November 11, 2014
MEIP: Rising numbers of non-resident Indians (NRIs) are a key opportunity in growing GCC
GCC countries continue to be among the worldвЂ™s fastest growing economies, which means that numbers of NRIs and other expats should rise steadily. This is one of the key findings from the fifth annual Middle Eastern Investment Panorama (MEIP), issued today by strategic research consultancy, Insight Discovery.
The 2014 report surveyed 236 independent financial advisers and wealth managers in the region, and found that although the investment environment has become tougher for advisers, most were very positive about future prospects.
Over the year to September 30, the Morgan Stanley Capital International (MSCI) indices for Qatar and the UAE rose by 22.66 and 42.23 percent respectively, underlining the benefits stemming from being promoted from frontier market to emerging market status and increasing listed companiesвЂ™ access to global capital.
MSCIвЂ™s index for Saudi Arabia rose by 35.30 percent in the same period, including a rise of 13.77 per cent in the three months to the end of September alone.
There has been widespread comment on the provision of much greater access to foreign investors who want to buy shares that are listed on Tadawul, the stock market of Saudi Arabia, but the MEIP report notes:
Commenting on the 2014 MEIP report, Nigel Sillitoe, CEO of Insight Discovery, said: вЂњThe details of the liberalisation of Saudi ArabiaвЂ™s market are still to be seen. For now, though, we doubt that it will have much impact on the advisers and their clients вЂ“ particularly as so few of the advisers are actually based in Saudi Arabia itself.
"However, we do not think that the promotion of Qatar and UAE markets has had much impact on the attitudes of advisers. In late 2013, we found that 49 percent of advisers were looking to lift their clients" allocations to GCC region equity strategies. Some 40 percent were looking to keep the allocations unchanged, and the final 11 percent expected that they would reduce allocations.
"A year later, the corresponding figures are 43, 38, and 19 percent. We suspect that some of the advisers are looking to book profits. However, in a general environment of increased uncertainty, larger numbers of advisors are looking to reduce allocations to almost all the asset classes that we considered in this yearвЂ™s MEIP survey."
The survey asked advisers to identify opportunities and challenges for the development of life insurance across the GCC countries and were markedly more upbeat about the prospects for family takaful than they were in late 2013.
Similarly, the already large and still growing numbers of Non-Resident Indians (NRIs) and other expatriates from South Asia is more widely seen as an opportunity than it was 12 months ago. Advisers are also more hopeful about issues such as the general volatility of financial markets and the small scale/lack of capital on the part of local insurers in the GCC.
Like their clients, many of the advisers are Muslims from South Asia or non-GCC countries in the Middle East. It is therefore unsurprising that 60 percent have clients who have enquired about ShariвЂ™ah-compliant products, with family Takaful, regular savings products, mutual funds, Sukuks, and general Takaful being of greatest interest.
Nigel Sillitoe, CEO of Insight Discovery, commented: "With this yearвЂ™s fifth edition of MEIP, we are confident that we have conducted the largest survey of independent financial advisers and wealth managers in the region. No fewer than 26 companies are part of this project, which proves how important the Middle East is becoming as a financial destination for both asset management and life companies.
"Besides attracting companies like Franklin Templeton, Morningstar, Pioneer Investments and Zurich we are delighted that the Qatar Financial Centre Authority has joined us this year."
Key findings of the 2014 MEIP include:
- In a general environment of increased uncertainty, larger numbers of advisors are looking to reduce allocations to almost all the asset classes covered in the survey.
- More than 75 percent of advisers see the rising cost of living in the region, which affects the amount that people can save, as being a challenge.
- Since much of the regionвЂ™s managerial workforce is made up of expatriates, they form a considerable savings pool and many of them accordingly turn to financial advisers for help with investment planning.
- Financial advisers are increasingly seen as a vital link between savers and life companies and international asset managers.
Image Credit: CPI Financial
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