November 21, 2019

Arabian Fund Market Summary – September 30, 2019

by Detlef Glow.

The fund industry in the Arabian markets (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) enjoyed overall estimated net inflows of $5.2 bn over the course of 2019 through Sept. 30. These inflows occurred in a volatile but positive market environment driven by discussions about a possible trade war between the U.S. and China, a possible return of the euro crisis caused by developments in Italy and France, and a general economic slowdown with decreasing earnings at the company level. Nevertheless, since the equity markets have shown an overall positive development over the course of 2019 to date, one would expect to see net inflows into mutual funds.

Assets Under Management in the Fund Industry of the Arabian Markets

The overall assets under management in the Arabian fund markets increased from $30.5 bn to $36.9 bn in 2019 year to date. This increase was driven by overall net sales (+$5.2 bn), while the performance of the underlying markets had a negative contribution ($1.2 bn) to overall assets under management.

Graph 1: Assets Under Management in the Fund Industry of the Arabian Markets (U.S. Dollar Billions)

Source: Lipper from Refinitiv

Assets Under Management by Fund Market

The assets under management in the Arabian fund markets are highly concentrated since the largest fund market, Saudi Arabia, accounts for $31.3 bn, or 84.74%, of the overall assets under management. Meanwhile, Kuwait accounts for $3.2 bn, or 8.66%, of the overall assets under management, and the United Arab Emirates accounts for $1.7 bn, or 4.64%, of the overall assets under management. The other three countries—Qatar ($0.4 bn), Oman ($0.3 bn), and Bahrain ($0.1 bn)—account together for 1.96% of the overall assets under management in the Arabian fund markets.

Graph 2: Market Share by Fund Market (September 30, 2019)

Review of the Arabian fund markets, September 30, 2019

Source: Lipper from Refinitiv

Assets Under Management by Asset Type

Money market funds ($23.4 bn) were the asset type with the highest assets under management at the end of September 2019, followed by equity funds ($8.7 bn), real estate funds ($2.5 bn), mixed-assets funds ($1.3 bn), bond funds ($1.1 bn), and commodity funds ($0.001 bn).

Graph 3: Market Share by Asset Type (September 30, 2019)

Review of the Arabian fund markets, September 30, 2019

Source: Lipper from Refinitiv

Arabian Fund Flow Trends 2019 Year to Date

Generally speaking, 2019 has so far been a tough year, with split results for the fund markets and asset managers in the Arabian fund management industry. Nevertheless, the year can be considered as positive as mutual funds (+$5.2 bn) have enjoyed net inflows.

Fund Flows by Asset Type*

A more detailed view by asset type reveals that not all asset types have enjoyed inflows over the course of 2019. Money market funds (+$5.8 bn) was the best-selling asset type, followed by bond funds (+$0.4 bn) and mixed-assets funds (+$0.01 bn). All other asset types faced net outflows—commodity funds (-$0.0002 bn), real estate funds (-$0.2 bn), and equity funds (-$0.8 bn).

Graph 4: Estimated Net Sales by Asset Type, Year to Date September 2019 (U.S. Dollar Billions)

Review of the Arabian fund markets, September 30, 2019

Source: Lipper from Refinitiv

Fund Flows by Sectors*

Money Market SAR (+$5.6 bn) was the best-selling sector overall, followed by Bond Other (+$0.4 bn), Money Market USD (+$0.2 bn), Mixed Asset USD Flexible – Global (+$0.1 bn), and Money Market Other (+$0.03 bn).

Graph 5: The 10 Best and Worst Selling Sectors for 2019 Year to Date (U.S. Dollar Billions)

Source: Lipper from Refinitiv

At the other end of the spectrum, Equity Saudi Arabia (-$0.4 bn) suffered the highest estimated net outflows overall, bettered by Real Estate Other (-$0.2 bn), Equity US (-$0.1 bn), Equity Europe (-$0.1 bn), and Equity Global (-$0.1 bn).

*Please note that Lipper launched an updated Lipper Global Classification Scheme in May 2019 which caused some shifts with regard to the assets under management and the estimated net flows within the single asset types and/or sectors. Please visit our website to learn more about the new Lipper Global Classifications.

 

Assets Under Management by Promoter

National Commercial Bank ($9.4 bn) was the largest fund promoter in the Arabian fund markets as of September 30, 2019, ahead of Riyad Capital ($4.4 bn), Samba Capital ($3.6 bn), Al Rajhi ($3.2 bn), and Alinma ($2.4 bn).

Graph 6: Ten Largest Promoters by Assets Under Management, September 30, 2019 (U.S. Dollar Billions)

Source: Lipper from Refinitiv

Fund Flows by Promoter

Riyad Capital, with net sales of $1.5 bn, was the best-selling fund promoter for 2019 so far, ahead of National Commercial Bank (+$1.0 bn), Al Rajhi (+$0.9 bn), HSBC (+$0.5 bn), and Alinma (+$0.3 bn).

Graph 7: Ten Best Selling Promoters, Year to Date September 30, 2019 (U.S. Dollar Billions)

Source: Lipper from Refinitiv

The views expressed are the views of the author, not necessarily those of Lipper or Refinitiv.

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