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The Gulf Cooperation Council’s (GCC) asset management market is estimated to grow above the global average, reaching nearly $500 billion in onshore assets by 2026.
The projections are a leap from $400 billion at the end of 2022, according to a new report by Strategy& Middle East, part of the PwC network.
“This projected growth underscores the potential of the GCC asset management industry amidst global economic challenges. Despite the region’s preference for offshore investing, increasing product sophistication and supportive regulatory initiatives are making onshore investment more appealing,” said Jorge Camarate, Partner at Strategy& Middle East and the firm’s financial services practice leader.
Though high-net-worth individuals and family offices have favored offshore asset management opportunities in the past, the report suggests that more than 70% of regional private wealth is in offshore accounts.
But the trend is changing. The region’s preference for offshore investing due to increasing product sophistication and supportive regulatory initiatives, according to the report.
The GCC’s asset management industry has “great potential”, supporting healthy growth levels, despite the problems in global markets, the report said.
Strong capital inflow into GCC countries on the back of favorable oil prices and record growth in initial public offerings are among the top tailwinds buoying the industry’s expansion.
“As GCC countries continue to diversify their economies and deepen their capital markets, regional investors and institutions are poised to benefit from an expanding array of investment avenues and opportunities,” said Aurélien Vincent, Partner at Strategy& Middle East.
In 2022, the IMF estimated that GCC countries held a trade surplus of approximately $350 billion. Wealthy individuals are also attracted to the region, with the UAE poised to attract most millionaires worldwide in 2022.
Regulatory initiatives have also supported increasingly dynamic investor needs in the region.
In Saudi Arabia, the Capital Market Authority introduced new amendments to investment funds regulation in 2021, while the UAE’s Securities and Commodities Authority made measures to improve the competitiveness of local asset managers and revitalize the industry.
The report suggests six strategic actions for GCC asset managers to utilize opportunities and address region-specific challenges, such as honing the performance track record, creating segment-specific operating models and value propositions, building effective sales functions, revamping the product range, exploiting digital tools, and consider non-organic growth opportunities such as M&A and partnerships.
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