Oct 19 2012
Friday, Oct 19, 2012
Investor interest in the Middle East has remained stable compared to 2011. Dubai remains the top regional financial centre for managing Middle Eastern investments, and some predict that the emirate could be a frontrunner in the race to become the next global financial centre of the future.
Another Middle Eastern star performer in The Banker’s 2012 ranking is Doha, Qatar’s capital, which has leapt ahead in the rankings, moving into the top three locations for managing Middle Eastern investment, behind Dubai and London. Doha now ranks in the global top six asset management centres of the future. Respondents from both Europe and the US praised Qatari authorities both for their clear strategy and their ambition to become a regional financial hub.“Middle Eastern financial centres, particularly Qatar and Dubai, are set to become major regional financial locations as markets open up and become less restrictive,” says Naïm Abou-Jaoudé, chairman and chief executive of Dexia Asset Management. “Energy revenues are generating a positive effect in the region, but further reform and development are still needed to open up these markets to institutional investors.”
The Gulf’s asset management sector remains a relatively nascent and unsophisticated industry compared with other parts of the world and, to date, the region has mainly focused on two asset classes – equity and real estate.
But the picture has noticeably started to change over the past few years, and the region has started to grow increasingly important to international asset managers.
Its attractiveness has been strengthened significantly by the establishment of the Dubai International Financial Centre (DIFC) in late 2004. Qatar followed hot on Dubai’s heels with the launch of the
Qatar Financial Centre
(
QFC
) in March 2005, aimed at spearheading Doha’s efforts to become a regional hub for financial institutions from across the world. However, so far, Dubai has grown faster than Qatar, boasting 860 institutions compared with Qatar’s 159.
While both centres try to play down their rivalry, there is no doubt that they remain in direct competition with one another. The
QFC
has been working hard to lure foreign funds after announcing at the start of 2010 that it was changing its strategy to focus on the asset management, reinsurance and captive insurance areas.
In August, the United Arab Emirates, of which Dubai is a member, made some major regulatory changes, when the Security and Commodities Authority (SCA) issued its long-awaited regulations for investment funds, which will apply to firms based in the DIFC.
The SCA said the regulations were aimed at boosting corporate investment, attracting foreign investment and providing more opportunities for stability in ?nancial markets. However, they have been met with some dissenting voices, with some asset managers in the DIFC expressing concern that the regulations could hamper their business.
The key concern is that the new regulations could effectively stop DIFC-registered funds from marketing and selling their products outside the financial free zone in the rest of the UAE. Fund managers and other industry observers have been quick to point out that the regulations could make it more cost effective to move to Qatar, which makes no distinction between companies operating either inside or outside the
QFC
.
The rise of Dubai and Qatar’s financial centres in recent years has somewhat eroded Bahrain’s standing. The kingdom lays claim to being the Gulf’s oldest financial centre, but in many eyes its crown has slipped somewhat over the past 18 months in light of the political turmoil that has gripped Bahrain since pro-democracy protests began in February 2011.
Nevertheless, since the start of 2012, three prominent asset managers – Notz Stucki, Altaira and Pinebridge – have all chosen Bahrain as the site of their Middle East and North Africa (MENA) headquarters.
By Melissa Hancock
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