The latest quarterly survey by the world’s biggest wealth manager found that 66% of Apac individual investors are confident about the regions’ economic prospects over the next 12 months, and 63% are bullish about regional stock markets for the next 6 months.
However, 60% of them believe that increased inflation will impact their portfolios significantly, with 53% of them expecting inflation to continue to accelerate.
“Though we expect the recent rise in inflation to ease, the outlook for inflation remains uncertain and therefore building inflation protection into portfolios is an appropriate step for investors to be taking now,” Tom Naratil, president of UBS Americas and co-president of UBS Global Wealth Management, said in a statement.
“This includes investing in commodities, private market infrastructure, and stocks with pricing power, as these areas tend to perform better in an inflationary environment and will help to preserve purchasing power over the long term,” he said.
Around 38% of Apac investors said they intend to increase their holdings of stocks, 40% will add precious metals and 37% plan to buy real estate, the survey shows.
UBS polled 2,999 investors and 1,201 business owners with at least $1m in investable assets or a minimum of $1m in annual revenue respectively, from 23 June to 12 July 2021. The global sample was split across 15 markets, including Mainland China, Hong Kong, Singapore, the UK and the US, among others.
Hong Kong investors are more optimistic about stock markets than their peers in the region, with 43% saying they want to increase their equity holdings, while 40% will raise their exposure to in real estate and 44% will invest more in sustainable investing themes
Their confidence in the region’s economic outlook has seen significant improvement, with 59% respondents to the survey bullish over the next 12 months, up from 48% in April 2021 when UBS conducted its last survey.
Wider anxieties
The survey shows that other concerns among investors in Apac are climate change (47%), geopolitical risk (46%), Covid–19 (46%), aging populations (45%) and healthcare costs (45%).
Globally, while investors are generally optimistic, their top worries are cybersecurity (50%), closely followed by their country’s politics (49%) and climate change (49%). Concerns about tax changes (48%) and Covid-19 (47%) have eased since investors were last surveyed in the first quarter of 2021.
“The Delta variant is leading to renewed worries about lockdowns, inflation has proven to be higher and longer lasting than many – among them the Fed – thought, and US/China tensions are resurfacing. It’s no wonder that we see some nervousness and uncertainty amongst investors, particularly in the US and Asia,” said Iqbal Khan, president of UBS Europe, Middle East and Africa and co-president of UBS Global Wealth Management.
“[But] our view is that there will be no return to national lockdowns and we’ll see inflation recede in the second half, meaning the Fed won’t need to withdraw stimulus. This should be positive for the re-opening of economies, recovery trades and many of the secular growth winners,” he added.
