Wealthiest investors are holding more cash says UBS

Trade fears are dominating concerns but overall confidence is higher

Wealthiest investors are holding more cash says UBS
Steve Randall

Sentiment about the global economy is generally positive among high-net-worth-individuals and business owners.

A global study by asset manager UBS shows that, among more than 4.600 wealthy investors and entrepreneurs in 18 markets, sentiment increased in the third quarter of 2019.

More than half (53%) were confident in the global economy while 61% were optimistic about the economy in their own region. These figures were both up two percentage points compared to the second quarter.

There was also a more bullish view of stocks in respondents’ own regions at 56%, up 1 percentage point quarter-over-quarter.

But almost three quarters of wealthy investors and business owners are concerned about the global trade war and 34% are shifting more money to cash as a result, making it their preferred option in response to trade concerns.

That puts the share of portfolios that are cash holdings at 27%, which UBS notes is far higher than it usually recommends.

“Geopolitical concerns such as the global trade war are keeping investor optimism in check,” said Paula Polito, Client Strategy Officer at UBS Global Wealth Management. “There is a dichotomy in sentiment - investors are holding large cash balances in a wait-and-see mode, even though nearly 50% anticipate higher stock market returns in the next six months.”

Weakened business sentiment

The current trade issues are also denting business investment sentiment with just 34% of business owners saying they plan to hire more people, down 5 percentage points from the second quarter.

Fears of recession in the next 6 months was expressed by 44% of business owners, although UBS Global Wealth Management’s Chief Investment Office sees this as unlikely especially with growing US consumption.