UAE investors eye low-risk assets

Investors in the UAE currently prefer to put their money in low-risk assets such as government bonds and saving plans, says a report.

According to a new report commissioned by Friends Provident International (FPI) titled Investor Attitudes, though UAE investors are sceptical about investing in the current global economic climate and market conditions, they prefer to put their money in low-risk assets such as government bonds, cash and gold followed by equities and property.

According to the detailed report released to Emirates Business, bonds are the least desirable asset class, with only one-third of respondents agreeing that they are a suitable investment at this time. Unsurprisingly, corporate bonds are the least preferred – perhaps demonstrating that the financial losses suffered by Lehman bond investors in Hong Kong and Singapore are still at the forefront of people's minds when it comes to investing in such instruments.

The research indicates that investor confidence is likely to return soon, with more than half of those surveyed (53 per cent) being of the opinion that market conditions will improve within six months. Only 12 per cent of those questioned expected it to worsen.

Matt Waterfield, General Manager (Middle East and Africa), Friends Provident International, said: "Optimism among investors in the UAE is improving and residents are becoming a little more bullish about investment markets. This, in turn, means there is an even greater need for careful financial planning."

In terms of investment strategies, 20 per cent of respondents in the UAE said they are investing for the short term, 12 per cent said they are investing for the long term and 22 per cent said they will not invest in the current climate, highlighting the uncertainty in the current investor sentiment.

When asked which products the respondents currently prefer, 55 per cent chose endowments or savings plans, followed by government bonds at 43 per cent, fixed-term deposits at 42 per cent, annuities at 34 per cent and corporate bonds at 25 per cent. A large proportion (62 per cent) of people surveyed in the UAE believe that it is important to use ethically screened investments, including Shariah-compliant products.

Interestingly, the research highlighted that 57 per cent of investors in the UAE rely on friends or family for financial advice.

The research for the report was conducted in the UAE, Hong Kong and Singapore, and it details the investment strategy of more than 2,750 respondents, their current view of investment market conditions, their attitude towards risk and their investment time horizon.

The UAE had the highest proportion of respondents who felt that now is a good time to invest in endowments.

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