The latest Friends Provident International (FPI) Investor Attitudes Report shows that United Arab Emirates (UAE) investor confidence continues to improve, albeit at a slower pace than has previously been the case.
While this clearly shows that confidence in the UAE investment market is returning, there is still a preference for low risk assets. Gold is again the most popular asset class, followed by cash. The latest report also shows an increase in the preference for property investment.
In terms of investment advice, 44% of respondents say they would approach a financial adviser for help with their plans – up from 40% in January 2011. The research shows a reduction in the percentage of investors who would turn to stockbrokers or insurance sales agents for advice, and an increase in the number of respondents who would not seek any advice.
With regard to how investors plan to mitigate the effect of inflation on their investments, surprisingly, a large number of respondents, one in five overall, said they would save more in cash, which perhaps points to a certain naivety when it comes to investing. One in five Dubai based respondents said they were not concerned about the effect of inflation on their investments. Abu Dhabi based respondents appear even less concerned, with only one in four saying they did not consider the impact of inflation on their investments to be a problem. Matthew Waterfield, general manager, Middle East and Africa for FPI said: “It is good to see a steady increase in the Friends Investor Attitudes Index since its launch last year.
This is a sure sign that investor confidence is improving in the UAE. The fact that more people are consulting with financial advisers is proof that investors are now willing to consider a more sophisticated approach to their financial planning.”
The report shows that almost two-fifths of respondents are not currently making any provision for their retirement, although affluent investors are more than twice as likely to have plans in place. Most of those are using either personal regular savings plans or a property portfolio as their retirement fund.
Matthew Waterfield added: “With affluent investors more likely to invest in high risk assets, it is important they seek appropriate financial advice. In view of recent turmoil in the UAE property market, I would urge investors to consider a balanced approach to investing, and not to rely exclusively on a property portfolio to fund their retirement plans.” While investment sentiment in the UAE is currently less positive than in FPI’s other key markets – Hong Kong and Singapore – the report shows that UAE respondents view the market as steadily improving, and think the improvement will continue over the next six months