UBS Global Wealth Management, says: “The US election will likely present numerous opportunities for investors, as well as some clarity over policy direction in the world’s largest economy. Regardless of the result, the eventual impact on financial markets is likely to be close to neutral, even if they experience some interim volatility.“

Sixty-four percent of UAE investors said they are highly interested in the US presidential election, and 70% of the UAE investors see Joe Biden more likely to win the US presidential election. Eighty five percent of the UAE investors plan to adjust their portfolios regardless of who wins the election.

Fifty-five percent of respondents said Joe Biden was most likely to win the election, compared with 45% who said Donald Trump. Forty-nine percent of Latin American investors foresaw a Trump victory, the highest proportion globally, while 42% of Swiss investors predicted a Trump win, the lowest share in any region.

Asian investors were most likely to say they would adjust their portfolio based on who wins, with 75% of respondents saying they were planning to do so versus a global average of 61%. Swiss investors were least likely, with only 31% of respondents saying they were planning to do so.

US

American respondents’ optimism over their region’s economic outlook increased more than in any other part of the world, with 41% expressing optimism compared with 30% three months prior. They were also less likely to say they would adjust their portfolios based on who wins the election, with 46% planning to do so compared with a global average of 61%. UBS’s ElectionWatch report predicts tactical adjustments are only likely to become a more important consideration in September as the campaign enters its latter stages.

Latin America

Latin American respondents’ optimism over their region’s stock market outlook rose faster than in other parts of the world, with 57% expressing optimism compared with 47% three months prior. They were also more likely to say they would adjust their portfolios based on who wins the US election, with 67% planning to do so. According to UBS ElectionWatch, the US elections are likely to have a meaningful impact on Latin America and other emerging markets, especially given the effect of US policy on the broader macroeconomic, trade, and geopolitical environment.

Europe

European respondents outside Switzerland were more optimistic on their region’s economy over the next 12 months than the global average, with 55% expressing optimism versus 52% globally. They also expressed more interest in the US election than any other region outside the US, with 72% highly interested compared with a global average of 67%. According to UBS ElectionWatch, the US election is likely to have many key implications for European companies, especially when it comes to trade, taxation, and exchange rates.

Switzerland

Swiss respondents expressed the second highest levels of interest in the US election globally, with 70% saying they were highly interested compared with 67% globally. However, they were also least likely to say they would adjust their portfolios based on who wins, with 31% of respondents planning to do so versus 61% globally. According to UBS ElectionWatch, the US election will have a number of implications for Switzerland, including for the Swiss franc, which tends to appreciate during times of uncertainty.

Asia

Asian investors were the most optimistic globally on their region’s economy over the next 12 months and on their own region’s stock market over the next six months, with 60% expressing optimism on both compared with global averages of 52% and 53%, respectively. They were also most likely to say they would adjust their portfolios based on who wins the US election, with 75% planning to do so versus 61% globally. According to UBS ElectionWatch, the election will have particular implications for China given its changing relationship with the US.

-Ends-

About the UBS Sentiment survey

For this edition, UBS surveyed 2,867 investors and 1,151 business owners with at least $1M in investable assets (for investors) or at least $1M in annual revenue and at least one employee other than themselves (for business owners), from June 23 to July 13, 2020. The global sample was split across 14 markets: Argentina, Brazil, Mainland China, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Switzerland, the UAE, the UK and the US. For the prior edition, UBS surveyed 4,108 investors and business owners with at least $1M in investable assets (for investors) or at least $1M in annual revenue and at least one employee other than themselves (for business owners), from April 1 to 20, 2020. The global sample was split across the same 14 markets.

About UBS

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. UBS' strategy is centered on our leading global wealth management business and our premier universal bank in Switzerland, enhanced by Asset Management and the Investment Bank. The bank focuses on businesses that have a strong competitive position in their targeted markets, are capital efficient, and have an attractive long-term structural growth or profitability outlook.

UBS is present in all major financial centers worldwide. It has offices in 50 markets, with about 31% of its employees working in the Americas, 32% in Switzerland, 19% in the rest of Europe, the Middle East and Africa and 18% in Asia Pacific. UBS Group AG employs over 67,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

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