New research* from Old Mutual International and Quilter Cheviot Investment Management has revealed that increasing numbers of UAE based investors are concerned about the impact of a slowing economy on their investments.
Over half of respondents (54%) believe economic stagnation in the world economy will be the biggest risk to their investments in the next 12 months, up from 39% in 2017.
Issues such as growing trade uncertainty, weak economic indicators and a series of global political challenges have pushed major stock market indexes down, something that hasn’t gone unnoticed amongst UAE investors.
The results of the survey also revealed that 43% of investors are concerned about interest rate hikes, versus 26% in 2017. Meanwhile, 41% are wary over falling oil prices, up from 39% in 2017.
Nearly a third of respondents feel Donald Trump’s presidency in the US could pose a risk to their investments; 30% feel geopolitical events such as terrorism may be a threat; while over a quarter of respondents believe the UK exiting the European Union in 2019 could also have a negative impact on investments.
Mark Leale, Head of Quilter Cheviot Investment Management’s Dubai representative office, comments: “With everything that is happening globally, it is understandable that many investors are concerned there will be an economic slowdown this year. However, our investment portfolios are well diversified internationally, so issues such as Brexit or falling oil prices are often less of a factor than people think.
“Markets will undoubtedly be more volatile in 2019 than in recent years. There are a number of events on the horizon that have fairly unpredictable outcomes, however, we still see attractive opportunities in many markets and continue to recommend the merits of holding a diversified portfolio invested across a range of asset classes.
“Handling risk is a key part of the investment process and managing the downside is inevitable when dealing with stock markets. It is therefore important that the portfolio is correctly matched to the investors’ risk profile and we will be in regular contact with our clients to ensure this is the case.”
Paul Evans, head of region, Middle East & Africa, Old Mutual International, comments:
“The importance of long-term financial planning shouldn’t be underestimated. Despite what investors will see and hear in the news and the impact this is having on the stock markets, markets will rise as well as fall, so it is important to stick to your financial plan in both good times and bad.”
Despite growing concerns over their investments, two-thirds of UAE based investors feel positive over the performance of the UAE economy over the next 12 months. 66% of respondents believe the economy will be strong or perform better than in 2018.
*Old Mutual International and Quilter Cheviot investment and retirement research, August 2018. A targeted piece of research, aimed specifically at investors living in the UAE (mainly Dubai and Abu Dhabi) who use the services of a professional to invest in the stock market. Investors needed to have a minimum of US$50,000 invested. 130 responses were received in total and were a representative cross-section living in the UAE (expats, NRIs, and GCC Nationals).