Middle East intermediaries more optimistic about global economic growth
The positive outlook for global economic growth has increased in the last year among Middle East intermediaries, according to the latest poll carried out by Invesco Asset Management.
Their biggest concern for global financial markets is emerging market monetary tightening.
The results of the poll conducted during Invesco’s eighth annual Dubai Investment Meeting, which was attended by over 180 intermediaries, reveals that more than two thirds (67 per cent) of the respondents feel positively or very positively about global economic growth prospects for 2014, which has increased from 56 per cent in 2013 and just 38 per cent in 2012.
The most favoured asset class for the year ahead by intermediaries in the region continues to be equities (48 per cent), followed by multi-asset (29 per cent). A third (33 per cent) of intermediaries state that 20 to 50 per cent of their clients’ portfolios are currently allocated to multi-asset products, and this is set to rise as almost two thirds (62 per cent) expect multi-asset allocations to increase over the next two years.
Diversification (55 per cent) is the primary reason for investing in multi-asset products, and indeed 62 per cent of intermediaries expect multi-asset products to diversify equity exposure the most over the next three years. Risk management (24 per cent) is listed as the secondary reason for investing in multi-asset products, followed by a way to increase returns (18 per cent).
Nick Tolchard, head of Invesco Middle East, says: “The high and anticipated increased allocations to multi asset funds from clients in the Middle East is an interesting trend, indicative of the increasing popularity of the asset class as a way to not only diversify portfolios in the current climate, but also manage risk and increase returns. Indeed, Invesco launched its Invesco Perpetual Global Targeted Returns Fund in 2013 in order to meet this demand, which aims to achieve a positive total return through capital growth and income in all market conditions over a rolling three year period.”
The poll also revealed that two fifths (38 per cent) of intermediaries believe that emerging market monetary tightening is the biggest issue facing global financial markets, more than tapering of quantitative easing policies (31 per cent) and geopolitical uncertainty (22 per cent). Furthermore the Eurozone crisis, of paramount importance in 2013 (39 per cent), is now a concern for less than one in ten (seven per cent) intermediaries and professional investors.
Tolchard says: “The increasingly optimistic outlook for global economic growth among Middle East intermediaries is encouraging. Despite the obvious challenges faced by the tapering of quantitative easing and emerging market monetary tightening, the abatement of the Eurozone crisis, which was the key concern in 2013, is indicative of returning confidence among the Middle East investment community generally, as the effect of both the Arab Spring and the Eurozone crisis begin to settle.”
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