December 1, 2020

Arabian Fund Market Summary – September 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 $8.1 bn over the course of the first nine months of 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. Nevertheless, the market environment remained volatile and vulnerable.

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 $48.6 bn over the course of the first nine months of 2020. This increase was driven by overall net sales (+$8.1 bn), while the performance of the underlying markets detracted (-$2.3 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 Q3-2020

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 $43.9 bn, or 90.33%, of the overall assets under management. Meanwhile, Kuwait accounts for $3.1 bn, or 6.38%, of the overall assets under management, and the United Arab Emirates accounts for $0.8 bn, or 1.65%, of the overall assets under management. The other three countries—Qatar ($0.4 bn), Oman ($0.2 bn), and Bahrain ($0.2 bn)—amount to 1.64% of the overall assets under management in the Arabian fund market.

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

Source: Refinitiv Lipper 

Assets Under Management by Asset Type

Money market funds ($37.7 bn) were the asset type with the highest assets under management at the end of September 2020, followed by equity funds ($8.0 bn), mixed-assets funds ($1.0 bn), real estate funds ($0.9 bn), bond funds ($0.9 bn), “other” funds ($0.05 bn), alternatives funds ($0.01 bn), and commodities funds ($0.001 bn).

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

Source: Refinitiv Lipper

Arabian Fund Flow Trends Year-to-Date September 2020

Generally speaking, the first nine months of 2020 have 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 (+$8.1 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 the first nine months of 2020. Money market funds (+$8.3 bn) was the best-selling asset type, followed by bond funds (+$0.1 bn), mixed-assets funds (+$0.1 bn), real estate funds (+$0.01 bn), alternatives funds (+$0.003 bn), commodities funds (+$0.0001 bn), and “other” funds (+$0.00003 bn). Meanwhile, equity funds (-$0.4 bn) were the only asset type with outflows over the course of the first nine months of 2020.

Graph 4: Estimated Net Sales by Asset Type, Year-to-Date, September 2020 (U.S. Dollar Billions)

Review of the Arabian Fund Industry Q3-2020

Source: Refinitiv Lipper

Fund Flows by Sectors*

Money Market SAR (+$7.8 bn) was the best-selling sector overall, followed by Money Market Other (+$0.3 bn), Money Market USD (+$0.3 bn), Bond Emerging Markets Other (+$0.1 bn), and Mixed Assets Other Aggressive (+$0.02 bn).

Graph 5: The 10 Best- and Worst-Selling Sectors Year-to-Date, September 2020 (U.S. Dollar Billions)

Review of the Arabian Fund Industry Q3-2020

Source: Refinitiv Lipper 

At the other end of the spectrum, Equity Saudi Arabia (-$0.2 bn) suffered the highest estimated net outflows overall, bettered by Equity Kuwait (-$0.1 bn), Equity UAE (-$0.03 bn), Equity MENA (-$0.03 bn), and Bond Other (-$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 ($14.4 bn) was the largest fund promoter in the Arabian fund markets as of September 30, 2020, ahead of Riyad Capital ($10.8 bn), Al Rajhi ($4.9 bn), Samba Capital ($2.9 bn), and HSBC ($1.5 bn).

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

Source: Refinitiv Lipper

Fund Flows by Promoter

Riyad Capital, with net sales of $3.0 bn, was the best-selling fund promoter for the first nine months of 2020, ahead of National Commercial Bank (+$1.9 bn), Al Rajhi (+$1.5 bn), Alinma (+$0.8 bn), and Alpha Capital (+$0.6 bn).

Graph 7: Ten Best Selling Promoters Year-to-Date, September 2020 (U.S. Dollar Billions)

Source: Refinitiv Lipper

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