Younger Arabs invest in equity markets, tech and Islamic finance

• Wealthy Arab youth believe equity markets will continue to perform well
• 89% of young investors keep all money within Middle East
• Islamic and sustainable investing are also high on priority list

Nearly three-quarters of rich young Arabs believe equity markets will continue to perform well and are actively planning to invest, with regional entities, Islamic finance, technology and sustainability their key priorities.

Geneva-headquartered global wealth and asset management company Lombard Odier surveyed around 200 high net worth individuals with assets of at least $1 million across the Middle East.

Some 71 percent said they believed that equity markets will continue to rise, and they would like to actively participate in their long-term growth.

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This comes as no surprise as, in the first 10 months of this year, the Gulf’s main bourses have bucked global trends and remained positive.

The Saudi Exchange has been up 3.4 percent year-on-year, Bahrain up 3.8 percent, Dubai up 4.3 percent, Oman up 5.7 percent, Qatar up 6.8 percent, Kuwait up 7.2 percent, and Abu Dhabi up 22.7 percent year-on-year.

By comparison, the MSCI World Index has fallen 21.2 percent over the same period, and the Emerging Markets MSCI Index is down 31.2 percent year-on-year. 

In terms of corporate earnings, listed GCC companies saw profits for the first three quarters of the year up almost a quarter to reach $70.7 billion.

The Lombard Odier survey found that 79 percent of respondents said they see “significant opportunities” in the digital and technology sectors. 

Young investors are also inward focused. Some 89 percent of respondents said their investments are all within the Middle East, with 86 percent saying they expect this to remain the case for the next three to five years.

Of the 11 percent who do invest their wealth outside the Middle East, 5 percent target Europe, 4 percent North America and 2 percent the Asia Pacific region.

In terms of where they put their money, Shariah-compliant and Islamic investments were popular with 91 percent of young investors, while sustainability was classed as a key factor for 88 percent.

“Islamic finance has proven its resilience against the worst of situations,” one unnamed young Saudi investor was quoted as saying.

With many GCC countries aiming to be net-zero in the coming decades, 73 percent believed they can achieve improved returns by investing in companies or ventures that will support the drive towards a net-zero economy.

“The next generation’s enthusiasm for Islamic and sustainable investing, and their keenness to work with expert financial advisors who share their values, is encouraging,” said Arnaud Leclercq, partner holding privé and head of new markets at Lombard Odier.

“We also observed a keen focus on regional investing, highlighting the sheer opportunity the Middle East offers for maintaining and accumulating greater wealth.”