x Abu Dhabi, UAEWednesday 26 July 2017

Financial rivalry to boost asset industry

The Gulf's US$50 billion asset management industry can be further developed with the onset of a better regulatory framework, a survey finds.

Rising competition among financial centres such as Dubai and Doha should help to develop the Gulf's US$50 billion (Dh183.65bn) asset management industry by encouraging improved regulations, a survey has found.

The region represents only a fraction of the total global industry and is also small compared with the estimated more than $1.6 trillion of assets held by the Gulf's sovereign wealth funds.

Much of the assets of the wealth funds are invested overseas in developed markets rather than at home.

But the survey on investor trends in the GCC by Insight Discovery, a market research company based in Dubai, found there was potential for further growth regionally.

"Most of the asset management firms are here, and given the pools of money within sovereign wealth funds and pension funds, the industry is proving very popular despite the turmoil elsewhere," said Nigel Sillitoe, the chief executive of Insight Discovery.

Most Gulf states have their own regulatory frameworks, leading to potential complications for players looking to invest in the industry across the region.

Respondents to the survey said they were concerned by a lack of clarity about the regulation of the industry and changes to the legal environment but were less worried by political upheavals in parts of the Middle East.

Several states are already moving to regulate the industry better.

In the UAE, the Securities and Commodities Authority is preparing to take control of the country's fund management industry with regulations aimed at protecting buyers from misleading investments.

Qatar is also upgrading its regulations.

Franklin Templeton, Invesco and JPMorgan Asset Management are among international asset management firms operating in the region.

In recent years, a number of local firms have also sprung up, led by Abraaj Capital, the region's largest asset management company.

Several local lenders including First Gulf Bank, National Bank of Abu Dhabi and Emirates NBD are also seeking to expand their asset management capabilities.

"In addition to the appetite for emerging-market equity products, one of the most important findings in this year's study is the advisory market's concerns about the changing regulatory environment in the Middle East," said Mr Sillitoe.

"This can only be seen as a positive sentiment, which may add pressure to the call for the introduction of some new best practices and greater transparency in the region."

tarnold@thenational.ae