HNW Investors Remain Confident For Long Term Despite Market Turmoil - UBS Study

Tom Burroughes Group Editor 29 April 2020

HNW Investors Remain Confident For Long Term Despite Market Turmoil - UBS Study

This quarterly survey of investors covers 14 countries from around the world. It shows that people in some countries are more worried than others about the pandemic's effects on their portfolios and their businesses.

Wealthy investors and business owners remain optimistic about the longer term in spite of a sharp dip in short-term confidence due to the coronavirus, according to the new quarterly Investor Sentiment survey from UBS.

According to the survey, which polled 4,108 wealthy investors and business owners in 14 markets in April, 70 per cent of respondents said that they are optimistic about the long-term economic outlook for their region, virtually unchanged from the prior survey three months previously. Forty-six per cent expressed optimism on the short-term outlook, down from 67 per cent.

UBS surveyed 2,928 investors and 1,180 business owners with at least $1 million in investable assets (for investors) or at least $1 million in annual revenue and at least one employee other than themselves (for business owners), from 1-20 April 2020. The global sample was split across Argentina, Brazil, China, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Switzerland, the UAE, the UK and the US.

The outbreak of the global pandemic has hit markets hard, although some indices have come off their lows, encouraged by central banks flooding the market with money, specific government fiscal measures, and some hope that the surge in COVID-19 deaths is slowing off. According to the MSCI World Index of developed countries’ equities, shares are down by 15.2 per cent. (See a range of wealth managers’ thoughts about the crisis and their investment views, here.)

The share of investors expressing short-term optimism fell most sharply in the US, from 68 per cent to 30 per cent, and least sharply in Europe outside Switzerland, from 58 per cent to 50 per cent. In Asia, it fell from 71 per cent to 55 per cent; in Latin America, from 60 per cent to 49 per cent; and in Switzerland, from 47 per cent to 28 per cent.

Globally, 47 per cent of investors expect to keep their stock market investments the same in the next six months, while 37 per cent plan to invest more. Additionally, 23 per cent think now is a good time to buy stocks, and another 61 per cent see an opportunity to buy if stocks fall another 5-20 per cent.

“Whilst the UK’s investors are some of the least optimistic about their own economy over the next decade, they are one of the most likely group of investors to increase their stock market exposure in the next six months (40 per cent). Furthermore, nearly a third (31 per cent) of the UK investors believe that current stock prices represent a buying opportunity,” Mark Goddard, head of high net worth business in London, UBS Global Wealth Management, said.  

In general, business owners are also positive on the longer-term outlook and express a continued desire to invest in their own firms. Sixty-one per cent are optimistic about their businesses, down from 73 per cent in the prior survey. Twenty-seven per cent plan to hire more versus 17 per cent who plan to downsize. The gap between those planning to hire and downsize was biggest in Latin America (+22 percentage points) and lowest in Switzerland (+2 percentage points).

Top worry
Both investors and business owners cited COVID-19 as their top concern, at 57 per cent and 60 per cent of respondents, respectively.

"While short-term investor optimism across the globe has dropped significantly, levels seem to align regionally with the pandemic cycle. In Asia, where the COVID-19 crisis and mitigation occurred earlier, investors appear to be slightly more optimistic about their region's stocks. By contrast, optimism appears lower in the US, which is currently experiencing an apex in the crisis," Paula Polito, divisional vice chairman, UBS Global Wealth Management, said.  

Different countries, different views
Only 35 per cent of US investors are bullish on US stocks over the next six months, down from 64 per cent three months ago. However, US investors are the most likely to believe now is a buying opportunity (at 33 per cent). Forty per cent of US investors believe COVID-19's worst impact will be over by the end of June, with a further 28 per cent saying by the end of September.

Forty-two per cent of Latin American investors plan to invest more in the next six months – higher than the global average (37 per cent). Forty-seven per cent feel optimistic about their stock market, the second highest percentage worldwide, while 42 per cent think that COVID-19's worst impact will be over by the end of June, the most of any region.

Forty-six per cent of European investors feel optimistic about European stocks, down from 57 per cent, but 43 per cent plan to invest more - the most of any region. Forty-one per cent expect COVID-19's worst impact will be over by the end of June, the second highest percentage globally.

Like their peers in the rest of Europe, Swiss investors grew more cautious. Thirty-five per cent were planning to invest more in the next six months, while 30 per cent felt COVID-19's worst impact would be over by the end of June, below the global average.

Fifty-one per cent of Asian investors were bullish on the six-month outlook for stocks in their region - the highest of any region surveyed. Eight-five per cent said the virus would be over by the end of either June, September, or December, one of the highest percentages globally.

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