DOHA – Asset managers in the MENA region are showing an increasingly “risk-on” attitude toward the growth potential in regional equity markets, the first edition of Qatar Financial Centre Authority's MENA Asset Management Barometer launched in Doha Monday showed. The barometer offers 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 “risk-on” attitude toward 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. Shashank Srivastava, CEO and Board Member of the Qatar Financial Centre Authority, 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 groundbreaking 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.” Commenting on the barometer's findings, Yousuf Mohamed Al-Jaida, Chief Strategic Development Officer of the QFC Authority, said: “The 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 toward equities and away from fixed income, encouraged by government investment and progress in developing financial centers 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.” The MENA Asset Management Barometer findings are based on 45 in-depth telephone interviews with senior personnel at banks, fund management firms, sovereign wealth funds and pension funds across eight MENA countries (GCC, Egypt and Morocco). The barometer provides a regional overview and a detailed country-by-country breakdown of views on the different asset classes and market participants. The MENA Asset Management Barometer revealed, among others, that 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; 42 percent believe equities will be the best performing asset class of 2013; 77 percent believe the largest operational expense will come from regulation and compliance. Over 70 percent of MENA's asset managers remain confident about 2013. This optimism mainly stemmed from GCC-based firms who believed that the combination of increased government investment and dynamic local equity markets would make the six GCC states attractive investment locations.
Qatar and the UAE seemed to offer the most potential. Barometer respondents said that the countries' infrastructure spending programs 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, chiefly characterized 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 asset management sector. Though respondents strongly supported the region's Shariah-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. — SG
