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UAE investors mull shift in strategies to combat inflation

About 61 per cent of local investors are more actively managing their wealth and making changes to their investment strategies, given current economic challenges

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Investors in the UAE cited inflation, the threat of recession, and an uncertain global economy as their top concerns with a segment of them saying that they are changing investment strategies to combat global inflation, a survey by a leading global bank revealed on Tuesday.

Standard Chartered’s Wealth Expectancy Report 2022 based on a survey shows 61 per cent of local investors are more actively managing their wealth and making changes to their investment strategies, given current economic challenges.

The survey, which examined the shifts in investor decisions for more than 15,000 emerging affluent, affluent, and high net worth (HNW) investors in 14 markets – including the UAE, said globally too investors are worried over rising inflation (34 per cent), a recession (27 per cent) and uncertain global economy (22 per cent).

Survey results show 61 per cent of local investors are more actively managing their wealth and making changes to their investment strategies, given current economic challenges. In the past year, local investors have made changes to their finances, such as spending less (29 per cent) and making new decisions around their portfolios (27 per cent), which will prompt shifts in major asset classes.

“Investors in the UAE face a complex reality, with inflation, the threat of recession and an uncertain global economy ranking as their top concerns, which is a common concern among investors across the globe. Our research reveals that UAE investors are making changes to their portfolio allocations in response to these challenges, which increases the importance of aligning these decisions to their long-term objectives and the global environment,” said Dr Owen Young, head of Affluent and Wealth Management for Africa, the Middle East, and Europe at Standard Chartered Bank.

The report also revealed that this year, gold continues to be of high interest for UAE investors, with 51 per cent saying they have invested as a result of inflation, in addition to combat inflation in 2022 there is, interest in value stocks at 45 per cent and bonds at 45 per cent.

To outpace inflation, 61 per cent of global investors are looking to reduce their cash holdings, compared to 71 per cent in the UAE. Standard Chartered predicts that global cash allocations will fall from 26 per cent in 2022 to 15 per cent in 2023, indicated by investor responses.

“We believe that diversified portfolios with multi-asset income generation strategies provide some of the best opportunities for investors in the UAE. This combined with professional investment advice tailored to their long-term goals will help them ride out the current market conditions and achieve their objectives,” Young added.

The survey revealed that investors are also reconsidering their holdings of equities as market volatility increases, although this asset class will remain an integral part of portfolios. Of those currently invested in equities, there is an indication that the allocation of equities in UAE investor portfolios to fall from 10.1 per cent to 6.9 per cent in the next year based on survey responses.

The research reveals that 72 per cent of local investors still believe that digital assets are an important part of any investment portfolio, despite multiple setbacks in the market this year.

Currently, 66 per cent of global investors hold digital assets, compared to 73 per cent in UAE. Looking ahead, 71 per cent of local investors surveyed plan to increase their investments in digital assets in the coming year.

— issacjohn@khaleejtimes.com

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