- Wealthy investors and business owners have grown more optimistic on the economic outlook over the next 12 months, according to UBS’s quarterly Investor Sentiment survey
- However, they are expressing increasing concern over domestic politics and the US election
- A close election contest would likely result in higher market volatility, according to UBS’s latest ElectionWatch report
Zurich/Basel, 22 July 2020 – Most wealthy investors and business owners globally have said they plan to adjust their portfolios based on who wins the US election, with almost half seeing November’s vote as one of their top concerns, according to the new Investor Sentiment study by UBS, the world's leading global wealth manager.
According to the study, which polled more than 4,000 wealthy investors and business owners across 14 markets globally in late June and early July, optimism regarding the economy and the stock market rose compared with the same period three months prior, as the effects of COVID-19 eased.
- Forty-six percent said they were optimistic on the global economy over the next 12 months, up from 40% three months prior
- Thirty-eight percent were pessimistic, down from 45%
- Fifty-two percent said they were optimistic on their own region’s economy over the next 12 months, up from 46%
- Fifty-three percent said they were optimistic on stocks in their own region over the next six months, up from 45%
However, a rising proportion of respondents (46%) globally ranked the US election among their biggest worries, up from 39% three months prior. Additionally, 51% expressed significant concern about their country’s politics, up from 44%.
A closely fought US election could indeed result in a higher degree of market volatility, according to UBS’s most recent ElectionWatch report, which examines the election’s global and regional implications. Nevertheless, the report does not envisage the levels of volatility that accompanied the onset of COVID-19.
Paula Polito, Divisional Vice-Chairman at UBS Global Wealth Management, says: “COVID-19 remains the top investor concern globally, yet there is significant divergence by region on the focus of post-recovery plans. While more Asians and Europeans see an opportunity for a ‘green’ recovery, US investors place more importance on a traditional economic turnaround.“
Solita Marcelli, Chief Investment Officer Americas at UBS Global Wealth Management, says: “The US election will likely present numerous opportunities for investors, as well as some clarity over policy direction in the world’s largest economy. Regardless of the result, the eventual impact on financial markets is likely to be close to neutral, even if they experience some interim volatility.“
Fifty-five percent of respondents said Joe Biden was most likely to win the election, compared with 45% who said Donald Trump. Forty-nine percent of Latin American investors foresaw a Trump victory, the highest proportion globally, while 42% of Swiss investors predicted a Trump win, the lowest share in any region.
Asian investors were most likely to say they would adjust their portfolio based on who wins, with 75% of respondents saying they were planning to do so versus a global average of 61%. Swiss investors were least likely, with only 31% of respondents saying they were planning to do so.
American respondents’ optimism over their region’s economic outlook increased more than in any other part of the world, with 41% expressing optimism compared with 30% three months prior. They were also less likely to say they would adjust their portfolios based on who wins the election, with 46% planning to do so compared with a global average of 61%. UBS’s ElectionWatch report predicts tactical adjustments are only likely to become a more important consideration in September as the campaign enters its latter stages.
Latin American respondents’ optimism over their region’s stock market outlook rose faster than in other parts of the world, with 57% expressing optimism compared with 47% three months prior. They were also more likely to say they would adjust their portfolios based on who wins the US election, with 67% planning to do so. According to UBS ElectionWatch, the US elections are likely to have a meaningful impact on Latin America and other emerging markets, especially given the effect of US policy on the broader macroeconomic, trade, and geopolitical environment.
European respondents outside Switzerland were more optimistic on their region’s economy over the next 12 months than the global average, with 55% expressing optimism versus 52% globally. They also expressed more interest in the US election than any other region outside the US, with 72% highly interested compared with a global average of 67%. According to UBS ElectionWatch, the US election is likely to have many key implications for European companies, especially when it comes to trade, taxation, and exchange rates.
Asian investors were the most optimistic globally on their region’s economy over the next 12 months and on their own region’s stock market over the next six months, with 60% expressing optimism on both compared with global averages of 52% and 53%, respectively. They were also most likely to say they would adjust their portfolios based on who wins the US election, with 75% planning to do so versus 61% globally. According to UBS ElectionWatch, the election will have particular implications for China given its changing relationship with the US.
About the UBS Investor Sentiment survey
For this edition, UBS surveyed 2,867 investors and 1,151 business owners with at least USD 1 million in investable assets (for investors) or at least USD 1 million in annual revenue and at least one employee other than themselves (for business owners), from June 23 to July 13, 2020. The global sample was split across 14 markets: Argentina, Brazil, mainland China, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Switzerland, the UAE, the UK and the US. For the prior edition, UBS surveyed 4,108 investors and business owners with at least USD 1 million in investable assets (for investors) or at least USD 1 million in annual revenue and at least one employee other than themselves (for business owners), from April 1 to 20, 2020. The global sample was split across the same 14 markets.
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