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Rich investors wait for markets to fall further before buying, says poll

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: June 18, 2020

The rich are keeping their powder dry and waiting for pandemic-hit stock markets to fall again before they invest, according to a poll.

Sixty-one per cent of millionaires say they expect stocks to fall between 5%-20% before they step into the market to buy, according to a quarterly survey by UBS Global Wealth Management. A further 23% believe it’s a good time to buy now while the remaining 16% expect stocks to fall and don’t see a buying opportunity.

UBS polled 4,108 people with investable assets of over $1m and business owners with equivalent annual revenues. The Swiss bank questioned wealthy investors and business owners across 14 markets in April and released the results on Wednesday.

Just under half, 46%, expressed optimism about the short-term economic prospects for their respective regions, while 70% of the bank’s high net worth clients were optimistic about the long-term outlook.

The decline in short-term optimism was sharpest in the US, falling from 68% in the fourth quarter to just 30%, while Europeans (excluding Switzerland) showed the smallest dip in sentiment, from 58% to 50%. by comparison, 55% of investors in Asia had a favorable outlook.

 

Rich clients expect a recession

Paula Polito, divisional vice chairman at UBS Global Wealth Management said:” In Asia, where the Covid-19 crisis and mitigation occurred earlier, investors appear to be slightly more optimistic about their region’s stocks. By contrast, optimism appears lower in the US, which is currently experiencing an apex in the crisis.”

Polito added the bank’s rich clients have “diverging views on when the worst of the crisis will be over, with a third citing by the end of June, a third citing the fall and a third citing the end of the year or beyond.”

Overall, 60% of the high net worth individuals expect a global recession over the next 12 months, but remain positive on the long-term outlook. The survey revealed last year that 55% of super-rich clients feared a market crash in 2020.

The survey found that of business owners particular, 61% are optimistic about their businesses, down from 73% in the prior survey, while 27% plan to hire more versus 17% who plan to downsize.

Governments and central banks around the world have used unprecedented fiscal and monetary stimulus packages worth trillions of dollars in a bid to shore up their respective economies against worldwide stalled business activity caused by lockdown measures to halt the spread of the coronavirus health emergency.

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Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.