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Dubai advisers recommend greater Asia exposure

Nearly 70% of professional investors based in Dubai are recommending clients allocate more to Asia.

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The findings were part of a survey conducted by Fidelity International at its Asian Investment Briefing in Dubai last week. The questions were answered by between 118 and 136 investment professionals from local retail banks, global retail banks, offshore life companies and offshore wealth advisers based in Dubai.

According to the findings, 52% were recommending clients allocate between 25% and 50% of their assets to the Asia-ex Japan region, while 42% recommend clients allocate between 10% and 25%

Inflation

However, investors were concerned about inflation, with nearly 45% stating they were worried that it was “getting out of control.” Furthermore, 58% of investors believe that Asian markets carried either “significantly” more risk (18%) or “slightly” more risk (40%) than developed markets.

Interestingly, 10% of investors believe that developed markets carried “significantly” more risk and 15% believe they carry “slightly” more risk than their Asian counterparts.

Speaking at the event Catherine Yeung, investment director in Fidelity International’s Hong Kong-based investment team, said she was not surprised to hear people were concerned about inflation.

“It is interesting that investors are concerned about inflation, as it has been one of the key reasons why investors have had such a high level of conviction in the Asian market,” she said.

“We expect to see another few months of high inflation readings and we also think inflation will peak in the first half of this year. This said, we do not believe it is going to be an issue going forward, however we will continue to monitor food prices and oil prices – although if oil prices do begin to hit peaks again this is going to be an issue for the whole world, not just for Asia.”

Despite concerns about inflation, 67% of investors said the most important factor when determining an allocation to Asian equities were economic growth rates. The depth and liquidity of equity markets and the size of the underlying economies also factored highly, both with 15% of the vote.

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