KSA Asset Management

According to Marmore’s Saudi Arabia asset management report, the market is concentrated among the top asset management companies, with the top five asset managers (out of a total of 33 managers) accounting for 86% of the total assets being managed. NCB Capital was the leading fund manager (in terms of AUM) with USD 7.03 billion in assets (35% market share), followed by Samba capital with USD 3.83 billion (19% market share) and Al Rajhi Capital with USD 3.31 billion (12% market share).

Saudi capital markets are characterized by lack of private institutional players and foreign investors which is expected to improve in the coming years following the opening up of Saudi stock market to foreign investors. Investor base primarily consists of retail investors and large state investors. Saudi Arabia has opened up its markets to foreign investors recently. The QFIs  (Qualified Foreign Investors) who are interested in entering the market should have a minimum AUM of USD $5Bn (Can be reduced to $ 3 Bn at the discretion of CMA) for applying. A QFI must fall within the categories – Banks, Brokerage & Securities Firm, Fund Managers and Insurance companies.

Currently, the three state institutional investors – General Organization for Social Insurance, Public Pension Authority and Public Investment Fund – form the largest group of institutional investors; private institutional investors such as private pension funds, insurance companies and mutual funds are too small in size to play a substantial role. According to Marmore’s Saudi Arabia asset management report, retail clients form the bulk of market participants in Saudi markets. Debt market is small in size and under developed but given the recent issue of bond by the Saudi government. Allowing foreign institutional investors to invest in the stock market has been largely seen as a positive sign by local wealth managers in the GCC region. Efforts to widen the investor base, introduction of various products to facilitate hedging and enhanced price discovery and increased disclosure norms for listed firms would augur well for the asset management industry.