Just like the rest of us, our wealthy friends and neighbours are still reeling from the financial crisis. What is interesting is how they see the road ahead taking shape. According to a survey released this week from Barclays Wealth, high-net-worth individuals in the Gulf are more optimistic than their global peers, with more than 80 per cent of those surveyed in the UAE saying they expect the economy to grow in the next few years.
Saudi Arabia, at 70 per cent, and Qatar, 88 per cent, also showed considerable confidence, whereas only 60 per cent worldwide said they were expecting strong growth in the coming years. But it is telling to see that many affluent people in the Gulf are not so bullish about the short-term prospects. UAE respondents were among the most pessimistic when asked whether they thought equities would perform "quite or very well" in the next year. Only 19 per cent agreed with that statement, compared with 68 per cent for Australia and 65 per cent in India.
Similarly, only 17 per cent of those surveyed in the UAE expect property to perform well in the next year, also among the most negative outlooks in the world. "A degree of investor caution remains after the downturn," said Soha Nashaat, chief executive of Barclay's Middle East. That sentiment squares with the results from Shuaa Capital's recent investor confidence report, in which results from the Gulf Co-operation Council were sharply lower in April.
The outlook was still considered positive, as the index remained north of 100 points, although lower than it had been in March. Overall, investors said that they found GCC equities markets undervalued, with the Abu Dhabi Securities Exchange the most attractive of the group. Of course, both of the surveys were conducted before the events of the past week, when global markets were rattled by a combination of sliding oil prices, tensions on the Korean peninsula and no apparent end to Europe's debt problems. It is safe to assume the confidence of most people engaged in the financial markets was shaken at least a bit by the headlines of recent days.
Despite the short-term wariness, it is notable that the UAE's wealthy anticipate a rapid recovery in the property market once the oversupply from the boom is absorbed. Seventy-seven per cent say they expect the property market to produce strong returns over a five-year period. Only four other nations in the survey, including Qatar, were more optimistic. That level of confidence indicates that despite the speed bumps of the past 18 months or so, Gulf investors remain bullish on the overall prospects for the region.
Barclay's conducted the survey in February and March by speaking with more than 2,000 individuals from 20 countries who have available assets of more than £1 million (Dh5.27m). One of the key reasons that regional investors remain somewhat optimistic could be that they simply were not as severely affected by the financial crisis as many of their peers around the globe. Only 21 per cent of UAE respondents said they were "very or quite negatively affected" by the downturn, the third-lowest percentage in the world.
Saudi Arabia was also at the low end, at 36 per cent. In countries including Spain, Ireland, Qatar and Japan, more than half of those surveyed acknowledged taking a severe hit. Wealthy individuals from the Gulf also indicated an increasing awareness of social issues and using their assets responsibly. The UAE, Saudi Arabia and Qatar all ranked in the top five of countries whose respondents reported giving to charitable causes.
Ms Nashaat said the figures reflected a change in attitudes that the bank expected to accelerate in the next decade. "This will be reinforced by a growing number of young wealthy [who are] more inclined to question the functioning and purpose of wealth investment," she said. "The increasing number of wealthy women will also add to pressure to change." There was one social issue where the UAE was much less engaged than others worldwide. Only 38 per cent of those surveyed agreed that they were "increasingly concerned about climate change", a rate that was the lowest among the nations that participated. The wealthy from the US, at 39 per cent, also were not very concerned about the issue.
The report also argues that the idea of passive investment is growing out of date, and notes that 73 per cent of UAE respondents spent more than 20 hours each week managing their investments. "GCC investors are some of the most savvy in the world and this report shows why," Ms Nashaat said. breagan@thenational.ae