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Bahrain Experience Robust Growth in Investments and Omani Economy Surges by 16.2% while Growth Expectations Remain Steady for the UAE


Middle East : 07 December 2012

Bahrain Investment Firms Post Higher Assets in September

Robust growth in the amount of assets managed by Bahraini investment firms was reported in September, reaching $16.46 bn and up by 72.4 percent, according to a recent Central Bank of Bahrain report.

The AUM (or assets under management) for the entire sector moved from $9.55 bn in September 2011 to $16.46 bn at the close of September 2012.

Third quarter figures indicate that investment businesses in the nation have continued to experience strong growth, with more licensees working in Bahrain since 2006, when the CBB replaced the Investment Advisory License with the less restrictive IB license. Current estimates state that the number of licensees rose from 22 in 2006, to 50 in 2012.

CBB’s Director of Financial Institutions Supervision Directorate, Mohammed Ayman Al Tajer, noted that as asset management companies expand their offerings, the AUM figure will rise and more industry professionals will be drawn to Bahrain. Experienced firms are established in the nation’s industry and provide a solid track record, according to Al Tajer.

Growth in the sector is being monitored by the CBB and the bank remains positive about the new companies that have introduced value-added business activity into the established industry through innovations and structure shifts. This activity has created a revolution in the investment appetite of the region, according to CBB’s Executive Director, Abdul Rahman Al Baker.

Several factors enhance the attraction of Bahrain for financial companies, including the comprehensive regulatory framework and tried and established laws that govern the asset management market. The time zone of this nation, an educated workforce and the nation’s nearness to regional wealth make Bahrain even more attractive.

Oman Economy Surges by 16.2 Percent in Opening Half of 2012

Robust oil prices caused the Omani nominal economy to climb by 16.2 percent over the opening six months of 2012, as most non-oil sectors also report marked growth in official data.

Rising from Dh 125bn in the opening half of 2011, Oman’s nominal GDP climbed to around Dh 146 bn over the first half of this year, based on data from the Ministry of Economy.

Closer inspection of the figures show a 16.8 percent increase in gas, a 19.9 percent increase in the hydrocarbon sector and a 20.1 percent surge within crude.

Non-oil GDP increased by around 12.6 percent, consisting of almost 10.9 percent expansion in the industrial sector and a 13.8 percentĀ  hike in services.

Reporting in the monthly bulletin, the Ministry of Economy noted that expansion in the oil sector drove figures from RO 6.59bn in H1 2011, up to RO 7.86bn in H1 2012. Oil makes up the majority of Oman’s GDP, and accounts for slightly over one half of H1’s total economy.

Higher oil production and rising prices resulted in a surge throughout the hydrocarbon sector. Omani crude prices rose from $98 on average for the opening half of last year, to almost $114 on average in the first six months of this year. Production in Oman surged from 878,800 barrels per day to almost 902,100 barrels per day.

A recent study by National Commercial Bank of Saudi Arabia reported that robust economic growth is expected in Oman for the coming years, after 6.6 percent growth last year as a result of stronger oil prices and greater levels of public spending.

The non-oil sector will drive real growth for the next couple of years, on the back on a substantial $78 billion infrastructure expenditure, according to Saudi’s largest bank.

Growth in real GDP slowed by 1.1 percent in 2009 as a result of declining crude prices, but rebounded in 2010 to reach 4 percent growth and hit 5.5 percent growth last year, according to NCB. This year growth is expected to reach 3.9 percent and increase to 4.2 percent next year, before falling slightly to an even 4 percent in 2014.

Stable Growth Expected in the UAE Next Year

A recent report by Merrill Lynch stated that next year will bring a steady 3.2 percent growth in the UAE, driven by recovery in the domestic economy and a positive period for emerging markets. These expectations are in line with global growth forecasts of about 3.2 percent.

The local region has enjoyed stable times after the global financial crisis, as noted by Johannes Jooste of Merrill Lynch. He stated that a stable property market, and activity in the trade and tourism sector are positive factors in the Gulf regional economy.

Jooste also stated that the United States is “picking up.”

Besides the Eurozone, Merrill Lynch expects to see asset values stabilize around the globe, with nothing distinct to set the UAE apart from those expectations.

Indications of recovery have been cited in the Dubai property market, including specific segments and neighbourhoods. Several factors have increased confidence in Dubai real estate, such as project handovers, publicity of Mohammed Bin Rashid City and sales of Nakheel and Emaar.

Jooste also noted that growth in emerging markets looks good. He believes 2013 will be a positive year for the Chinese economy, as that nation moves toward higher levels of domestic consumption.

According to Merrill Lynch, the case of equities is beginning to rise above, as it is currently heavy on emerging markets like the GCC, when looking at global asset allocation for next year.

Jooste advises that, in global terms, lower levels of government bonds are wise in terms of most fixed income and balanced portfolios. The bank remains light on cash.

Although global factors may impact growth, Jooste noted that the banking sector continues to face deleveraging, especially in Europe. Deleveraging tends to have a long-term impact on investment and funding, as opposed to trade.

Emerging economies will face risks from the political spectrum, added Jooste.

He noted that results can vary widely beyond expectations in regions that have experienced change or political upheaval in the last 24 months, either in the positive or negative direction. These conditions tend to create risk, as opposed to driving the economy in a certain direction.

The UAE is expected to report 3.3 percent growth this year, according to the Merrill Lynch report. Jooste stated that expectations for next year will remain stable with those figures.

Andrew Reid, Staff Writer, Gulf Jobs Market News
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