RIYADH: Saudi Arabia’s assets under management are expected to reach $300 billion within the next two years, driven by regulatory reforms and expanding equity and debt capital markets, according to Fitch Ratings.
In its latest report, the credit rating agency stated that AUM in the Kingdom’s asset management industry grew by 13.5 percent year on year by the end of the first half of 2024, surpassing $250 billion.
The growth of the asset management industry, or AMI, in the second half of this year and in 2025 will be fueled by an increasing number of high-net-worth individuals seeking these services in Saudi Arabia.
The Kingdom has the largest AMI in the Gulf Cooperation Council region and ranks fifth among countries in the Organization of Islamic Cooperation. Fitch further noted that Saudi Arabia is the second-largest public Islamic funds market globally.
Bashar Al-Natoor, global head of Islamic Finance at Fitch Ratings, said: “We expect Saudi Arabian AUM to cross $300 billion within a couple of years, driven by Vision 2030’s Financial Sector Development Program. There is strong demand for Islamic products, with around 95 percent of mutual funds being shariah-compliant.”
He added: “The industry’s AUM reached 22 percent of gross domestic product in 2023, with private funds three times larger than public funds. Saudi bank-affiliated managers held 63 percent of industry revenues, but competition from international managers is rising as the government attracts them to Saudi Arabia.”
According to the report, the net income of all capital market institutions increased by 29 percent year on year to $1.1 billion in the first half of 2024.
Fitch also noted that private funds’ AUM has doubled since 2020, with 43 percent allocated to equities and 40.5 percent to the real estate sector.
About 28 percent of public funds are invested in money markets, followed by equities at 25.6 percent, Real Estate Investment Trusts at 18.7 percent, and debt at 16 percent.
The report concluded that rising initial public offerings and the improving performance of the Tadawul All Share Index are attracting equity funds to the Kingdom.
In April, Abdullah bin Ghannam, deputy for listed companies and investment products at Saudi Arabia’s Capital Market Authority, highlighted the significant growth in the AMI.
He noted that asset management activity revenues for capital market institutions in Saudi Arabia reached $1.12 billion in 2023, reflecting a 58.6 percent increase over the past four years.
