UAE Investor confidence on the rise, FPI survey

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UAE Investors have Increased Confidence in Local Investment Market, reveals FPI survey
The Friends Provident International (FPI) Investor Attitudes report, says UAE investors have increased confidence in the local investment market. Photo-DIFC

According to the latest edition of the Friends Provident International (FPI) Investor Attitudes report, conducted for Q4 in 2012, UAE investors have exhibited increased confidence in the local investment market when compared to those in Hong Kong and Singapore.

The research has yielded the Friends Investor Attitudes Index of 28 for the UAE, which is an 11 point increase over the last ranking. The Friends Investor Attitudes Index is a reliable indicator of investor attitudes and sentiment, where 100 is most positive and -100 is least positive.

The indices for Hong Kong and Singapore now stand at 27 (38) and 25 (28) respectively.

As quoted by the report, property investments seem to be on a rise across the UAE. Equities and bonds are also becoming assets of choice for investors, along with an improvement in confidence for investing in cash and money/currency markets. Interest in collectibles however, is slowly diminishing.

“The fact that UAE investors are now more confident in their local investment market than their counterparts in Hong Kong and Singapore resonates with recent stories in the media concerning improved consumer confidence in the country. It is interesting – although not entirely surprising – to see the much improved preference for investing in property, which has been building over the last few editions of the report. Sentiment towards property investment is a fairly reliable barometer of the level of confidence in the local investment market.” — Matthew Waterfield, FPI General Manager, Middle East and Africa

Overall, as in Hong Kong and Singapore, UAE investors adopted a balanced approach (41%) to investing. However, regardless of income, UAE investors are almost twice as likely to follow a capital preservation strategy (36%) than Hong Kong (18%) and Singapore investors (19%).

The survey, which is conducted in the three markets, Hong Kong, Singapore and the UAE, simultaneously, includes assessment of the wealthier investors in each market. In the UAE, the definition of such an investor includes one having USD 4,000 per month disposable income and/or a lump sum of USD 100,000 to invest.

Some of the major findings of the research are summarised as follows:

  • UAE investors are more than twice as likely to diversify their investments by asset class (35%) rather than geographically (16%). Most respondents also quoted that they diversify their investments both by asset type and geographically.
  • More than three-quarters (76%) of investors believe the investment market has improved over the last six months, and the same number believe that markets will continue to improve over the next six months.
  • Despite improved investor confidence, for the most part, investors have no clear idea of how much they need to save for their retirement. The most common response (31%) thought they would need a maximum of Dhs2.4m. Only 8% of respondents have worked with an adviser to determine how much they are likely to need to secure a comfortable retirement.
  • 22% of respondents have no life insurance, and 27% don’t have any critical illness coveragea. Of those respondents with life insurance 41% have coverage of less than AED 500,000 and 45% of respondents with a critical illness plan have less than AED 500,000 coverage.

Elaborating upon the last two findings, Matthew Waterfield, commented;

“It’s great to see improved confidence in the current and future markets, but a little disturbing that people don’t seem to be planning for the long term and in particular for their retirement. In addition, the number of people without any life and/or critical illness insurance is a cause for concern, as is the number of people with a relatively low level of coverage.

I strongly recommend that anyone who needs help to determine the amount they need to save for a comfortable retirement – or to determine the amount of life and/or critical illness insurance they need to protect the things that matter to them most – seek independent financial advice to make sure their money is working as hard as possible, and their families and businesses are sufficiently protected.”

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