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Wed 7 Nov 2012 04:43 PM

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Emirati investors more cautious, eye India

Lloyds TSB Private Banking research says market volatility leads to selling of high-risk deals

Emirati investors more cautious, eye India

Emirati investors are responding to on-going volatility in financial markets by selling higher risk investments and holding more cash, according to new research conducted by Lloyds TSB Private Banking.

The bi-annual Investor Outlook Survey revealed that 28 percent of investors in the UAE increased their cash allocation in the past six months, against only 18 percent who decreased it.

The report said this trend is set to continue with 32 percent of investors planning to up their cash exposure in the next six months, while only nine percent plan a decrease.

At the same time, almost 70 percent of British expats in the UAE increased their cash holdings while just 17 percent decreased it.

Emerging market investments, once the rising star of financial markets, are now considered 'too risky' by many Emiratis - only 13 percent would consider adding them to their investment portfolio in the next six months, the survey said.

Despite Emiratis' cautious approach to emerging markets in general, 35 percent identified India as the most attractive world market for investment.

British expats in the UAE said they remained more upbeat about emerging markets in general, with 28 percent planning to increase their exposure over the next six months.

The report also said British expats in the UAE still look to their home country as a relative 'safe haven' from the volatility affecting global financial markets.

One fifth said they increased their exposure to the UK stock market in the past six months, while 15 percent plan to increase it further in the future.

Anthony Valgimigli, head of Middle East, Lloyds TSB Private Banking, said: "Emirati investors seem to be battening down the hatches - holding more cash and investing in assets that they judge to be safe.

"Yet at the same time, a portion of investors are still attracted to typically riskier emerging markets such as India, although most have not been willing to take the risk and invest there.

"The majority of investors seem to have been sensitive to the continued shocks that have shaken the financial markets and are opting for a 'safety first' approach."

The survey included 2,700 private investors from the UK, the UAE and 12 other countries around the world.

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