April 14, 2020

Arabian Fund Market Summary – December 31, 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 $10.9 bn over the course of 2019. 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, 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 $42.9 bn over the course of 2019. This increase was driven by overall net sales (+$10.9 bn), while the performance of the underlying markets contributed (+$1.4 bn) to the overall increase in assets under management.

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

Review of the Arabian Fund Market - December 2019

Source: Refinitiv Lipper

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 $37.2 bn, or 86.89%, of the overall assets under management. Meanwhile, Kuwait accounts for $3.5 bn, or 8.10%, of the overall assets under management, and the United Arab Emirates accounts for $1.4 bn, or 3.30%, 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 1.71% of the overall assets under management in the Arabian fund markets.

Graph 2: Market Share by Fund Market (December 31, 2019)

Source: Refinitiv Lipper

Assets Under Management by Asset Type

Money market funds ($29.2 bn) were the asset type with the highest assets under management at the end of December 2019, followed by equity funds ($9.0 bn), real estate funds ($2.3 bn), mixed-assets funds ($1.4 bn), bond funds ($1.0 bn), and commodities funds ($0.0001 bn).

Graph 3: Market Share by Asset Type (December 31, 2019)

Source: Refinitiv Lipper

Arabian Fund Flow Trends 2019

Generally speaking, 2019 has 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 (+$10.9 bn) have enjoyed strong net inflows.

Fund Flows by Asset Type*

The unusual flow pattern can be revealed by taking a more detailed view on the estimated net flows by asset type, as this shows that not all asset types have enjoyed inflows over the course of 2019. Money market funds (+$11.5 bn) was the best-selling asset type, followed by bond funds (+$0.4 bn) and mixed-assets funds (+$0.04 bn), as well as commodities funds (+$0.00001 bn), while equity funds (-$0.8 bn) faced the highest outflows, despite a strong performance of the equity markets globally. Real estate funds (-$0.2 bn) were the other asset type with outflows over the course of 2019.

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

Review of the Arabian Fund Market - December 2019

Source: Refinitiv Lipper

Fund Flows by Sectors*

Money Market SAR (+$11.3 bn) was the best-selling sector overall, followed by Bond Other (+$0.4 bn), Money Market USD (+$0.1 bn), Mixed Asset USD Flexible – Global (+$0.1 bn), and Money Market Other (+$0.1 bn).

Graph 5: The 10 Best- and Worst-Selling Sectors 2019 (U.S. Dollar Billions)

Review of the Arabian Fund Market - December 2019

Source: Refinitiv Lipper

At the other end of the spectrum, Equity Saudi Arabia (-$0.5 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 MENA (-$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 ($12.3 bn) was the largest fund promoter in the Arabian fund markets as of December 31, 2019, ahead of Riyad Capital ($7.7 bn), Samba Capital ($3.5 bn), Al Rajhi ($3.3 bn), and Alinma ($2.3 bn).

Graph 6: Ten Largest Promoters by Assets Under Management, December 31, 2019 (U.S. Dollar Billions)

Source: Refinitiv Lipper

Fund Flows by Promoter

Riyad Capital, with net sales of $4.8 bn, was the best-selling fund promoter for 2019, ahead of National Commercial Bank (+$3.7 bn), Al Rajhi (+$1.0 bn), HSBC (+$0.6 bn), and Alinma (+$0.2 bn).

Graph 7: Ten Best Selling Promoters 2019 (U.S. Dollar Billions)

Review of the Arabian Fund Market - December 2019

Source: Refinitiv Lipper

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

 

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