Markaz Sector Report

Transcription

1 Markaz Sector Report MENA Asset Management Trends & Issues in MENA Asset Management Industry Research Highlights: Analyzing the state of MENA asset management industry in terms of fund performance, market size, regulations and challenges.

2 Research M.R. Raghu CFA, FRM Head of Research N.C. Karthik Ramesh Manager - Research [email protected] Rajesh Dheenathayalan Research Analyst [email protected] Support Jenevivu Lasrado Secretary, Research [email protected] Nael Aboul Huda Manager, Media & Communications [email protected] Disclaimer This report has been prepared and issued by Kuwait Financial Centre K.P.S.C (Markaz), which is regulated by the Capital Markets Authority and the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz.. Any user after obtaining Markaz permission to use this report must clearly mention the source as Markaz. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Kuwait Financial Centre K.P.S.C (Markaz) may seek to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz s website shall be at your own risk. For further information, please contact Markaz at P.O. Box 23444, Safat 13095, Kuwait; [email protected] ; Tel: ; Fax: Kuwait Financial Centre K.P.S.C. Markaz 2

3 Table of Contents 1. Executive Summary Key Questions and Policy Actions to be addressed... 8 What prevents the growth in Assets under Management?... 8 When will Saudi Arabia and Kuwait be part of MSCI Emerging Market Index?... 9 What is ailing the debt market in the region and what can be done to improve it? Why ETFs aren t popular in the MENA region? Why is liquidity so low in the region? How to attract foreign investments? What could be Key innovation areas in MENA asset management industry? Can Mutual funds outsize Managed accounts in terms of assets? Industry Architecture Research Product Range Marketing/Distribution of Funds Operational Support Risk Management SWOT Analysis Market Structure Leadership Position Cost Domicile Specialized Funds Managed Assets Saudi Arabian Funds Morocco Funds Egypt Funds Kuwait Funds Tunisia Funds MENA Funds Kuwait Financial Centre K.P.S.C. Markaz 3

4 12. GCC Funds Lebanon Funds UAE Funds Oman Funds Qatar Funds Iraq Funds Jordan Funds Bahrain Funds Challenges to the Industry Elusive Growth Political Risk Benchmark Issues Fund Size Marketing/Distribution of Funds Fluidic Regulations Regulatory Developments Appendix Appendix 1: Global Asset Management Industry Overview Appendix 2: Estimating the Size of Managed Accounts Appendix 3: Consolidated Fund Manager Rankings Appendix 4: MSCI Classification Criteria Appendix 5: Current Stance of MENA Countries Kuwait Financial Centre K.P.S.C. Markaz 4

5 Tables and Charts TABLES CHARTS 2.1 Current Stance of MSCI 2.1 Portfolio Equity Investment, net (in USD bn) 2.2 Establishment of Corporate Governance Code 3.1 Industry Architecture 3.1 Skewed Sectorial Representation 3.2 Fund Distribution Network 5.1 MENA Asset Management Snapshot 6.1 Saudi Arabia AUM Breakup 5.2 Top Asset Managers in each Geographical Focus 7.1 Morocco AUM Breakup 5.3 Estimating the Size of Managed Accounts (USD 8.1 Egypt AUM Breakup billion) 6.1 Assets under Management - Summary 9.1 Kuwait AUM Breakup 6.2 Top Fund Managers 10.1 Tunisia AUM Breakup 7.1 Assets under Management - Summary 11.1 MENA AUM Breakup 7.2 Top Fund Managers 12.1 GCC AUM Breakup 8.1 Assets under Management - Summary 13.1 Lebanon AUM Breakup 8.2 Top Fund Managers 14.1 UAE AUM Breakup 9.1 Assets under Management - Summary 15.1 Oman AUM Breakup 9.2 Top Fund Managers 16.1 Qatar AUM Breakup Assets under Management - Summary 17.1 Iraq AUM Breakup 10.2 Top Fund Managers 18.1 Jordan AUM Breakup 11.1 Assets under Management - Summary 19.1 Conventional Equity Fund 11.2 Top Fund Managers 22.1 Global Assets under Management (in USD trillions) 12.1 Assets under Management- Summary 22.2 Middle East & South Africa, Assets under Management 12.2 Top Fund Managers TABLES (Contd) 13.1 Assets under Management - Summary 17.2 Top Fund Managers 13.2 Top Fund Managers 18.1 Assets under Management - Summary 14.1 Assets under Management - Summary 18.2 Specialized Funds 14.2 Top Fund Managers 19.1 Assets under Management - Summary 15.1 Assets under Management - Summary 19.2 Conventional Funds 15.2 Top Fund Managers 20.1 AUM over the Years (in USD mn) 16.1 Assets under Management - Summary 20.2 Average Fund Size in MENA 16.2 Top Fund Managers 21.1 MENA Independent Capital Market Authorities 17.1 Assets under Management Summary 22.1 Worldwide Mutual Fund Assets, Investment Funds Multiple Matrix Kuwait Financial Centre K.P.S.C. Markaz 5

6 1. Executive Summary MARKAZ SECTOR RESEARCH MENA Asset Management Industry manages USD 61.7billion in assets in about 782 funds as of May 31, MENA Asset Management Industry manages USD 61.7billion 1 in assets in about 782 funds as of May 31, Geographically, Saudi Arabian funds account for 35.3% of the total (USD 21.7bn), followed by Morocco mandated funds with 22.6% share. In terms of products, money market fund leads the pack with a 31.5% share, followed by trade finance at 26.7% and equities at 23.3%, while the remainder is in fixed income and specialized funds. Of the total assets, conventional funds manage USD 36.7bn (62%) in assets and rest are Islamic. In terms of the number of funds, Morocco mandated funds lead the table with 176 funds (22.5%), followed by Saudi Arabia with 122 funds (15.6%). Product wise, there are 332 equity funds, 179 specialized funds, 157 fixed income funds, 82 money market funds and 32 trade finance funds. Similar to trend witnessed in assets under management, there are more conventional funds (583 funds) than Islamic funds (199 funds). AUM/GDP ratio for half the MENA countries was less than 0.5%, implying lack of mutual fund penetration as an investment option. AUM/GDP ratio for half the MENA countries was less than 0.5%, implying lack of mutual fund penetration as an investment option. The MENA asset management market is concentrated among the top asset management companies, with the top 10 asset managers (out of a total of 174 managers) accounting for 54.6% of the total assets being managed. NCB Capital leads the list of large asset management companies with USD 7.39bn in assets (12% market share), followed by Beltone Asset Management with USD 5.52bn in assets (8.9% share). Equity funds in MENA region, on an average, charge 1.47% as fund management fee. This is apart from administration, custodian and performance fees. Morocco equity funds charge the highest management fee at 1.93%, while Egyptian funds charge the least at 0.61%. The performance fee component is almost nonexistent in Moroccan and Saudi equity funds. Management fees for fixed income and money market funds are much cheaper. Moroccan fixed income and money market 1 Assets under Management (AUM) refer to mutual fund assets. AUM value computed for funds with MENA region or one of its constituent countries as their geographical focus. Kuwait Financial Centre K.P.S.C. Markaz 6

7 funds charge the highest management fees amongst all at 1.38% and Local markets tend to suffice as domiciles with respective countries being the popular choices. Asset growth and higher fees which had hitherto been driving profitability are fast replaced by cost containment measures. 1.2% respectively. Considering that local investors make up the bulk of participants in MENA funds, local markets tend to suffice as domiciles for these funds, with respective countries being the most popular choices and accounting for 95% of the total. Demand for Sukuk (Islamic bond) as an asset class has been on the rise even among conventional fund managers who are increasingly looking at this option post the devastating Eurozone debt crisis, as the debt here is fully backed by real assets. Ensuing market volatility and increased political risk has kept risk-averse clients away from the market, resulting in stagnant industry AUMs. Smaller funds sizes and evolving regulations which vary from country to country have constrained business growth. Asset growth and higher fees which had hitherto been driving profitability are fast replaced by cost containment measures. Policy Action Modernize & Unify Stock Exchanges Attract Investment Foreign Develop Debt Markets Effective Governance Corporate Expected Outcome Boosts market liquidity, limits volatility and enhances confidence for market participants. Increased market efficiency, results in increased disclosures and shareholder activism. Proper pricing of risk with establishment of sovereign yield curve. Secondary market liquidity increases. Companies with good governance enjoy more investor support and confidence and command a premium for their equity. Cost of the full report: $500 For payment details please write to: [email protected] Or Kindly use our online payment gateway at Kuwait Financial Centre K.P.S.C. Markaz 7

8 Advocating Sound MENA Research Our Research Archive Infrastructure Power Egypt(2014) KSA(2013) Kuwait(2012) UAE(2012) Qatar(2012) MENA (Ex- GCC) (2013) Ports KSA(2012) UAE(2012) Qatar(2012) Oman(2012) Kuwait(2014) Aviation UAE(2012) KSA(2012) Water Qatar(2014) Kuwait(2013) KSA(2013) ICT KSA(2012) Kuwait(2013) UAE (2013) Qatar (2013) Roads and Railways KSA(2013) Qatar(2013) GCC Integrated Infrastructure (2013) Economic Kuwait's PPP Law (Dec - 13) Bankruptcy in the GCC (Jan-13) Multiple directorships in KSA(Jan-13) GCC Demographics (July 12) Got a CMA: What Next? (Feb-12) How is the GCC preparing for a AA+ World? (Sept-11) Stress Testing Kuwait Banks (May-11) MENA Unrest (Apr-11) Kuwait Development Plan (Mar-11) The New Regulations on Kuwait Investment Sector (Jun-10) Kuwait Capital Market Law (Mar-10) Diworsification: The GCC Oil Stranglehold (Jan-09) The Vicious Square Monetary Policy options for Kuwait (Feb-08) To Leap or To Lag: Choices before GCC Regulators (Apr-07) Sector KSA Education (2014) KSA Asset Management (2014) Egypt Asset Management (2014) UAE Asset Management (2014) GCC Banking (2014) KSA Healthcare (2014) GCC Investment Banking (2013) GCC Petrochemicals (2013) GCC Education (2013) GCC Women Investors (2013) GCC Media (2013) GCC Retail (2013) FIFA World Cup 2022 (2013) Mena Asset Management (2013) GCC Islamic Finance (2013) GCC Insurance (2013) GCC Residential RE (2013) GCC Media (2013) GCC Contracting (2013) GCC Healthcare (2012) GCC Metals & Mining (2012) Capital Market Mena Asset Management Policy Perspectives (Dec-13) Including GCC in the MSCI EM Index (Oct-12) Alpha Abound (Aug-12) Kuwait Investment Sector (Mar-12) GCC Defensive Bellwether Stocks (Jan- 12) KSE 15 Index (Sept-11) Kuwait Investment Sector (Sept-10) The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) GCC Banks - Done with Provisions? (Jan-10) Missing the Rally (Jun-09) Shelter in a Storm (Mar-09) This Too Shall Pass (Jan-09) Fishing in Troubled Waters (Dec-08) Policies Towards Involving Kuwaitis in the Private Labor Market (2013) Powering Kuwait into the 21 st Century - Alternatives for Power Generation (2013) Powering Kuwait into the 21 st Century - Adopting a sustainable power strategy (2012) Tools to Strengthen & Support Kuwait s Private Sector (2012) Daily Morning Brief Markaz Kuwait Watch Monthly Fixed Income Update MENA Real Estate Monthly Round Up International Market Update Market Review Quarterly Half yearly GCC Outlook Equity Risk Premium Corporate Earning Annual Policy Periodic Global Outlook Access Our Reports Bloomberg - MRKZ <Go> Thomson Research, Reuters Knowledge Nooz Zawya Investor ISI Emerging markets Capital IQ FactSet Research Connect TheMarkets.com Paid reports ranging from US$ Complimentary reports

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