Risk appetite of GCC investors decline

Dubai: The findings of the GCC Wealth Insight Report 2016 published by Emirates Investment Bank (EIBank) suggest that the negative sentiment towards the current situation of both the global and regional economies has affected investment and banking decisions for the majority of those surveyed.

The survey results showed about 43 per cent of HNWIs (high net worth individuals) said the global economic situation has affected their banking and investment decisions, which represents a significant increase from 28 per cent in 2015. One in five (21 per cent) said it has prompted them to reduce (or stop) their global investment exposure.

The higher level of risk aversion among the regional HNWIs is supported by the 2016 report showing greater current allocations by the GCC’s wealthy to cash/deposits (up to 24 per cent in 2016 from 17 per cent in 2015); gold and precious metals (up to 9 per cent in 2016 from 5 per cent in 2015) and large average allocation is to their own businesses (27 per cent).

When taking a longer-term view, seven in ten HNWIs (69 per cent) say that they plan to increase their investment in their own business in the near future. Meanwhile, 62 per cent intend to increase their investment in cash/deposits, which suggests that HNWIs expect to remain somewhat cautious in the years to come. HNWIs were most negative towards stocks, with just 20 per cent of HNWIs say they plan on increasing their allocations to stocks, with 33 per cent saying they plan on decreasing their allocations.

HNWIs’ planned allocation of wealth in the future shows a notable increase in allocations to direct investments/private equity and a significant decrease in planned allocations to real estate, which suggests that HNWIs are increasingly interested in diversifying their portfolios away from the more traditional asset classes towards selective business ventures. Similar to the 2015 Report findings, 76 per cent of HNWIs prefer to keep their assets closer to home.