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Saturday, October 16, 2021

Gulf funds expect strong growth over the next year

Fund managers in the six countries of the Gulf Cooperation Council expect strong growth over the next year, supported by a growing demand for Islamic products and investments.

A study conducted by “Moody’s” credit rating agency said that half of the investment officials in the largest financing companies in the region expected a growth rate of more than 10 percent in net inflows, while a third of them expected a modest increase. Moody’s did not mention the names of those funds, according to “Reuters”.

Eighty percent of those surveyed expected a modest increase in investments, while 20 percent expected a slight decrease.

“About 25 percent of executives said that they have not yet incorporated environmental, social and corporate governance standards into their investment management decisions,” Moody’s added, noting that “the natural intersection between sustainable investing and Sharia-compliant social principles creates opportunities for the Islamic finance industry.”

More than 60 percent of CEOs said that Islamic financing instruments that are compliant with Islamic principles will see increased demand over the next year. Moody’s highlighted that Sharia principles include the prohibition of investing in tobacco, gambling, and the alcoholic beverage industry.

About half of the GCC-based funds surveyed by Moody’s said they were ready for mergers or acquisitions within the next two years, which the agency described as evidence of the sector’s growing sophistication and fierce competition.

Moody’s said that the decline in oil prices may constrain government spending and reduce economic growth, with negative consequences for asset managers and stock market returns, which in turn affects the assets of funds under management.

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