Slowing global economy poses the biggest risk, say investors

More than half of UAE investors believe a slowing world economy poses the biggest risk to their investments in 2019, a study found.

According to research from financial services companies Old Mutual International and Quilter Cheviot Investment Management, 54 per cent of the 130 UAE residents polled believe economic stagnation in the global economy will be the largest threat this year – up from 39 per cent in 2017.

Interest rate hikes were a concern for 43 per cent of investors, versus more than a quarter in 2017, while 41 per cent are wary of falling oil prices. Mark Leale, head of Quilter Cheviot Investment Management’s Dubai representative office, said it is “understandable” many investors are concerned as markets will “undoubtedly be more volatile in 2019”.

“Handling risk is a key part of the investment process and managing the downside is inevitable when dealing with stock markets,” he said.

The US-China trade war, along with weak economic indicators and a series of global political challenges, such as Brexit in the United Kingdom, adversely affected major stock market indexes at the end of last year. Stocks around the world limped into the end of a dismal 2018 that saw bear markets in equities from Japan to Germany. Meanwhile, the US Federal Reserve increased interest rates four times in 2018 with two more expected in 2019.

Nearly a third of poll respondents feel Donald Trump’s presidency in the United States could pose a risk to their investments, while 30 per cent fear geopolitical events such as terrorism may be a threat.

The UK potentially exiting the European Union this year is also a concern for over a quarter of respondents.

However, two thirds of UAE investors feel positive about the performance of the UAE economy over the next 12 months - 66 per cent believe it will be strong or perform better than in 2018.