Retail Savings and Investments in United Arab Emirates - Coronavirus (COVID-19) Sector Impact

Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel Coronavirus a pandemic on March 11, 2020.

Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with most of the countries across the world registering declines in their economic growth for the year to date. Many economists and institutions have cut their forecasts as a number of countries officially slipped into recession in Q1 2020.

The ongoing pandemic has affected the UAE’s economy, resulting in a fall in tourism and in the domestic consumption of goods and services. The country is expected to enter recession by the end of 2020. According to the central bank, the country’s economy shrank by 1% year on year in Q1 2020, and it expects a contraction of 3.6% for the full year. However, economic activity is expected to recover in the second half of the year, supported by the government’s stimulus measures as well as a rise in consumer spending with several lockdown restrictions now eased.

This report focuses on the impact of the coronavirus outbreak on the UAE's economy and the country’s retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts the publisher's pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.

Scope

• UAE retail savings and investments are forecast to expand by 2.1% over the course of 2020, as the impact of COVID-19 and lower oil prices are taking a toll on economic productivity. While the performance of the stock market is on an upward trend as a result of the progressive easing of lockdown measures across the country, the ongoing loss of productivity coupled with a potential second wave of virus infections will continue to weigh heavily on demand for risk assets throughout the year. Retail equity and mutual fund holdings are expected to take the brunt of the economy’s slowdown, with respective declines of 19.8% and 16.0% anticipated in 2020.
• Retail deposits and bond holdings are set to fare better than initially expected over the forecast period courtesy of a flight to safety away from risk assets. According to the Central Bank of the UAE, residential deposits balances rose by 2.5% from AED454.4bn ($123.7bn) in March to AED465.6bn ($126.8bn) in April. Consequently, we anticipate deposit balances to increase by 10.4% in 2020.
• The effects on the different segments that make up the HNW market will be disproportionate. The financial services and investments sector - the largest contributor to HNW wealth - has already taken a significant hit, as indicated by the 29.6% decrease of the ADX Banking & Fin index for the year to July 19, 2020.
• On the contrary, the healthcare sector is observing a digital transformation through increased investment in cloud infrastructures and automation of healthcare operations. The sector has thus held up in the face of the crisis. Similarly, the fast-moving consumer goods industry is holding up more robustly as demand for staples, toiletries, and over-the-counter drugs remains high.

Reasons to Buy

• Make strategic decisions using top-level revised forecast data on the UAE's retail savings and investments industry.
• Understand the key market trends, challenges, and opportunities in the UAE's retail savings and investments industry.
• Receive a comprehensive insight into the retail liquid asset holdings in the UAE, including deposits, mutual funds, equities, and bonds.