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Asset management industry ‘set for growth’

Bahrain Business
Tue, 15 May 2018
By Avinash Saxena

MANAMA: Bahrain’s assets management industry is set to see continued strong growth in the next five years, according to a top regulatory official.

Central Bank of Bahrain executive director of financial institutions supervision Abdulrahman Al Baker told the GDN this positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets, the enhancement to the existing regulations governing assets management and capital markets, the growth of wealth of high net-worth individuals as well as the steady economic growth in the region.

He was speaking on the sidelines of 3rd Annual Middle East Asset Management Forum at the Gulf Hotel Convention and Spa yesterday.

As of the end of the first quarter of 2018, the total assets under management of investment firms in Bahrain reached $20.1 billion, with an average growth of 16 per cent per annum recorded over the past five years, added Mr Al Baker.

This growth in assets is mainly due to the entrance of new investment firm licensees to the market and the introduction of new innovative products and structures by existing firms, he said.

The CBB, through its enabling legislation, promotes the development of new products for investors in both conventional and Islamic financial markets, while at the same time providing credible regulation in both areas.

Since the introduction of the investment business licence by the CBB under Volume 4 Rulebook in 2006, the number of investment business licensees has risen to 52 as of date.

“This clearly indicates that the number of the investment business licensees grew from 22 firms in 2006 to 52 as of the end of April 2018.”

In a keynote address, Mr Al Baker told attendees of the forum that the three categories of investment licence permits firms to undertake any or full range of assets management activities depending on their category and line of business, such as investing as principal, asset management, operating a collective investment undertaking, acting as custodian of financial instruments, or offering brokerage and advisory services on financial instruments to clients.

The mutual funds sector is another fast growing segment of the industry.

With approximately $7.4bn in assets under management, through more than 2,300 funds, the industry has been growing at steady base in recent years.

Overall, there are 89 Islamic funds that are incorporated and registered in Bahrain with total assets amounting to $1.43bn as of March 2018, he added.

Mr Al Baker said as the industry grows, opportunities will expand for asset management firms to further enhance their market share and increase their distribution channels to individual and corporate investors in the region.

Reviewing global trends, he said it is estimated that the assets management industry globally reached around $70 trillion as of the end of 2016, with assets under management roughly doubling over the past decade.

The upward trend is likely to continue, absolutely and relative to the economy, and is expected to reach $100trn by 2020.

Such growth will be mainly due to the fact that economies of South America, Asia, Africa and the Middle East are set to grow faster than in the developed world.