As the world’s wealthiest people are bracing for a rocky 2020, a report published by UBS Global Wealth Management shows that 25% of investors’ average assets are in cash.
As Venture Capital has grown suspicious of tech companies, more traditional assets are attracting the planet’s wealthiest individuals.
Tense geopolitical situations, from the U.S-China trade war to the Brexit in the United Kingdom have been a threat on the market throughout the year. The 2020 US presidential election may likely cause more tension to the global situation.
However, the UBS Global Wealth Management story reveals that investors are optimistic for long term assets.
An unstable global diplomacy
As US president Donald Trump was visiting Turkey this week to meet with president Erdogan and speak about the Syrian war, investors continue to see red flags this year when it comes to diplomacy.
First, the U.S-China trade war has changed the way both countries are consuming. According to MSNBC, “the average price for products sold by Chinese sellers has climbed 29% between Oct. 2017 and Oct. 2019, the price for products sold by American sellers went up 35% over the same period”, basing these results on products sold on Amazon.com and Alibaba.
“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” shared Paula Polito from UBS GWM on Bloomberg. “They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”
Read on Alvexo: “China Accuses Washington of Destroying Hong Kong”
Wealthiest people lost money…
According to Bloomberg, “wealthy investors see volatility increasing next year”. As a result, the top investors are planning to reduce their exposure to markets and 25% of their average assets will go to cash.
The survey published by UBS showed that 55% reckon there will be a market drop by the end of 2020. 60% are considering saving more cash by the end of this year, while 62% said they plan to diversify their assets.
After five years of growth, the collective wealth of the world's billionaires dropped by 4.3%, or $388 billion, according to a new report from Swiss bank UBS and auditing firm PwC https://t.co/qfrAgTMvUl
— CNN (@CNN) November 9, 2019
Moreover, by the middle of the year in May, investors reported to have an average of 32% of their portfolios in cash. This can also be explained by the fact that the world’s wealthiest dropped by 4.3% or $388 billion.
… But remain optimistic
However, the wealthiest people remain optimistic, reported Bloomberg. While 69% of the top American billionaires expressed hope, more than 72% of EMEA’s wealthiest people shared optimism – Latin American fortunes reached new highs at 83%.
Investors expect a volatile 2020. But feel optimistic about returns by 2030 (source: #UBSInvestorWatch survey). Deep dive into what investors are thinking about right now. #shareUBShttps://t.co/ho58gJgBRi
— UBS (@UBS) November 13, 2019
According to the 4,300 surveyed billionaires, 70% of them think they will have a return on investment in the next ten years.