The Saudi Arabian asset management industry (AMI) is poised for growth in 2H24–2025, following regulatory reforms, expanding equity and debt capital markets, and increasing numbers of high-net-worth individuals seeking asset-management services, Fitch Ratings said.

Assets under management (AUM) rose 13.5% yoy, exceeding $250 billion at end-1H24. Saudi Arabia has the largest AMI in the GCC, the fifth-largest in the OIC, and the second-largest public Islamic funds market globally.

As the AMI matures, it could attract funds that were placed with offshore asset managers.

"We expect Saudi Arabian AUM to cross $300 billion within a couple of years, driven by Vision 2030’s Financial Sector Development Program,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.

“There is strong demand for Islamic products, with around 95% of mutual funds being sharia-compliant.

“The industry's AUM reached 22% of GDP in 2023, with private funds three times larger than public funds. Saudi bank-affiliated managers held 63% of industry revenues, but competition from international managers is rising as the government attracts them to Saudi Arabia," he added.

BlackRock recently partnered with the Public Investment Fund to launch a Riyadh-based multi-asset investment-management platform, with investments from the latter.

Private funds’ AUM doubled since 2020, with the majority equities (43%) and real estate (40.5%). About 28% of public funds were in money markets, followed by equities (25.6%), REITs (18.7%), and debt (16%).

The rising IPOs and uptick in the Tadawul All-Share Index performance is attracting equity funds. Tadawul is the GCC’s largest stock exchange and world’s tenth-largest.

The net income of all capital market institutions increased 29% yoy to $1.1 billion in 1H24. In 2023, the industry’s returns on equity reached 15% with the capital adequacy ratio (end-1H24: 28.1%) well above the 8% minimum requirement.

The AMI is exposed to oil-price and interest-rate volatilities. – TradeArabia News Service