II. Summary of Findings 08 - WSJ

Table of Contents

I. Introduction

02

II. Summary of Findings

08

III. Chapter 1: Evolution and Business Dynamics

of the Global Asset Management Industry

16

IV. Chapter 2: Current and Emerging Landscape

of Asset Classes in the GCC

Section A: Mutual Funds

26

Section B: Private Equity & Islamics

38

V. Chapter 3: Key GCC Investor Groups and

their Emerging Role

48

VI. Chapter 4: Opportunities and Challenges for

the Asset Management Industry in the GCC Region

56

VII. Chapter 5: Way Forward and Key Areas of Focus

for Regulators & Policy Makers

66

VIII. End Notes

70

01

02

I Introduction

"A great stock, though with small pro ts, generally increases faster than a small stock with great pro ts. Money, says the proverb, makes money. When you have a little, it is o en easier to get more. e great di culty is to get that little." ? Adam Smith, e Wealth of Nations.

e years 2009 and 2010 were perhaps the most spectacularly di cult years for the Gulf Cooperation Council ("GCC") asset management industry. e reverberations of the global

nancial crisis of 2008 were being severely felt in the GCC region. As a result, almost every segment of the industry was nding itself severely impaired. Before the crisis, almost all investment assets were growing

at a rapid, and in some cases, even astronomical pace (though the growth was not necessarily concurrent). Oil prices were touching new highs. ere was a widespread view within the region's banking, investment and asset management industries that the region's vast oil wealth, the overall health of the banking system and the massive investment in infrastructure by the public sector

ring-fenced the GCC from any possible nancial catastrophe worldwide. A er all, the GCC had hardly felt the impact of the dotcom crash of 2000 or the Asian nancial crisis of 1997.

Such assessments proved to be grossly misplaced. Despite impressive economic growth of the countries in the GCC, the local markets su ered a severe asset price de ation and, even though with a

Years 2009 and 2010 were perhaps the most di cult years for the GCC asset management industry

time lag, a serious liquidity and debt re nancing crisis. e days of massive borrowing for property development and large scale infrastructure projects came to an end. Property prices in the most active GCC regions plummeted by up to 50%. Stock markets collapsed and trading volumes dropped. e young asset management industry almost faced an existential threat. A number of asset managers, including private equity houses were forced to either close down or downscale their operations. ere was a major shake-up in the asset management industry across all asset classes. Fundraising e ectively came to a halt. ere were high pro le defaults and standstills all around. Investors practically ceased new investment activities and

instead started taking stock of the quarter in a decade. Although the

severity of damage to their

United States, which was the

investment portfolios.

epicentre of the nancial crisis, is

Just as few had expected the spectacular downturn of 2009 and 2010, not many would have predicted signs of recovery by 2012.

e signals may appear relatively weak and subdued, but they are unmistakably present. Despite the severity of the storm, the global

still not out of the woods, there is optimism about its recovery, and the nancial system is functioning properly. Problems in the Eurozone seem more addressable than what it appeared last year although there are still concerns about the integrity of the union and drag of weaker

nancial

markets are nding a new

equilibrium, so much so that

Not many would have predicted signs of recovery by 2012; Q1 has been the best quarter in a decade for global stock

global stock

markets

markets are

nearing their

pre-crisis levels. e rst quarter of economies on the overall growth of

2012 was recorded as the best

the Eurozone.

03

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download