Inflation and the Russian-Ukrainian crisis top the list of global investor concerns

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Rising inflation and the impact of the Russian-Ukrainian war on the global economy are major concerns for wealthy investors around the world, according to a new survey from Swiss wealth manager UBS.

About 92% of global investors expect the war to increase inflation, while more than half believe inflation will last longer than 12 months, according to the quarterly UBS Investor Sentiment Survey.

However, geopolitical risk, market downturn and global trade conflict are the top concerns for investors in the UAE, where 85% of respondents to the survey – which surveyed more than 2,500 investors and 1,000 business owners businesses in 14 markets – expect the war to drive up inflation, while 43 percent believe the rising cost of living will last longer than 12 months.

“Investors around the world are clearly concerned about the personal and economic impacts of one of the biggest humanitarian crises in decades,” said Iqbal Khan, president of UBS Europe, Middle East and Africa and co-chairman of UBS on Thursday. UBS Global Wealth Management.

“The long-term economic implications of the war in Ukraine are difficult to gauge, but most investors remain optimistic about their outlook for the stock market and are confident in their well-diversified investment portfolio.”

The era of the Covid-19 pandemic characterized by low interest rates and fiscal and monetary stimulus is coming to an end, with rising inflation forcing the US Federal Reserve and other central banks to tighten their monetary policies.

On Wednesday, the Fed raised interest rates by 50 basis points, its most aggressive move since May 2000 to contain inflation.

The Fed’s decision is the second in less than three months as the labor market continues to overheat and US inflation hit 8.5% in March, the highest level since 1981.

Concerns about inflation are causing around 52% of investors in the UAE to delay big purchases, according to the UBS survey.

While 57% of survey respondents in the UAE are very concerned about the impact of inflation on their retirement savings, 56% are worried about its effect on wealth transfer, he said.

Most investors in the UAE anticipate a negative economic impact from the Russian-Ukrainian war, with 67% concerned about increased cyberattacks and greater global instability, 64% expecting higher energy prices and 61% fearing the risk of recession, UBS said. .

If stock markets continue to fall, 33% of UAE investors plan to enrich their portfolios, while another 30% will redirect their investments to different sectors, according to UBS.

About 43% of investors in the UAE also consider buying cryptocurrencies amid war, while 41% prefer real estate and 40% choose to invest in gold, according to the survey.

The most attractive sectors and investment themes in the UAE market today include real estate, sustainable investing and healthcare, he added.

Meanwhile, top concerns for business owners around the world include geopolitical instability, rising material costs, tax increases, tightening regulations and supply chain issues, according to the UBS survey.

As a result, confidence in their own businesses for the next 12 months fell by 11 percentage points.

In the United States, geopolitical risk, politics and inflation are the main concerns, with around 60% of investors worried about the war in Ukraine and its effects on their portfolios, according to the UBS survey.

Additionally, a majority of independent financial advisors and wealth advisors in the Middle East and North Africa believe the region’s asset management industry is growing faster than expected, with 69% up. between them claiming that it will reach $2 trillion in assets under management before 2025, up from $1.2 before. tn in 2020, according to new research from behavioral finance firm Oxford Risk.

Sixty-two percent of wealth advisers believe expansion will be spurred by increased international investment in the region, while 52 percent of respondents said the growing number of wealthy and affluent people is driving interest of global companies, Oxford Risk said on Thursday.

Updated: May 06, 2022, 04:30

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Christi C. Elwood