Wealthy Gulf individuals feel more confident about regional prospects

Gulf-based HNWIs are increasingly optimistic about the prospects for their home markets and the world economy. (AFP)
Updated 25 April 2018
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Wealthy Gulf individuals feel more confident about regional prospects

  • “Factors like the region’s stability, attractive investment opportunities and low-tax environment are seen as the main drivers behind the growing confidence in the region’s economy.”
  • Among the most optimistic were respondents in the UAE, with 57 percent of those surveyed saying they thought the overall outlook was improving.

DUBAI: Survey finds growing optimism on region’s economies, but Saudi investors remain wary.

Wealthy individuals in the Gulf are more optimistic over the future of the region and the global economy compared with last year, and are increasing likely to invest in their own countries and other emerging markets in Asia than in western economies. These are among the main findings of an annual survey by Dubai-based Emirates Investment Bank (EIB), released on Tuesday, of the sentiment among high net worth individuals (HNWIs) in the region. 

After two years of falling confidence, some 60 percent of regional HNWIs now believe things will improve or stay the same. Fewer are pessimistic about both regional and global economic prospects than last year, while nearly 80 percent of respondents said they would prefer to invest in Gulf assets, rather than looking abroad.

The recovering oil price was a big reason for the increasing feel-good factor in the Gulf, according to Khalid Sifri, EIB’s chief executive officer, who added: “Factors like the region’s stability, attractive investment opportunities and low-tax environment are seen as the main drivers behind the growing confidence in the region’s economy.”

After falling below $30 per barrel in early 2016, oil has subsequently recovered to a three-and-a-half-year high, breaching the $75 a barrel mark yesterday for the first time since November 2014.

However, the overall optimism of the survey masks some concerns among regional HNWIs; in Saudi Arabia, 48 percent of respondents said that they saw the regional economic situation improving or staying the same, against 52 percent who felt it was likely to worsen in 2018.The survey was conducted last November and December, when investor sentiment in the Kingdom was affected by the high-profile anti-corruption campaign undertaken against some prominent business people accused of financial wrong-doing. “It may have been affected by that. We shall see what the situation is at the end of this year,” Sifri said. 

Respondents from Kuwait were even more pessimistic. None of the respondents from the country felt that things were going to improve on the investment front this year, while 54 percent said they would worsen. Among the most optimistic were respondents in the UAE, with 57 percent of those surveyed saying they thought the overall outlook was improving. On the long-term global outlook, a total of 78 percent of those surveyed across the region were optimistic about prospects over the next five years, with most citing positive economic and political stability as the reason, along with a smaller number who said oil price stabilization would benefit the world economy. The oil price recovery was the biggest reason for regional optimism. 

The geopolitics of the region was claimed as a big factor in deciding investment decisions, but Saudis were less concerned than others. Only 29 percent in the Kingdom said they were influenced by geo-political events, compared with 83 percent in Qatar and 85 percent in the UAE. 

Oil prices, economic reforms and the introduction of VAT were also factors influencing investment, as was the election of Donald Trump as president of the USA. There has been a big shift in global investor orientation outside the GCC. Nearly half of regional wealthy investors (47 percent) are now looking to Asia, 38 percent to the wider Middle East and North Africa, some 34 percent to Europe and only 17 percent to North America. The survey was conducted among 100 HNWIs with $2 million or more in investable assets.


UK shoppers rein in spending as Brexit nears

Updated 43 min 17 sec ago
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UK shoppers rein in spending as Brexit nears

  • Retail sales volumes fell 0.2 percent in the fourth quarter after a 0.2 percent rise in the three months to November
  • Businesses are also cutting investment before Britain’s scheduled departure from the EU in late March

LONDON: British shoppers cut back on spending in the three months to December for the first time since last spring, adding to evidence of a consumer slowdown as Brexit approaches, data showed on Friday.
Retail sales volumes fell 0.2 percent in the fourth quarter after a 0.2 percent rise in the three months to November, the Office for National Statistics (ONS) said.
Friday’s data chimed with other signs that consumer spending is cooling after a strong summer.
Businesses are also cutting investment before Britain’s scheduled departure from the European Union in late March, leaving the overall economy growing at a snail’s pace.
In December alone, retail sales fell 0.9 percent, recoiling after November’s Black Friday splurges, but were 3.0 percent higher than a year earlier. Both readings were below economists’ forecasts in a Reuters poll.
“A major concern for retailers will be that already cautious consumers further limit their spending in the near term at least due to the heightened uncertainties over Brexit,” economist Howard Archer from the EY ITEM Club consultancy said.
Sterling and British government bonds were little changed after the data.
The ONS said the value of sales fell for the first time in three years in the three months to December, underlining a squeeze on retailers’ profit margins as they battle for customers.
A survey last week from the British Retail Consortium showed retailers failed to increase Christmas sales for the first time since the depths of the global financial crisis a decade ago.
Supermarkets Sainsbury’s and Morrison missed Christmas sales forecasts though Tesco beat them. Clothing retailer Next and department store John Lewis reported a late surge in demand.
The ONS data showed a drop in sales of carpets and floor coverings, possibly reflecting a stalling housing market.
While disarray over Brexit has weighed on consumer confidence, there has been some comfort for households recently with the fastest underlying pay growth since 2008 and inflation falling to an almost two-year low of 2.1 percent.
Highlighting the easing of inflation pressures, the ONS’s measure of annual price increases in stores cooled to 0.6 percent in December from 1.3 percent in November, the smallest uptick in more than two years.