Opportunities and Challenges in the Notoriously Opaque Market of the Gulf Cooperation Council Countries

Opportunities and Challenges in the Notoriously Opaque Market of the Gulf Cooperation Council Countries

FOR IMMEDIATE RELEASE

September 2018, Boston. A new report from Cerulli Associates, a global research and consulting firm, in partnership with Insight Discovery Limited, finds that assets under management (AUM) of the institutional investors that are based in the six Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)--amount to around USD 3.5 trillion.

This one-time report, The Cerulli Report—Asset Management in the Middle East 2018: Pockets of Addressability, highlights three very different pools of capital available to international asset managers in the GCC countries. The most important institutional investors are the dozen or so sovereign wealth funds (SWFs). AUM of the SWFs that are available to international asset managers is probably around USD 1.2 trillion. This amount includes holdings of exchange-traded funds and other indexed products. In a market that is notoriously opaque, it is not clear how much of the AUM of other institutions are available to foreign managers.

Cerulli believes there are opportunities for global financial services groups with well-established private banking franchises who are already catering to 700,000 high-net-worth individuals (HNWIs) who are based in the Middle East (which extends beyond the GCC countries). Cerulli estimates that USD 800 billion is available for asset managers even after allowing for assets that are held in cash, tied up in HNWI’s businesses, or invested in physical real estate.

Cerulli finds there will always be investment advisors in the GCC countries. In all six economies, the workforces of nationals are too small to provide the service needed. The numerous expatriates who fill the gaps—at all levels in the job market—are almost all looking to take advantage of disposable incomes that are much higher than what they could earn at home, and to save a nest egg. As the GCC economies grow, demand for expats’ services will grow, and the potential demand for services of the advisors will expand as well. This creates a rising opportunity for asset management firms, international life companies, and others.This one-time report, The Cerulli Report—Asset Management in the Middle East 2018: Pockets of Addressability, offers global asset managers, private banks, and other wealth management firms analysis on this marketplace.

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