Tuesday, May 26, 2020

Cash Rich Investors Look For Right Moment To Pounce

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Investors have a pile of cash and are keen to find the right opportunities to invest, according to a new study.

More than 3,600 investors and entrepreneurs worldwide were quizzed about their investment plans for the rest of the year.

Double the number (51%) were optimistic about the global economy picking up, compared with 21% who were less enthusiastic, said the poll by banking giant UBS.

The gap was wider for business owners, with 62% positive about growth, compared to just 15% who were more pessimistic.

Political worries

The main negative prospect voiced by 44% of investors was a concern about their country’s politics, followed by 40% who have worries about their country’s debt.

Paula Polito, client strategy officer at UBS Global Wealth Management, said: “Cash is a safe asset for a liquidity strategy but a risky one for longevity. Right now, we see high levels of cash globally. This is a good time for investors to consider a more diversified portfolio.”

The survey highlighted investors are holding cash ready to invest.

An average one in three of portfolios are held in cash. US and Swiss investors’ cash holdings were lower (23% and 31%). Holdings in Asia and Latin America were both 36%. In Europe, they were 35%. However, only one in four of US investors were likely to invest more,  while those in Latin American and Asia were the most likely, at 66% and 54%.

Home bias

In the USA, investors seemed biased that the national economy would do well (56%), but were less optimistic about the rest of the world (37%), although 55% had concerns about the policies of President Donald Trump.

Asia investors, particularly those in China, fear trade wars and a slowdown of the Chinese economy will hurt the region.

In Europe, political uncertainty over Brexit and the European Union are worries, along with disappointing growth and weak market returns.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “Buy local works well for vegetables, but we are more optimistic on the global economy and this survey confirms investors sometimes focus too much on their home region. Diversification is still the best way to access opportunities and side-step domestic risks.”

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