Reportedly a DIFC – Thomson Reuters study states that disclosed onshore assets under management (AUM) in Saudi will grow to over US$50 billion in 2020 from $22.39bn in 2016, in Bahrain it will grow to $22bn from $18.39bn for the same dates and for the UAE it will reach $18.9bn from $1.65bn.
When I first started reading this article the question in my head was where all these assets are going to come from especially given where oil prices are. Particularly eyebrow raising is that UAE AUM was just 10 per cent of Bahrain. So Saudi will more than double AUM in the next four years, Bahrain will increase about 20 per cent but the UAE will increase 1,145 per cent?
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My last article before I took my break was about the children’s tale “The Emperor’s New Clothes.” Clearly that wasn’t a strong enough message. We harm the country, the economy and ourselves when we refuse to be realistic. This is like someone who falls from the top of a 40 floor building and having fallen 39 floors without mishap thinks that the rest of the fall will be fine.
One of our exchanges should create a prediction market. For example, people who think that AUM growth of 1,145 per cent in four years is conservative can go long four year futures at 1145, those who think that it is optimistic can short the same futures, and those who think it is exactly right can short an option straddle struck at 1145. Anyone who makes a prediction needs to act as market maker. Then we’ll have accountability.