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Hong Kong millionaires note unprecedented unpredictability
Hong Kong, 18 May 2017 – UBS Wealth Management today published the "UBS Investor Watch" report which polled millionaires in seven markets on the topic of unpredictability. The survey asked 2,842 millionaires globally, including 401 from Hong Kong, how macroeconomic uncertainty was shaping their attitudes and actions, and, specifically, what effect it has had on their wealth planning.
Around 80% of Hong Kong-based millionaires believe that they are living in an era of unprecedented unpredictability. Around 79% admit to suffering from information overload as they seek to navigate the uncertainty while 80% acknowledge that short-term distractions and unforeseen events are distracting them from focusing on long-term financial goals.
The majority of respondents from Japan, Singapore, Mexico, Italy, Switzerland, and the UK, believe emotion has superseded fact in shaping public opinion; an opinion shared by 80% of the Hong Kong sample.
Around 60% of respondents from Hong Kong believe that new technologies like big data have the potential to make the world more predictable, compared to 46% of the global sample. Hong Kong entrepreneurs are far more positive than their global counterparts vis-a-vis the potential benefits of big data, artificial intelligence and robotics.
Nearly 70% of respondents are confident in their ability to assess financial risks relating to an uncertain world while Hong Kong's wealthy are more willing to take risks following the 2008 global financial crisis than any of their peers globally.
Cash continues to retain its status as a safe haven in uncertain times with 77% of those surveyed saying that cash offers financial safety, notwithstanding the downside posed by potential inflation. While millionaires in Hong Kong agree that diversification away from home markets is important, less than 20% would consider diversification into the US and only 12% into Europe.
According to the UBS Confidence Index, almost half (47%) of Hong Kong millionaires feel optimistic about the future compared to 15% who are pessimistic. In particular, 52% expect their finances to improve over the next 12 months while 11% expect their finances to decline over the period. On long-term financial goals, 50% of repsondents were optimistic about reaching their long-term financial goals, compared to 12% who were pessimistic.
The confidence is underpinned by the belief that safe havens are available; 71% believe the domestic market offers security, with 79% and 77% having the same view vis-a-vis physical assets and cash, respectively.
"Some people would argue the world is easier to predict than ever before. The world’s wealthy clearly feel the opposite. After a year of uncertain events and high-profile shocks, most believe we live in a very unpredictable age with political, economic, societal and financial risk all prominent.
"In an unpredictable world, we advise clients to take a long-term approach, focus on goals and invest in a balanced portfolio across a range of assets and locations. Diversification and strategic asset allocation are gaining traction among clients and, increasingly, they are coming to terms with the need to implement plans early to ensure financial security," said Jean-Claude Humair, Regional Market Manager, Hong Kong, UBS Wealth Management.
UBS Wealth Management recommends four broad tactics to combat unpredictability:
- Focus on the long term. Avoid responding to short-term events or distractions. Cutting through noise has never neen more important, because there has never been so much of it.
- Consider all wealth dimensions. Investments, business, family are interconnected and require an integrated wealth planning approach.
- Maintain a diversified portfolio. Exposure to a broad range of assets and geographies is essential. Maintaining a diversified portfolio not only mitigates against the risks inherent in portfolios with a domestic bias but the inclusion of alternative investments provides protection against global and regional uncertainty while, at the same time, offers attractive yield opportunities.
- Be wary of overestimating the safety of cash. Cash may appear attractive in times of unpredictability but the inflation has the potential to erode value over the long term.
Notes to Editors:
About the research
Those surveyed had at least USD 1 million investable assets (excluding property). The global sample was split evenly across seven markets: UK, Italy, Switzerland, Mexico, Hong Kong, Singapore and Japan. At least 400 were surveyed in each market, and at least 30% of which were women. The research was conducted between January 2017 and February 2017 by Censuswide on behalf of UBS Wealth Management.
About UBS Wealth Management
UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS's strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.
UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
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