Gulf lures high net worth investors

GULF LURE: The region is attracting high net worth investors with negative interest rates and strong market performance, experts said. (Getty Images)

An oil driven liquidity glut, negative interest rates and the regional infrastructure boom have combined to lure a swath of high net worth individuals (HNWIs) to the Gulf from around the world, chief executive of the Dubai International Finance Centre (DIFC) said on Tuesday.

Speaking at a conference in Dubai, Nasser Al-Shaali lauded the resilience of Gulf economies during a time when uncertainty clouds the US market and fears of a global slowdown loom large.

“While economists are divided on whether the United States will go into recession, and how it would affect the rest of the world, there is little disagreement that [the] Middle East in general and the Gulf region in particular, is set for a period of sustained economic growth in both [the] short- and medium-term,” Al-Shaali said, quoted Saudi daily Arab News.

Al-Shaali said Gulf markets were increasingly being seen by international investors as a venue offering a varying array of sophisticated investment tools designed to enhance and preserve wealth.

“The Gulf region is attracting more and more global interest from institutions and high net worth individuals looking for exposure to these markets,” he said, citing both the attractive returns and the diversification that regional markets offer investors as the primary drivers in capital migration.

“With growing demand for alternative investment vehicles and increasing variety of locally-based tools, we see funds requiring a local presence in the heart of this market,” he said.

Also speaking at the conference, Peter Clarke, chief executive of financial services firm Man Group, said there was a clear trend towards increasing institutional allocations in the region.

“On the high net worth and ultra high net worth side… absolute flows look set to remain healthy as it is supported by burgeoning emerging market wealth and increased longevity,” said Clarke, quoted Arab News.

The remarks come at a time when volatility has rocked regional markets, forcing some funds to reduce allocations due to risk assessment.

A report released on Tuesday by Markaz found that volatility in GCC markets during January resulted in negative average returns (-3%) for asset weighted equity funds.

The Saudi market, the GCC’s largest by capitalisation, plunged 13.4% in January, while Qatar and the UAE dipped 1% and 1.7% respectively.

The MSCI GCC Index, which tracks the performance of GCC markets, was down 8.6% for the month.

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