JEDDAH – Despite its youth, and especially in the aftermath of the financial crisis, GCC asset management industry has shown signs of maturity and consolidation, a study conducted by Markab Advisory and sponsored by Qatar Financial Centre Authority said Tuesday.
The study, Asset Management Industry in the GCC: Growth Dynamics and Contours of the Next Phase of Evolution, said the industry has "tremendous potential to graduate to the next level of sophistication." Private equity (PE), rather than mutual funds, will be the main arbiter of growth of the region’s asset management industry, says the study, which explores the growth and dynamics of the regional asset management industry and highlights the role that the industry can play in improving the global competitiveness of the GCC region.
The study found out that although the mutual funds industry has registered phenomenal growth during the last decade, future growth of mutual funds will be predicated on depth and diversity of the capital markets. Limiting factors, which include a restricted number of actively traded stocks, concentration of market values in a few sectors and mutual fund investors’ home bias, might hinder growth in mutual funds’ market penetration, which stands at less than 3 percent of the aggregate market capitalization.
Yousuf Al Jaida, Director of Asset Management at QFC Authority, said: "The GCC asset management industry, while nascent, has developed rapidly in size and sophistication, and demonstrated extraordinary resilience during the global financial crisis of 2008. It plays a key role in a growing economy, helping companies to unlock value and serving as a catalyst for efficient capital allocation. It is also important for attracting foreign capital. As this report shows, the prospects for the asset management industry in the GCC are very bright."
Mohammad Athar, Managing Director of Markab Advisory, said, "The building blocks for catapulting the GCC asset management industry into next phase of growth are in place. The dynamics of the industry in the region remain unique in terms of its potential sources of growth. There are strong indications of renewed activity in the private equity arena. Over the next 4-5 years, private equity is expected to be major arbiter of capital allocation in the region."
"The industry has potential for multidimensional growth via consolidation of existing asset classes, introduction of new asset classes, nurturing new asset managers and attracting new financial capital from external investors", Aamir Rehan, Managing Director of Markab Advisory, added. – SG