Six in 10 UAE investors intend to increase their exposure to equities over next six months, UBS says

About six in 10 investors in the UAE plan to boost their exposure to stocks in the next six months, according to a new survey by global wealth manager UBS.

This compares with 41 per cent of investors globally who intend to raise their exposure to equities, 12 per cent who aim to cut their stock holdings and 47 per cent who plan to keep their portfolios unchanged.

The global Investor Sentiment survey polled 4,000 investors and business owners across 14 global markets, including the US, Europe, Asia and the UAE from March 30 to April 18 this year.

However, individual investors around the world continue to hold elevated levels of cash, which accounts for 22 per cent of their portfolios.

The average cash holdings of UAE investors rose by 9 percentage points since September to 26 per cent, the UBS study said.

“Investors’ cash holdings are still far higher than our recommended allocations, especially given the current market and economic environment, so it is encouraging that they are looking to invest more in equities,” said Tom Naratil, president of UBS Americas and co-president of UBS Global Wealth Management.

“If inflation picks up, the value of cash will be eroded in real terms and investors will be forced to look to other asset classes to help meet their financial goals.”

This position mirrors that of Bank of America’s February Global Fund Manager Survey, which said higher-than-expected inflation remains the biggest risk for global financial markets.

Fund managers have flagged the Covid-19 pandemic as their top concern in every month since February last year.

However, investors said their primary concern is that the economic recovery could drive a surge in price growth that could be hard to contain.

About half of all global investors are “very concerned” and 26 per cent “somewhat concerned” that cash could take a hit if inflation rises too much, according to the UBS survey.

About 41 per cent said they would raise their stock holdings in such a scenario while 31 per cent said they would strengthen their property positions, it said.

Seven in 10 investors globally said technological transformation will be main theme over the next six months while 64 per cent believe stocks are an effective way to diversify portfolios during a post-Covid recovery and 63 per cent said sustainable investing is a promising opportunity.

“In the UAE, a majority of investors told us they are seeing opportunities in industries that are being transformed by technology,” said Ali Janoudi, Middle East and Africa chief at UBS Global Wealth Management.

“We agree and believe that sectors such as GreenTech, FinTech and HealthTech will be structural winners in the long term.”

Investors and business owners around the world said they are bullish about US President Joe Biden’s policies over the next four years, according to UBS.

About 64 per cent believe that the Biden administration will have a positive impact on the global economy, 60 per cent feel it will support global markets and 57 per cent are confident that their personal finances will benefit.

Fifty-four per cent of business owners believe US policies will boost their companies, the study found.

Fund managers have flagged the Covid-19 pandemic as their top concern in every month since February last year