Over 70% of Mena’s asset managers remain confident about 2013 based mainly on the attractiveness of the GCC countries that benefit from increased government investment and dynamic local equity markets, says the first edition of QFC Authority’s “Mena Asset Management Barometer”.
“Qatar and the UAE seemed to offer the most potential,” the report said. The findings were based on some 45 in-depth telephone interviews with senior bankers, fund management firms, sovereign wealth funds and pension funds across the GCC countries and Egypt and Morocco.
The respondents said the countries’ infrastructure spending programmes and successful attempts to build hubs for financial service firms would continue to pay off in 2013.
The biggest investment trend mentioned by managers was a return to a more “risk-on” approach. This was chiefly characterised by asset managers moving from fixed income to equities, or at least re-weighting portfolios to an equity parity or bias.
Different geographies agreed on the impact of regulation, with all participants predicting that new rules would have a measurable effect on Mena’s (Middle East and North Africa) asset management sector. Though respondents strongly supported the region’s Shariah-compliant sector, managers also said the lack of unified regulation across Mena was damaging distribution and investment opportunities, as well as pushing up asset management overheads.
The barometer, which is intended to be published annually, found that asset managers are showing an increasingly “risk-on” attitude towards the growth potential in local equity markets. They were also united on the need for clearer regulation and better distribution opportunities.
The findings were announced on the sidelines of the second annual Bloomberg Doha Conference here yesterday.
Qatar Financial Centre Authority CEO Shashank Srivastava said, “The QFC Authority is proud to launch its inaugural Mena Asset Management Barometer, providing industry practitioners with detailed insight into the regional asset management industry. The barometer is a ground-breaking piece of research, which exemplifies the QFC Authority’s commitment to thought leadership serving the financial services industry in the Mena region as well as in Qatar. The Bloomberg Doha Conference, which brings many leaders of the asset management industry under one roof, is a fitting occasion for sharing the Barometer’s findings.”
QFCA chief strategic development officer Yousuf Mohamed al-Jaida said: “The barometer paints an optimistic yet realistic picture. It reveals confidence in the continued expansion of GCC (Gulf Co-operation Council) and Mena markets in 2013. Fund managers expect more weighting towards equities and away from fixed income, encouraged by government investment and progress in developing financial centres around the region. They would also like to see more regulatory convergence. Regulation is seen as having the biggest impact on the conduct of business and as the major cost. There is strong support for Shariah-compliant finance, but again fragmented regulation is a hindrance.”
Key findings from the Mena barometer include:
l 70% of managers are confident about the continued growth of Mena financial markets;
l 38% believe political unrest to be the largest negative impact on local markets;
l 80% believe the increased spending of governments is the largest positive impact on local markets;
l 42% believe equities will be the best performing asset class of 2013;
l 77% believe the largest operational expense will come from regulation and compliance.