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Abu Dhabi, UAEFriday 22 June 2018

UAE millionaires 'more bullish' than global counterparts, says UBS

Geopolitical risk, inflation, and tax rises cited as factors that could affect future prospects

Abu Dhabi's skyline. UAE-based millionaires are the second most confident about their personal and wider economic prospects out of nine global markets, according to a survey by UBS. Christopher Pike / The National
Abu Dhabi's skyline. UAE-based millionaires are the second most confident about their personal and wider economic prospects out of nine global markets, according to a survey by UBS. Christopher Pike / The National

Millionaires in the UAE are the second most confident after the Swiss about their own prospects and the wider economy compared with their counterparts in other wealthy global markets, according to a study from Swiss bank UBS.

More than three-quarters (77 per cent) of UAE-based millionaires said they were confident about the short-term and long-term outlook, compared to 62 per cent for all nine markets surveyed in the UBS’ annual Confidence Index. The survey polled more than 5,400 millionaires, with each at least $1 million in investable assets, between November 2017 and January 2018.

Despite recent market turbulences, we continue to see high levels of confidence among the world’s wealth holders,” said Ali Janoudi, head of wealth management, Central and Eastern Europe, Middle East and Africa, France and Benelux International at UBS.

“Overall confidence, measured by gauging investors' optimism on the national economy and personal financial situation over the long and short term, is highest in Continental Europe, the Middle East and the US.”

The UAE came second only to Switzerland (78 per cent) out of nine markets that also included the United States (ranked third), Germany, Italy, the United Kingdom, Singapore, Hong Kong and Taiwan.

Just 11 per cent of total millionaires surveyed said they felt pessimistic about their personal and wider economic prospects, according to the index. The figure was even lower in the UAE, at 5 per cent.

The index reflects increased optimism about the world economy, UBS noted. The IMF revised global growth forecasts for 2018 and 2019 upward by 0.2 percentage point to 3.9 percent in January, reflecting “increased global growth momentum and the expected impact of the recently approved US tax policy changes."

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Global wealth flows are set to strengthen as a result. In the UAE, Dubai is expected to cement its position as a hub for wealthy individuals.

The number of ultra-high-net-worth individuals, those with personal assets of $30m or more living in Dubai, increased by 12 per cent between 2015 and 2016, and is expected to rise by a further 60 per cent by 2026, according to real estate consultancy Knight Frank’s annual Wealth Report, published last week.

Globally, the number of UHNWIs is expected to grow by 42 per cent between 2016 and 2026, the report shows.

“Strong optimism about the financial climate is reflected in the millionaires’ ranking of key concerns,” UBS said. It added that anxieties about the market downturn, interest rate rises, inflation and market volatility all fell outside the top five list of worries cited by respondents.

Instead, millionaires ranked societal challenges of rising healthcare costs, cybersecurity and terrorism as their top three fears.

In the UAE, wealth holders cited geopolitical risks, inflation, tax increases and terrorism as key concerns. Male UAE millionaires cited a higher level of concern about each of these issues than their female counterparts, the report found.

“The UAE ranks as the second most confident market among all countries globally,” said Mr Janoudi.

“But one trend that we are seeing the world over is a natural bias among millionaires towards their own domestic stock markets. Spreading risk remains important in case we do see any kind of correction in future.”