Assets under management in the Middle East increased by $100 billion to $1.3 trillion in 2022 despite global macroeconomic headwinds, management consultancy Boston Consulting Group has said.
The region's 7 per cent annual growth last year bucked the global trend in which AUMs fell 10 per cent to $98 trillion, BCG said in its Global Asset Management 2023: The Tide Has Turned report.
Examining the external and internal pressures shaping the industry, the report pressed upon asset managers to transform their businesses in an era of “market uncertainties, fee compression, rising costs and technological change”.
“While performing relatively better than their European and American peers, the asset management industry in the Middle East has arrived at a critical juncture, compelling leaders to reassess their organisations' operations to regain the profit growth they experienced in the previous years,” said Markus Massi, managing director and senior partner at BCG.
“In fact, since 2006, 90 per cent of revenue growth came from market performance, and in an environment where this is no longer guaranteed, it is now time for a real transformation.”
Last year was among the worst for investor returns since the global financial crisis in 2008 but markets are expected to recover as the economic headwinds subside.
However, central banks, which kept interest rates near record lows to stimulate economies and financial markets during the Covid-19 pandemic, are “no longer engineering sustained market appreciation” and this has affected the global asset management industry.
“Their goals for the short term are the exact opposite; they are trying to slow growth to combat inflation, which will have an impact, especially on equity markets,” Mr Massi said.
“However, for the Middle East, the growth outlook is more positive, driven by continued higher oil income and comparatively positive equity market developments.”
Given the existing pressures and market expectations, BCG estimates annual profit growth at about 5 per cent, half the industry average in recent years, if global asset managers stay the course until the end of the year.
To return to historical levels, asset managers will need to cut costs by 20 per cent overall and shift their revenue mix to generate at least 30 per cent of their turnover from higher-margin products.
Asset managers should transform their approach to profitability and should pursue alternative investments and private market opportunities.
“Firms aiming to enter the alternative market can do so through four primary pathways – build in-house, buy multiple firms and use an affiliate or boutique structure, buy an alternative firm and operate it independently or establish partnerships,” the report said.
“This is particularly applicable for Middle Eastern asset managers, given the high preference of regional investors for private assets and the lack of other alternative investment instruments.”
Asset managers should also harness technology that will help them to create personalised client experiences and products to distinguish themselves from the competition.
“Organisations should evaluate and optimise costs across the full value chain and really focus on what makes them stand out,” said BCG principal Farouk El Hosni.
“Going forward, the only choice is change.”
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Thailand: Pokklaw 82'
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German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
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Name: The Protein Bakeshop
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Founders: Rashi Chowdhary and Saad Umerani
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Killing of Qassem Suleimani
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MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
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Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
UAE currency: the story behind the money in your pockets
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Most smart home devices are controlled via the owner's smartphone. Therefore, if you are using public wi-fi on your phone, always use a VPN (virtual private network) that offers strong security features and anonymises your internet connection.
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Always give your router a unique name, replacing the one generated by the manufacturer, to ensure a hacker cannot ascertain its make or model number.
match info
Manchester United 3 (Martial 7', 44', 74')
Sheffield United 0
