The year of reckoning in the UAE… or not?
29 Nov 17
A lot of gloom is found in Insight Discovery’s flagship Middle East Investment Panorama (MEIP) for 2017, says its chief executive Nigel Sillitoe. Some 63% of advisers saw their clients’ lack of willingness to invest as a threat. Meanwhile, there were not many optimists. Only 18% of advisers saw their clients’ readiness to invest as an opportunity.
We have always sought to answer this question: what do advisers across the GCC region want from the asset management companies and international life insurance companies with whom they work?
The peculiar nature of the GCC region economies means the advisers are working overwhelmingly with expatriates – and, especially, those from the UK and the Indian sub-continent. This means that we have generally not dealt with two other important questions. One is: what are the opportunities for asset managers from the retirement savings of GCC nationals? The other is: how large are the opportunities from the region’s sovereign wealth funds (SWFs)?
This year, we have worked with Marmore Research to gain a comprehensive view of all the asset pools across the region.
The assets under management (AUM) of the SWFs dwarf all others, at $2,921bn. Unfortunately, the public finances of most of the GCC governments mean that most of the SWFs – essentially buffers to provide protection against hard times – are growing slowly, if at all.
With AUM of $411bn, the defined benefit (DB) pension funds are the second largest pool of assets. Like the SWFs, they hold considerable allocations outside the domestic capital markets of the GCC region. Unlike the SWFs, they are growing steadily, thanks to economic and demographic trends.
Other important pools of assets include state-owned enterprises of GCC governments (with AUM of $124bn), mutual funds ($25bn) and private equity (PE) funds ($7bn).
The AUM of the region’s insurance companies – at $85bn – are substantial in absolute terms. In part because nearly half of advisers have been increasing their usage of non-life insurance products for clients, the figure is likely to rise.
Not included in Marmore Research’s analysis are: portfolios of high net worth individuals that are run by/through private banks outside the region; savings held as deposits with GCC region banks by nationals and expatriates; and assets of advisers clients in mutual funds that are domiciled in Luxembourg, Ireland and other centres outside the region.
Tags: Insight Discovery | UAE
