UBS Investor Sentiment: Investors concerned about the war yet stay the course with their portfolios

Investors remain confident in their region’s economy and stock market, even though many expect prolonged and increased inflation

High-net-worth investors remain deeply concerned about the impact of the war in Ukraine on the global economy and rising inflation, according to the new quarterly Investor Sentiment survey from UBS, the world’s leading global wealth manager. The survey, which polled over 2,500 investors and 1,000 business owners across 14 markets globally, found that 92% of investors expect the war to increase inflation, with more than half believing inflation will last longer than 12 months.

According to half of investors surveyed, market volatility is higher than usual. Most investors foresee a negative economic impact from the war, with 66% expecting higher energy prices, 64% expecting more global instability and 60% concerned about increased cyber-attacks. However, investors aren’t adjusting their portfolios yet, but are poised to do so should the market decline further. Many are now more likely to consider buying gold, domestic stocks and oil, while technology and energy remain the most attractive sectors in the current market environment.

“Investors globally are clearly concerned about the personal and economic impacts of one of the largest humanitarian crises in decades,” said Iqbal Khan, President of UBS Europe, Middle East, and Africa and Co- President of UBS Global Wealth Management. “The long-term economic implications of the war in Ukraine are difficult to assess, but most investors remain optimistic on their outlook for the stock market and are confident in their well-diversified investment portfolio.”

The sources of concern for business owners increased this quarter with geopolitical instability joining rising material costs, tax increases, heightened regulations, and supply chain issues. As a result, confidence in their own businesses for the next 12 months declined 11 percentage points. The survey found business owners tempering their hiring and investment plans and are focusing on increasing their employee benefits, IT spending and upgrading talent.

“The impact of the war in Ukraine and rising inflation have forced business owners to again adapt to an unprecedented and unpredictable situation, after managing the effects of the pandemic on their business,” said Tom Naratil, President of UBS Americas, and Co-President of UBS Global Wealth Management. “In a tight labour market, business owners are working with their financial advisors on employee wellness offerings such as UBS’s Workplace Wealth Solutions, to bring greater value to their employees.”