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UBS Investor Watch Report Reveals Soaring Investor Optimism Overall Entering 2017

Economic outlook improved by 50% since the election with more than half of investors actively looking for investment opportunities

Key findings:

  • 68% of investors expect strong returns in the stock market
  • 55% of investors are actively looking for investment opportunities
  • 30% are considering taking cash off the sidelines
  • 41% of small business owners plan to invest more in business
  • 30% of small business owners plan to increase hiring
  • 84% of small business owners would like to see the Affordable Care Act revised or eliminated

UBS Wealth Management Americas (WMA) today released its quarterly UBS Investor Watch report, “The Revived Investor,” which revealed the highest levels of investor optimism since the 2008 financial crisis in anticipation of President-elect Trump assuming office on January 20. Investors cited Trump’s pro-business policies (71%) – including lower personal and corporate taxes – expectations for less regulation and increased infrastructure spending (69%), which they believe will spur U.S. economic growth, as the primary sources of their optimism.

Importantly, Investor Watch found that investors’ outlook on the economy, their top concern during the 2016 Presidential election, has improved by 50% since Trump was elected. Additionally, 68% of investors said they expect Trump’s policies to lead to strong stock market returns over the next six months. As a result, the majority of investors (55%) are actively looking for investment opportunities, up from 34% immediately following the election, with 42% likely to increase their investments in the stock market and nearly one-third of wealthy investors (30%) ready to deploy cash.

The report includes a survey of small business owners, which shows their outlook on the economy has also improved in anticipation of expected policy changes and they plan to invest more in their businesses and increase hiring.

"After years of caution following the financial crisis, we are finally seeing the tide turn. Investors are more willing to move cash off the sidelines and increase investments, while business owners are set to increase capital spending and hiring," said Paula Polito, Client Strategy Officer of WMA. "If the recent optimism continues, it will bode well for the markets and the economy."

Investors’ outlook for the stock market is even more optimistic than it is for the economy. While President-elect Trump supporters are more likely than Clinton supporters to be optimistic about S&P 500 returns in the next six months (90% vs. 44%), stock market optimism across party lines has increased from 25% before the election to 68% in January.

Investor optimism at its highest since financial crisis… but doubt remains 

Investor optimism is at its highest point since the financial crisis. President-elect Trump supporters’ economic outlook has improved from 25% prior to the election to 79% post-election. Clinton supporters’ confidence declined immediately after the election (34%, down from 57% prior to the election), but has since started to recover (41% now). The vast majority of Clinton supporters continue to be wary of Trump’s unpredictability (87%) and his potential business conflicts (80%), and the impact they can have on social issues and America’s standing in the global competitive environment.

"Investors have high expectations of the new administration, particularly with regard to deregulation, infrastructure spending and tax reform," said Sameer Aurora, head of Client & Investor Insights for WMA. "These expectations are fueling a sharp rise in optimism and prompting investors to put more of their money to work."

Small business owners spotlight – plans to invest and increase hiring 

Similar to high net worth investors, the survey of small business owners found that this group believes they will see significant growth opportunities under the Trump Administration. Consequently, 41% percent of small business owners said they plan to invest more in their businesses and 30% say they intend to increase hiring, compared to the 14% who plan to downsize their workforce and 18% who say they will invest less in their businesses.

In terms of their concerns, UBS revealed that the majority of business owners (62%) are worried about overregulation. Reducing healthcare costs is the top priority for business owners (50%), followed closely by infrastructure investment (49%), easing regulation to allow businesses to grow (47%), reducing terrorism (44%), lowering taxes (43%) and breaking the gridlock in Washington (42%). In terms of action, the vast majority (84%) would like to see the Affordable Care Act revised or eliminated, while 53% indicate that banking regulations have made it more difficult to borrow money to invest in their businesses. More than half (55%) of business owners say reducing government regulations would help their businesses.

That being said, optimism and expectations among business owners appear to be high, as most believe President-elect Trump will address their significant issues during his first 100 days in office. Four out of five small business owners expect the U.S. regulatory environment to ease, while two out of five expect their taxes to decrease.

UBS Wealth Management Americas surveys U.S. investors on a quarterly basis to keep a pulse on their needs, goals and concerns. After identifying several emerging trends in the survey data, UBS decided in 2012 to create the UBS Investor Watch to track, analyze and report the sentiments of affluent and high net worth investors. To download this report or review others, please visit ubs.com/investorwatch.

Methodology

For this eighteenth edition of UBS Investor Watch, 2,025 high net worth investors responded to our survey from December 20 - 27, 2016. All respondents have at least $1 million in investable assets, including 412 with at least $5 million. We also included an oversample of 282 business owners who have at least one employee besides themselves. With 81 survey respondents, we conducted qualitative follow-up interviews.

Wealth Management Americas is one of the leading wealth managers in the Americas in terms of financial advisor productivity and invested assets. Its business includes UBS’s domestic US and Canadian wealth management businesses, as well as international business booked in the US. It provides a fully integrated set of wealth management solutions designed to address the needs of ultra-high net worth and high net worth clients.

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS’s strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.

UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).