Most Saudi HNWIs view commodities as safe
Riyadh, July 17, 2011
About 80 per cent of Saudi high net worth individuals (HNWIs) view commodities as a safe investment proposition, a far greater proportion than any other market, a Barclays Wealth report said.
Saudi Arabia is the only country in the Middle East where all respondents expressed strong views on the risk factor of commodities, in stark contrast to other markets where up to 12 per cent of investors have no particular opinion on commodities, said the 13th volume of the Barclays Wealth insights report titled “Risk and Rules: The Role of Control in Financial Decision Making.”
In line with the fact that Saudi investors view them as safe, 62 per cent of investors are currently invested in commodities, higher than any other country included in the global survey, it said.
The report is based on a global survey of more than 2,000 HNWIs, and provides an in-depth examination of wealthy investors from a behavioural finance perspective. In addition to considering the different financial personality traits that exist amongst wealthy investors, the report shows their views on nine main asset groups: real estate; cash; alternative strategies (long/short funds, arbitrage etc); equities from both developed and emerging markets; bonds from developed governments, blue-chip corporations and high yield/emerging markets; and commodities.
Additionally, the report revealed that 94 per cent Saudi HNWIs consider investments in real estate to be safe over the next 12 months, further validating their tendency to invest in illiquid assets to avoid impulsive investment decisions during market volatility, it said.
As for cash and alternative investments, over 60 per cent of Saudi HNWIs view investment in cash as risky, while only a minority (24 per cent) find it safe. Among all respondents surveyed, less than 20 per cent currently hold cash investments.
HNWIs in the kingdom revealed mixed sentiments towards investments in alternative strategies: one half (50 per cent) considers them safe, while the other half (48 per cent) sees alternative strategies as risky.
Results also showed that 66 per cent of Saudi investors found developed market equities safe, making them a more preferable investment choice over emerging market equities. Half of all respondents (50 per cent) considered investments in emerging market equities as risky for the next year.
An overwhelming majority of respondents (70 per cent) considered developed government bonds safe. Corporate and investment grade bonds fared much worse and are considered safe by only 28 per cent. Furthermore, investments in high yield and emerging market bonds are in fact considered safe by 42 per cent of investors, it said.
Ayman Sejiny, chief executive officer of Barclays Saudi Arabia (BSA), said: “Understanding Saudi high net worth individuals is extremely important for the wealth management industry as they include some of the globally recognised investors operating in a market that is witnessing noticeable growth figures. The report provides unique insights not only into their behaviour but also into their outlook for the future, and in doing so, BSA will have the opportunity to further tailor its services to cater for the financial objectives and requirements of Saudi family offices, high net worth and ultra high net worth individuals as well as their corporate needs especially that most UHNWIs in the Kingdom are owners of top tier corporations that largely benefit from BSA’s Private and Investment Banking services.” – TradeArabia News Service