July 28, 2020

Arabian Fund Market Summary – June 30, 2020

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 $5.5 bn over the course of H1 2020. These inflows occurred in a market environment driven by the outbreak of the coronavirus and the resulting lockdowns around the globe. As a result, central banks and governments around the world started quantitative easing and economic stimulus programs to cushion the damage of the lockdowns and slowed economic growth. These programs resulted in a bounce back of the equity markets, as well as further decreasing interest rates.

Assets Under Management in the Fund Industry of the Arabian Markets

Within this environment, the overall assets under management in the Arabian fund markets increased from $42.9 bn to $45.6 bn over the course of H1 2020. This increase was driven by overall net sales (+$5.5 bn), while the performance of the underlying markets detracted (-$2.8 bn) from 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 industry - June 30, 2020

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 $40.7 bn, or 91.04%, of the overall assets under management. Meanwhile, Kuwait accounts for $3.0 bn, or 6.69%, of the overall assets under management, and Qatar accounts for $0.32 bn, or 0.71%, of the overall assets under management. The other three countries—United Arab Emirates ($0.3 bn), Oman ($0.2 bn), and Bahrain ($0.2 bn)—account together for 1.64% of the overall assets under management in the Arabian fund markets.

Graph 2: Market Share by Fund Market (June 30, 2020)

Source: Refinitiv Lipper

Assets Under Management by Asset Type

Money market funds ($35.4 bn) were the asset type with the highest assets under management at the end of June 2020, followed by equity funds ($7.5 bn), mixed-assets funds ($1.3 bn), bond funds ($1.0 bn), real estate funds ($0.3 bn), “other” funds ($0.04 bn), alternatives funds ($0.01 bn), and commodities funds ($0.001 bn).

Graph 3: Market Share by Asset Type (June 30, 2020)

Review of the Arabian fund industry - June 30, 2020

Source: Refinitiv Lipper

Arabian Fund Flow Trends H1 2020

Generally speaking, H1 2020 has been a tough period, with split results for the fund markets and asset managers in the Arabian fund management industry. Nevertheless, the year can be considered as positive since mutual funds (+$5.5 bn) have enjoyed net inflows.

Fund Flows by Asset Type*

One can get a better idea of the flow pattern by taking a more detailed look at the estimated net flows by asset type since this shows that not all asset types have enjoyed inflows over the course of H1 2020. Money market funds (+$5.8 bn) was the best-selling asset type, followed by mixed-assets funds (+$0.02 bn), bond funds (+$0.01 bn), real estate funds (+$0.01 bn), alternatives funds (+$0.002 bn), and commodities funds (+$0.0001 bn). Meanwhile, the two asset types with the biggest outflows over the course of H1 2020 were equity funds (-$0.3 bn) and “other” funds (-$0.0001 bn).

Graph 4: Estimated Net Sales by Asset Type, H1 2020 (U.S. Dollar Billions)

Review of the Arabian fund industry - June 30, 2020

Source: Refinitiv Lipper

Fund Flows by Sectors*

Money Market SAR (+$5.6 bn) was the best-selling sector overall, followed by Money Market Other (+$0.2 bn), Bond Emerging Markets Other (+$0.1 bn), Money Market USD (+$0.1 bn), and Bond Other (+$0.03 bn).

Graph 5: The 10 Best- and Worst-Selling Sectors H1 2020 (U.S. Dollar Billions)

Source: Refinitiv Lipper

At the other end of the spectrum, Equity Saudi Arabia (-$0.1 bn) suffered the highest estimated net outflows overall, bettered by Equity Kuwait (-$0.04 bn), Equity UAE (-$0.03 bn), Equity Global (-$0.03 bn), and Equity MENA (-$0.03 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 ($14.8 bn) was the largest fund promoter in the Arabian fund markets as of June 30, 2020, ahead of Riyad Capital ($9.4 bn), Al Rajhi ($4.4 bn), Samba Capital ($2.9 bn), and HSBC ($1.4 bn).

Graph 6: Ten Largest Promoters by Assets Under Management, June 30, 2020 (U.S. Dollar Billions)

Source: Refinitiv Lipper

Fund Flows by Promoter

National Commercial Bank, with net sales of $2.6 bn, was the best-selling fund promoter for H1 2020, ahead of Riyad Capital (+$1.7 bn), Al Rajhi (+$1.1 bn), Alpha Capital (+$0.3 bn), and Arab National Bank (+$0.3 bn).

Graph 7: Ten Best Selling Promoters H1 2020 (U.S. Dollar Billions)

Review of the Arabian fund industry - June 30, 2020 

Source: Refinitiv Lipper

The views expressed are the views of the author and not necessarily those of Refinitiv. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.

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