A scarcity of institutional investors is hampering the development of the Gulf’s capital markets, experts have said.
“One of the most serious problems in terms of rebuilding international investor confidence is the lack of institutional investors,” Beshr Bakheet, chairman and CEO of Bakheet Investment Group, said during the MEED Capital Markets conference in Abu Dhabi on Monday.
“The next stage is to promote institutional investments, so insurance companies, investment funds – all these are unheard of here.”
Bakheet indicated that pension funds were be the biggest institutional investors globally and that local policy needed to be changed to allow the sector to be opened up.
“We have a structural problem,” he said.
“Open it up to private sector companies to have their own schemes and permit fund managers to manage those funds for them – then you have an institutional investor business.”
Other delegates at the conference echoed Bakheet’s call.
“If you think about all the institutions in the region, there aren’t that many,” said Oliver Schutzmann, chief communications officer for Shuaa Capital.
“There are about 240 mutual funds in the GCC. And if you look at the fund assets under management as a percentage of GDP, it’s only one percent.”
Schutzmann added that the comparative figure for the MENA region was two percent, while in developed markets it averages around 55 percent.
In the US, the level is as high as 78 percent