The Middle East North Africa (MENA) region's funds industry registered $64.5 billion in assets under management at the end of the first quarter of 2011 for funds domiciled in the region, with Saudi Arabia, having 243 domiciled funds, continues to lead the way with $23.7 billion in assets under management, Zawya, an online provider of business intelligence, said in its recent quarterly funds ranking results. Morocco followed with $13.2 billion and Kuwait with $8.9 billion. Compared to the previous quarter, only two countries posted net funds inflow: Jordan ($1.6 million) and Oman ($1.3 million). All others showed net outflow. Saudi Arabia has the largest mutual funds market in the region with more than 243 funds domiciled in the kingdom having $23.70 billion of AUM as at the end of March 2011. The country also is home to some of the most important players in the region in terms of AUM with some of them managing multi-billion-dollar portfolios. The market was affected by the turmoil in the region and mutual funds witnessed a strong decline in net asset value (NAV) to reach their lowest point towards the beginning of March 2011. But as commerce and business in the kingdom was unhindered and with clear signs of government support providing comfort to investors, Saudi funds were able to quickly turn their performance indicators green and ended the first quarter almost without any losses. During the second quarter of 2011, Saudi funds continued their upward trend as the Saudi stock market flourished with support from high oil prices and strong growth expectations. Some sector funds outperformed the market, especially those focused on petrochemicals and cement, while others focused on the financial sector suffered heavy losses compared to their local peers by the end of the second quarter in terms of YTD returns. During the first half of 2011, the Capital Market Authority announced the approval of 26 new mutual funds, most of them focused on the Saudi market with some others focused on regional or international markets. Among the top-ranked funds in the first quarter of 2011, conventional categories are: Al-Mal UAE Equity Fund in the UAE Equity conventional category, Markaz Arabian Fund in the MENA Equity conventional category, Gulf Gate Fund in the GCC Equity conventional category, Al-Arabi Saudi Equity Fund in the Saudi Arabia Equity conventional category, NBK Qatar Equity Fund in the Qatar Equity conventional category, and Arab African International Bank Investment Fund in the Egypt Equity conventional category, the report said. Of the 12 sampled asset types, five posted new inflow, while the rest showed net outflow. Fixed income funds had the largest net inflow with $139 million, while trade finance funds were the bigger losers with net outflow of $1.52 billion. Zawya report indicated that 11 MENA funds succeeded in maintaining their leading positions on top of the ranking, while the other 10 categories all have new funds in first place in the first quarter of 2011. The ranking for the first quarter consists of 15 conventional and six Islamic categories, a total of 21, an increase from last quarter's 19 categories, Zawya noted, adding that the two new categories are Egypt Balanced Conventional and Egypt Equity Islamic. The negative performance of the mutual funds industry in the MENA region during the first half of 2011 did not reflect the long-term growth prospects, only the short-term political instability. The first milestone of the second half of 2011 will be the 2Q2011 corporate results, which are expected to be a catalyst for the market as well as the mutual funds industry, Zawya said. Separately, according to PriceWaterhouse Cooper (PwC), initial public offering activity in the Gulf region was subdued in the first half of 2001 as investors remained cautious amid economic uncertainties, resulting in further delays and postponements of IPOs. IPOs dropped by 50 percent, from 8 to 4, with the deal value plunging by 57 percent to $358 million from $830 million, PwC said. Last year, IPO activity in the GCC was dominated by Saudi Arabia's Tadawul. However, this year only Saudi Integrated Telecom Company floated IPO on the Tadawul, raising $93 million in May, as compared with the seven IPOs in the first half of 2010 which raised $685 million. Nonetheless, the Saudi market is expected to witness a number of flotations in the second half.
