Investors, business owners cautiously optimistic on global economy

Source: Xinhua | 2019-05-09

A rebound in bullish investment has appeared among high-net-worth individuals and business owners globally in the first quarter, along with their cautious optimism on the global economy, according to a survey released Tuesday by leading Swiss investment bank UBS.
More respondents remained positive on their own region's macro and investment landscapes than those did on the global side, with their cash holdings remaining high, which indicates high levels of cash globally.
The survey polled 3,653 investors and entrepreneurs in 15 countries with at least 1 million U.S. dollars in investable assets (for investors) or at least 250,000 dollars in annual revenue and at least one employee (for businesses) on March 10-28.
GUARDED OPTIMISM
Investors and business owners alike saw better prospects and more opportunities domestically than they did globally.
Among individual investors, 51 percent were optimistic about the global economy, while 60 percent were positive about their own region's economy. Among business owners, such readings came at 62 percent versus 68 percent.
Investors were also bullish on stocks. Among them, 56 percent expressed optimism on stocks in their own regions versus 49 percent on stocks globally.
In addition, 74 percent saw recent market volatility as an investment opportunity, compared with 67 percent still concerned about the volatility witnessed in the fourth quarter of 2018.
For future investment intentions, 42 percent of investors planned to invest more in the next six months versus 17 percent who planned to invest less, citing sustainable investing as a growing interest.
Business owners were equally bullish. Globally, 74 percent were optimistic about the prospects of their business. Over the next 12 months, 37 percent planned to invest more and 31 percent intended to hire more.
The biggest disparity between investors' global outlook and how they viewed their own economy emerged in the United States, as 56 percent of U.S. investors favored the domestic economy, compared with 37 percent who were optimistic on the global front.
"Part of the reason we have this sort of investor preference for home bias could well be that they feel like they have a greater handle on what's happening domestically than they do internationally," said Michael Ryan, group managing director at UBS Global Wealth Management.
CASH HOLDINGS
While there is an overall sense of optimism, the UBS survey also found that investors have high cash holdings, with 32 percent of their portfolios allocated to cash on average.
Cash holdings of both Asian and Latin American investors were 36 percent. In Europe, they were 35 percent. U.S. and Swiss investors' cash holdings were lower at 23 percent and 31 percent, respectively.
"(Those are) higher cash balances than we normally would have expected. So, there's still been a reluctance to fully commit. I think it's partly (because of) a lack of confidence in the sustainability of the expansion or the durability of the bull market," Ryan noted at an event briefing the survey.
"I think it also suggests that there's some dropout. The fact that we haven't seen full commitment yet suggests that there's still money that's being put to work," he added.
In this aspect, though cash is a safe asset for a liquidity strategy, it is a risky one for longevity, said Paula Polito, client strategy officer at UBS Global Wealth Management.
"Right now, we see high levels of cash globally. This is a good time for investors to consider a more diversified portfolio," Polito said.
On the negative side, investors expressed worries over domestic issues. Some 44 percent cited their country's politics as a top concern, followed by 40 percent who cited their national debt.
The top concern of business owners globally was cyber security, covering 48 percent of responding entrepreneurs, while 47 percent said tax issues were also a big worry.