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By Santhosh V Perumal/Business Reporter
Qatar’s foreign assets are estimated to grow more than 19% to $210bn this year mainly supported by double-digit growth in overseas holdings of its sovereign fund and the central bank.
The country’s asset management sector being small, it presents significant opportunities, according to the Qatar Financial Centre Authority (QFCA).
Foreign assets held by Qatar Investment Authority are expected to grow by 21% to $135bn (more than 64% of the total foreign assets of the country); those held by central bank by 23% to $54bn and those by commercial banks by 8% to $27bn, QFCA acting CEO Shashank Srivastava disclosed quoting the Institute of International Finance data.
Addressing a seminar, jointly organised by QFCA and Luxembourg for Finance, Srivastava said liquid assets of affluent individuals in Qatar were $27bn in 2010 and total assets under management of funds in Qatar were only $5.3bn as on September 2010.
“Qatar’s significant wealth and the (current) gap on the ground asset management capacity make Qatar an attractive market for asset management,” he said. Quoting Datamonitor, Srivastastava said liquid assets of affluent individuals in Qatar rose from mere $7bn in 2004 to $8bn in 2005, $11bn in 2006, $14bn in 2007, $20bn in 2008, $25bn in 2009 and $27bn in 2010.
“As a part of its strategy, QFC is focused on supporting the creation of on the ground asset management capabilities in Qatar,” he said.
On the insurance sector, he said the low penetration levels in the country indicated high growth potential in both life and non-life segments.
Qatar’s insurance sector witnessed 12% compounded annual growth in premium between 2006 and 2010 with that in the life insurance growing by 58% and 11% in non-life, Srivastava said.
“Despite this growth, penetration rates in Qatar remain low (0.05% for life and 0.75% for non-life) compared to global averages (3.90% for life and 2.79% for non-life,” he said.
Moreover, with high cession rates (51% in 2010); Qatar’s reinsurance market also demonstrates significant potential, according to him. On the banking industry, he said total assets in Qatari banks grew faster than the country’s economy between 2006 and 2010, indicating rising penetration levels.
“Qatar has a small market share of the GCC banking assets but one of the highest asset growth rates. This demonstrates the high potential in the Qatari banking sector,” he said.
The country’s banking market is characterised by relatively low levels of credit penetration, further demonstrating potential for growth, he added.