Middle East investors with stock in the oil industry have become the most risk-averse in emerging markets and are looking for safer alternatives to store their wealth, according to an executive at Barclays bank.
“In the Middle East the risk appetite levels have fallen a lot,” the executive told Reuters. “There’s a lot more focus on local liquidity, a lot more focus on preserving liquidity.”
Oil prices plummeted in March as the world reeled from the coronavirus health crisis that brought travel to a halt. For a brief period on April 20, major crude prices traded negative for the first time in history. While stocks and oil prices have somewhat recovered from the fallout, investors are still wary of market instability.
For wealthy clients in the Middle East, this means a shift towards air-tight investments like dollar assets, equity-paying dividends or selective fixed income, Salman Haider, Barclays Private Bank’s head of global growth markets, told Reuters
“A lot of focus has been on making sure their businesses are able to sustain liquidity needs, working capital and so forth,” said London-based Haider.
Wealth clients in the US, Europe, and Russia were also more risk-averse, generally investing more in sectors such as technology and healthcare than areas that could be affected by the pandemic, such as travel and entertainment.
“We have had interest come in to look at specific direct investment opportunities. These could be a direct investment in companies across healthcare and technology where can provide direct access as equity participation,” Haider said, adding there was also renewed interest in real estate.
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