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GCC equity fund assets down 46% - Markaz

Country specific and pan-GCC equity funds experienced a 46 percent plunge in assets under management from April to Dec 2008, as investor sentiment turned sour, Kuwait Financial Centre (Markaz) revealed on Monday.

Total equity fund assets under management plummeted from nearly $22 billion to less than $12 billion over the eight month period.

Equity fund gains made during the first half of 2008 were sharply reversed as oil prices tumbled from their July peak of $147 and the global financial crisis spread to the region, sapping investor confidence and sending stock markets into a tailspin, according to a report by Markaz.
“Fund managers began hoarding cash and investors began redeeming,” said Mandagolathur Raghu, head of research at Markaz.

“The ever-worsening turmoil in the global market sent fund managers into panic mode in December, where managers held 29 percent of their assets in cash as against four percent in July.”

Bahrain’s equity funds were the most affected, with a 75 percent drop in assets under management over the eight month period, followed by the UAE, which saw a 62 percent decline.

Delmon Fund, managed by Bahrain’s Global Investment House, posted a loss of nearly 17 percent in 2008, according to the report.

The country with the least contraction was Kuwait, where assets under management declined 26.6 percent from $6.37 billion in April 2008 to $4.7 billion in December 2008.

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