The regional asset management industry, which is now valued at $70 billion, is forecast to reach $200 billion in less than five years.

Concurrently, the rapid development of regional capital markets, including Shari’a compliant products, is increasing the ratio of regionally focused funds to their international comparables and the ratio of Islamic to conventional products, said Algebra Capital.

“Our geographic footprint includes some of the world’s fastest growing economies namely the Middle East, including the GCC and North Africa, as well as Emerging Asia (“Menasia”),” commented Ziad Makkawi, founder and CEO, Algebra Capital. 

Currently, the industry trend is towards local asset management and this is being reinforced by fast developing capital markets and attractive investment opportunities.  "Three years ago we predicted that regional assets under management would hit $75 billion by 2010. We have almost passed that mark three years early, and see this trend continuing in the future, to exceed $200 billion," he said.

“Algebra Capital focuses on asset management only.  With one of the strongest management teams and the longest combined track record in the Middle East, we seek to position Algebra Capital as a market leader in the regional asset management space, with at least $4 billion under management by 2012.  In doing so, we also seek to contribute to the DIFC’s ambition of becoming an international financial center,” Makkawi concluded.

The potential for growth in both public and private markets is sizeable.  The region has a current ratio of assets under management (AUM) to market capitalization of less than 7.2 per cent compared to an emerging market average of 25 per cent and developed market averages ranging between 70 per cent-80 per cent. Makkawi continued: “The potential in the asset management business is too significant to ignore.  To almost triple the size of regional AUMs, an industry growth rate of 23.5 per cent over five years is comfortably in line with growth rates recorded in other emerging markets during earlier stages in their respective capital markets development.  Singapore, Brazil, and China all grew at compounded annual growth rates between 20 per cent and 40 per cent.”

While trade flows continue to grow and accelerate, capital flows between and among the Mena and Emerging Asia regions is also increasing. Research shows that total cross border investments between the GCC and Asia are predicted to climb from $15 billion today to $300 billion over the next decade.  “The GCC economic boom, combined with increased liquidity and wealth is spurring demand for more sophisticated financial services such as asset management and advisory services,” stated Makkawi. - TradeArabia News Service