Concerns about war and subsequent inflation have so far not prompted investors to review their portfolios. Highlighting the trend was UBS’s latest quarterly investor confidence survey.
In particular, investors still show strong concern about the impact of the war in Ukraine on the world economy, as well as the generalized rise in prices. The research, which surveyed over 2,500 investors and 1,000 entrepreneurs across 14 markets around the world, found that 92% of investors expect war to lead to higher inflation, and more than half of them believe that inflation is set to persist for over 12 months.
According to half of the investors surveyed, market volatility is higher than usual. Most investors expect the war to have a negative economic impact: 66% expect energy prices to rise, 64% expect greater global instability, and 60% fear more cyber attacks. However, investors are not yet reviewing their portfolios, but they say they are ready to do so should the market suffer further. Many are now more inclined to consider buying gold, domestic stocks and oil, while technology and energy remain the most attractive sectors in the current market conditions.
“Investors around the world are undoubtedly concerned about the personal and economic repercussions of one of the largest humanitarian crises in decades,” said Iqbal Khan, President of UBS Europe, Middle East and Africa and Co-President of UBS Global Wealth Management. “It is difficult to assess the long-term economic implications of the war in Ukraine, but a large portion of investors remain optimistic about the outlook for the stock market and are confident in their well-diversified portfolios.” Sources of concern for entrepreneurs increased during the quarter, with geopolitical instability adding to rising material costs, tax hikes, tightening regulations and supply chain problems. As a result, confidence in its investment businesses dropped by 11 percentage points for the next 12 months. The research found that entrepreneurs are scaling back their hiring and investment plans to focus on increasing employee benefits, IT spending and talent development.
“The impact of the war in Ukraine and rising inflation have forced entrepreneurs to adapt again to an unpredictable and unprecedented situation, having already managed the effects of the pandemic on their business,” said Tom Naratil, President of UBS Americas and Co-President of UBS Global Wealth Management. “In a shrinking job market, entrepreneurs are working together with their financial advisors to offer solutions that can bring benefits to their employees, such as UBS’s Workplace Wealth Solutions, in order to create more and more value for their employees. employees”.
Paolo Federici, Market Head of UBS Global Wealth Management in Italy commented: “Without doubt the difficult situation we are experiencing at a geopolitical level due to the conflict in Ukraine, as well as having a strong emotional impact on our lives, is having significant repercussions. on the markets. More than ever, therefore, building a well-diversified portfolio positioned for volatility is a priority for investors. And in this context, sustainable investments, tech and energy transition, issues in which UBS GWM has been seeing value for a long time, represent a winning way to build a portfolio that not only resists change, but benefits from it “.