MENA asset managers moving from fixed income to equities
11 April 2013 Doha
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A combination of increased government investment and dynamic local equity markets will make the six GCC (Gulf Cooperation Council) states attractive investment locations, said respondees to a Qatar survey.
The Qatar Financial Centre (QFC) Authority published the first edition of its MENA Asset Management Barometer, offering a comprehensive portrait of current market sentiment to be tracked over time.
The barometer, intended to be published annually, found that asset managers are showing an increasingly 鈥渞isk-on鈥� attitude towards the growth potential in local equity markets. Additionally, asset managers are united by the need for clearer regulation and better distribution opportunities.
The findings were announced during the second annual Bloomberg Doha Conference exploring the challenges and opportunities for asset managers in the GCC and MENA regions.
Yousuf Mohamed Al-Jaida, chief strategic development officer of the QFC Authority, said: 鈥淭he barometer paints an optimistic yet realistic picture. It reveals confidence in the continued expansion of GCC 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 Sharia鈥檃h-compliant finance, but again fragmented regulation is a hindrance.鈥�
According to the survey, 70 percent of managers are confident about the continued growth of MENA financial markets; 38 percent believe political unrest to be the largest negative impact on local markets; 80 percent believe the increased spending of governments is the largest positive impact on local markets; and 42 percent believe equities will be the best performing asset class of 2013.
More than 70 percent of MENA鈥檚 asset managers remain confident about 2013. This optimism mainly stemmed from GCC-based firms that believed that the combination of increased government investment and dynamic local equity markets would make the six GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) attractive investment locations.
Qatar and the UAE seemed to offer the most potential. Barometer respondents said that the countries鈥� 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 鈥渞isk-on鈥� 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鈥檚 asset management sector. Though respondents strongly supported the region鈥檚 Sharia鈥檃h compliant sector, managers also said that the lack of unified regulation across MENA was damaging distribution and investment opportunities, as well as pushing up asset management overheads.
The Qatar Financial Centre (QFC) Authority published the first edition of its MENA Asset Management Barometer, offering a comprehensive portrait of current market sentiment to be tracked over time.
The barometer, intended to be published annually, found that asset managers are showing an increasingly 鈥渞isk-on鈥� attitude towards the growth potential in local equity markets. Additionally, asset managers are united by the need for clearer regulation and better distribution opportunities.
The findings were announced during the second annual Bloomberg Doha Conference exploring the challenges and opportunities for asset managers in the GCC and MENA regions.
Yousuf Mohamed Al-Jaida, chief strategic development officer of the QFC Authority, said: 鈥淭he barometer paints an optimistic yet realistic picture. It reveals confidence in the continued expansion of GCC 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 Sharia鈥檃h-compliant finance, but again fragmented regulation is a hindrance.鈥�
According to the survey, 70 percent of managers are confident about the continued growth of MENA financial markets; 38 percent believe political unrest to be the largest negative impact on local markets; 80 percent believe the increased spending of governments is the largest positive impact on local markets; and 42 percent believe equities will be the best performing asset class of 2013.
More than 70 percent of MENA鈥檚 asset managers remain confident about 2013. This optimism mainly stemmed from GCC-based firms that believed that the combination of increased government investment and dynamic local equity markets would make the six GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) attractive investment locations.
Qatar and the UAE seemed to offer the most potential. Barometer respondents said that the countries鈥� 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 鈥渞isk-on鈥� 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鈥檚 asset management sector. Though respondents strongly supported the region鈥檚 Sharia鈥檃h compliant sector, managers also said that the lack of unified regulation across MENA was damaging distribution and investment opportunities, as well as pushing up asset management overheads.
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