21st July 2011
The UAE Investor Attitudes Index, which started at six points in June 2010, experienced its biggest wave on wave increase from 13 to 18 points, and Singapore's Index, which began at 16, has risen to 21 points over the year as investors show continued positivity towards market conditions.
The optimism was reinforced by an upbeat outlook on the future, with 59% of investors in the UAE and 57% in Singapore predicting the investment markets would improve over the next six months.
Singapore has maintained the highest Index score throughout the five waves and saw 61% of investors optimistic about the current state of the market, mirroring the country's healthy economic growth of 8.3% in the first quarter of 2011.
Despite the political and civil unrest in the Middle East and North Africa (MENA) region 70% of investors in the UAE said that they are either more positive or have an unchanged view about investing in the UAE, indicating UAE could be seen as a 'safe haven'.
Rocco Sepe, managing director International at Friends Life, said, "A year on since we launched the Friends Provident International Investor Attitudes Report, we are seeing strong Index results for the UAE and Singapore and a steady return to confidence among investors. The Index is developing trend data, which tracks the recovery of international markets following the global economic crisis. It continues to provide an insight into how investors feel about various investment options. The results reveal an optimistic outlook that suggests local markets are becoming increasingly attractive."
Gold and cash are still by far the most popular asset classes for investors, and money markets, property and equities/shares have made significant quarter on quarter gains since June 2010, pointing to an increased risk appetite and broadening of portfolios by UAE investors.
The report findings for Hong Kong paint a different picture with the Index for the country dipping for a second time this wave to a score of 15 points. Investors demonstrated the lowest confidence in future market performance since the launch of the report, with only 52% of respondents predicting an improvement in the investment market within the next six months.
In the wake of the recent earthquake and resulting situation in Japan, Hong Kong investors were asked about their view of the Japanese investment market. Not surprisingly, over half indicated that they were at least slightly less positive about investing, or wouldn't invest at all in the Japanese market.
Turning to asset manager investment attitude, Nick Kirrage of Schroders UK equity team says: "One of the most common human errors is that of overconfidence…when it comes to investment nowhere is that overconfidence more prevalent than people's confidence in their own forecasts of the future. This is particularly true where businesses and industries are predicted to be very stable and therefore easy to forecast into the future…
"As value investors one of the things that we understand is that over time the unknown can always happen…
"The impossible to forecast happens more often than people think. That is why we place a low valuation at the centre of our investment philosophy…"
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