(28 October 2019 ) DAILY MARKET BRIEF 2:Confidence holds up; waiting to deploy cash

Compared to their global peers, APAC investors are just slightly less optimistic but confidence is holding up. About 73% of them indicate that they are confident about their personal financial situation over the next 12 months, versus 75% of all investors in the survey.

That's according to the 3Q19 edition of UBS Investor Sentiment Survey, conducted between 18 September and 3 October. UBS surveyed 1,802 high-net-worth investors with at least USD 1mn in investable assets and business owners with at least USD 250,000 in annual revenue and one employee. Of those, 461 have at least USD 5mn in investable assets.

The APAC sample was split across nine markets: China, Hong Kong, Taiwan, Japan, Singapore, Indonesia, Thailand, Malaysia and the Philippines.

On the Asian economy, they have turned more positive this quarter; 68% of respondents say they are 'somewhat' or 'very' optimistic about the region over the next 12 months, up from 60% in the 2Q study.

They have also become more upbeat about the Asia's long-term economic prospects; 73% say they are optimistic, a two-percentage-point improvement.

Investments: Plans and intentions

Compared to global investors, Asian investors have also turned more bullish about their home region's stock market; 61% say they are somewhat or very optimistic about their market's leading equity index, versus 56% in the previous study and 56% of global investors.

Asian investors are also more positive about the outlook of investment returns for global market indices over the next six months.

However, as they are worried about the lingering global trade war – 45% of respondents cite this as their top concern – they have been hoarding more cash. About 34% of their portfolios are in cash or cash equivalents, up from 32%, the highest among all regions.

Why? About 82% are waiting for more economic or world news before making changes. They intend to deploy their cash but want to enter the market at the right time.

As for the themes they are interested in, they mentioned sustainable investing, long-term investment themes such as digital transformation and medical devices, as well as yield and income strategies.

UBS Global Wealth Management’s Chief Investment Office (CIO) thinks that holding cash is costly and would advise investors to put that cash to work, adopt a longer-term horizon and diversify.

Business confidence has moderated

Business owners across the region meanwhile have become less optimistic; 69% of them say they are optimistic about their business over the next 12 months, down from 77%.

Their views on the Asian and global economy has also become more downbeat; 68% say they are optimistic about the outlook for Asia, down 3 percentage points. On the global economy, the figure is 64%, also 3 points lower.

They have therefore put on hold their plans to expand their business, as they worry about operating costs, additional overheads because of trade tariffs, and rising cost of materials.

By UBS