High net worth individuals (HNWIs) in the GCC are more positive about the economic situation in the Gulf region than globally, a report said.

High net worth individuals (HNWIs) in the GCC are more positive about the economic situation in the Gulf region than globally, with 55 per cent saying the economic situation in the Gulf is improving compared to 31 per cent saying the global economy is improving, a report said.

Dubai-based Emirates Investment Bank (EIBank), a major investment bank, today (March 8) published its second “GCC Wealth Insight Report”, which outlines the views of HNWIs across the Gulf on local and global economies as well as the main elements that define their investment and banking decisions.

Respondents were more cautious towards the global economy compared to last year, with the view that the global economic situation is worsening almost doubling (29 per cent) on last year (16 per cent), the report said.

Nonetheless, the report’s findings were optimistic about the longer-term prospects for both the Gulf region and the global economy; 86 per cent say they are very or somewhat optimistic about prospects for the Gulf region over the next five years with 78 per cent saying the same thing for the global economy.

The more cautious approach to the global economy taken by regional HNWIs is matched by an increasing preference to keep assets closer to home, which has risen 19 percentage points since last year to 83 per cent.

Those who prefer to keep assets closer to home are most likely to say the main reasons are confidence in the stability of their local economy (39 per cent) and a desire to have greater personal control over their investments (20 per cent).

Regional HNWIs are also more likely to have a local rather than international bank to help manage their wealth compared to last year, with 80 per cent saying they prefer to use a local bank compared to 59 per cent last year. Respondents said they believe that local banks provide easier access, have a better understanding of the local market or regulations, and are safer.

The top four factors for selecting a local bank have not changed since last year – HNWIs look for level of service, bank reputation and brand, fees and pricing, and investment expertise and global access.

Philanthropy has also featured prominently in GCC countries in this year's survey, with 86 per cent of respondents saying they dedicate a portion of their wealth to charitable giving, mostly to humanitarian charitable causes. 60 per cent of those HNWIs who currently allocate a portion of their wealth to charity are planning to increase their distribution to charity in the near future.

Khaled Sifri, CEO of Emirates Investment Bank, said: “While views of the global economy are more negative than last year, with respondents in this year’s survey almost twice as likely to say the situation is worsening, HNWIs are keen to continue growing their wealth and remain optimistic about future prospects globally and in the Gulf region in particular.”

“There are strong signs of moving beyond the days of the financial crisis, albeit with a more cautious and perhaps more regional investment approach. We believe that the continued growth-focused attitude of regional entrepreneurs reinforces the positive outlook for the GCC region and global economy in the coming years,” he added.

Report highlights

•    HNWIs in the UAE (89 per cent), Qatar (83 per cent) and Oman (75 per cent) are the most optimistic among the GCC countries about the prospects of their economies

•    Just over a quarter of GCC HNWIs (28 per cent) have had their banking and investment decisions affected by the global economic situation; compared to (66 per cent) last year

•    GCC HNWIs are now less affected by local economic conditions (33 per cent) in their banking and investment decisions; compared to (43 per cent) last year. A quarter of those affected attributed the reason to the geopolitical situation in the Arab region

•    GCC HNWIs (83 per cent) are more likely than last year (64 per cent) to say they prefer to invest in assets closer to home due their confidence in their local economy’s stability and security (39 per cent) and ability to control and oversee their investments easily (20 per cent)

•    GCC HNWIs who invest globally (18 per cent) do so mainly to take advantage of global opportunities (44 per cent) or diversify their risk (44 per cent)

•    In the next 3-5 years, global investors from the GCC are expected to be regionally focused, with 29 per cent seeing the GCC as their best investment destination

•    GCC HNWIs still prefer to invest their wealth in their own businesses (33 per cent) and in real estate (30 per cent); almost same as last year (34 per cent and 25 per cent respectively) rather than stocks and bonds

•    Eight in ten expect to increase investments in real estate (81 per cent) and two thirds expect to increase investment in their own business (64 per cent) in the near future; compared to 65 per cent and 65 per cent respectively last year

•    A large majority of GCC HNWIs (84 per cent this year and 90 per cent last year) are persistently more focused on growing than preserving their wealth

For the purposes of this study, HNWIs are defined as individuals with $2 million or more in investable assets, EIBank aid.  – TradeArabia News Service