A new UBS Financial Services survey found that many wealthy investors are bracing for a rough market in 2020.
“Two in three global investors believe markets now are driven more by geopolitical events than business fundamentals such as profitability, revenue and growth potential.”
Out of 3,400 investors surveyed by UBS, 55% think there is going to be a significant sell-off and drop in the markets during 2020, but there’s no telling when. In response, many of these super-rich investors are shifting their portfolios to be around 25% cash. The investors surveyed have at least $1 million of investable assets.
Another UBS survey in September showed more evidence there is fear of an impending downturn. Of 360 global family offices averaging around $1.2 billion in wealth, 45% said they are shuffling their portfolios into safer sectors like bonds and real estate, while 42% are bulking up their cash reserves.
“Investors see reasons to be cautious in the new year,” a UBS Global Wealth Management spokesperson said in a note Tuesday, according to CNBC. “Two in three global investors believe markets now are driven more by geopolitical events than business fundamentals such as profitability, revenue and growth potential.”
The ongoing trade war between the U.S. and China is the leading concern. UBS also said there is some worry surrounding the 2020 U.S. presidential election.
Markets are reacting to any sliver of news from the U.S.-China trade front, and last week stocks hit record highs after there were signs that “phase one” of a new trade deal would be completed soon. U.S. President Donald Trump cooled some of that excitement, though, when he said he wasn’t ready for all the tariff rollbacks China was expecting.
“They’d like to have a rollback. I haven’t agreed to anything,” Trump told reporters Friday. “China would like to get somewhat of a rollback, not a complete rollback because they know I won’t do it.”
Trump’s reaction killed the momentum Friday, and the markets have been fairly flat since then.
Deutsche Bank also ranked the U.S.-China situation as one of the top risks for the stock market in 2020.
And as far as the 2020 election goes, many wealthy investors are worried about the rise of Democratic primary hopeful and Elizabeth Warren. Leon Cooperman, a notable billionaire investor, predicts the market will crash 25% if the Massachusetts senator manages to take the White House.
All of this led almost 60% of those surveyed to say they don’t feel as in control of their portfolios amid the market volatility, and 75% think the investing environment has become much more challenging than it was five years ago.