Assets under management in the GCC are projected to expand above the global average to hit about $500 billion in onshore assets by 2026, from $400 billion at the end of 2022, a report has shown.
More than 70 per cent of regional private wealth is in offshore accounts, which are typically favoured by high-net-worth individuals (HNWIs) and family offices, but this trend is shifting, according to estimates by Strategy& Middle East, a unit of global consultancy PwC.
“This projected growth underscores the potential of the GCC asset management industry amidst global economic challenges,” said Jorge Camarate, partner at Strategy& Middle East and leader of the company’s financial services practice.
“Despite the region's preference for offshore investing, increasing product sophistication and supportive regulatory initiatives are making onshore investment more appealing.”
The GCC asset management industry's projected growth comes at a time of global macroeconomic headwinds.
Rising interest rates, tighter liquidity, the fallout from high-profile bank failures and increased competition for environmental, social and governance-related investments are among the factors pushing the industry to adapt quickly.
Assets under management in the Middle East increased by $100 billion to $1.3 trillion in 2022 despite global economic challenges, management consultancy Boston Consulting Group said in a report in June.
The region's 7 per cent annual growth last year bucked the global trend in which assets under management fell 10 per cent to $98 trillion, BCG said.
The GCC's asset management industry has “great potential”, with several tailwinds supporting healthy growth levels, despite the problems in global markets, Strategy& report said in its report on Tuesday.
Strong capital inflow into GCC countries on the back of favourable oil prices and record growth in initial public offerings are among the top tailwinds buoying the industry's expansion, the report said.
Higher oil prices provided GCC countries with large trade surpluses. Nations in the region collectively recorded a trade surplus of about $350 billion, according to the International Monetary Fund's estimates for 2022.
The ratio of trade surplus to gross domestic product was about 15 per cent for Saudi Arabia and the UAE, and more than 20 per cent for Kuwait and Qatar, according to the Washington-based lender.
In terms of strong capital inflows, the UAE is expected to attract 4,500 new millionaires this year, drawing the second-highest net inflow of high-net-worth individuals globally after Australia, according to a report by Henley & Partners.
Meanwhile, the Middle East set a record for IPO activity in 2022, bucking the global slowdown in equity capital markets activity.
This growth continued to gather momentum in the second quarter of this year as the volume of IPOs on regional bourses climbed by 44 per cent, driven by Saudi Arabia and the UAE, amid robust economic expansion, according to consultancy EY.
The Mena region's IPO pipeline for the second half of this year and for 2024 remains “very healthy”, EY said in a report in August.
Also boosting the GCC asset management industry's growth is its transition from “standard strategies to more advanced products” that meet the needs of more demanding investors, the Strategy& report said.
As the regional industry matures, it can attract and retain investment portfolios previously placed offshore with international players
Strategy&,
a unit of global consultancy PwC
“As the regional industry matures, it can attract and retain investment portfolios previously placed offshore with international players,” it said.
Financial regulators in GCC countries have also helped with initiatives to develop the asset management industry further.
“These trends position GCC asset managers for significant growth in the coming years,” the report said.
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
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The biog
Family: Parents and four sisters
Education: Bachelor’s degree in business management and marketing at American University of Sharjah
A self-confessed foodie, she enjoys trying out new cuisines, her current favourite is the poke superfood bowls
Likes reading: autobiographies and fiction
Favourite holiday destination: Italy
Posts information about challenges, events, runs in other emirates on the group's Instagram account @Anagowrunning
Has created a database of Emirati and GCC sportspeople on Instagram @abeermk, highlight: Athletes
Apart from training, also talks to women about nutrition, healthy lifestyle, diabetes, cholesterol, blood pressure
Killing of Qassem Suleimani
UAE jiu-jitsu squad
Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)
Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)
More from Neighbourhood Watch:
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
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- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
India team for Sri Lanka series
Test squad: Rohit Sharma (captain), Priyank Panchal, Mayank Agarwal, Virat Kohli, Shreyas Iyer, Hanuma Vihari, Shubhman Gill, Rishabh Pant (wk), KS Bharath (wk), Ravindra Jadeja, Jayant Yadav, Ravichandran Ashwin, Kuldeep Yadav, Sourabh Kumar, Mohammed Siraj, Umesh Yadav, Mohammed Shami, Jasprit Bumrah.
T20 squad: Rohit Sharma (captain), Ruturaj Gaikwad, Shreyas Iyer, Surya Kumar Yadav, Sanju Samson, Ishan Kishan (wk), Venkatesh Iyer, Deepak Chahar, Deepak Hooda, Ravindra Jadeja, Yuzvendra Chahal, Ravi Bishnoi, Kuldeep Yadav, Mohammed Siraj, Bhuvneshwar Kumar, Harshal Patel, Jasprit Bumrah, Avesh Khan
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Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
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Jetour T1 specs
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The biog
Born November 11, 1948
Education: BA, English Language and Literature, Cairo University
Family: Four brothers, seven sisters, two daughters, 42 and 39, two sons, 43 and 35, and 15 grandchildren
Hobbies: Reading and traveling
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New schools in Dubai
