Developing asset management to help boost Saudi economy, says Alkhabeer CEO
The development of asset management could be a vital source of funding to boost economic growth in Saudi Arabia, said Ahmed Saud Ghouth, CEO of Alkhabeer Capital.
Speaking at the two-day Capital Market Forum in Riyadh, Ghouth highlighted the untapped potential of asset management in the Kingdom while comparing it to that of the US.
He noted that the Kingdom is currently managing around SR700-SR800 billion worth of assets, which is equivalent to almost 20 percent of the country’s annual gross domestic product.
On the other hand, the US “asset management industry manages more than $50 trillion worth of assets. That’s actually equivalent to two times their GDP.”
“Is there any source of funding that we missed, and they have captured? The answer is yes,” said Ghouth.
He attributed the impressive asset management position of the US to their mutual funds which are primarily sourced from the nation’s retirement schemes.
Mutual funds are vehicles or entities that pool money from multiple investors and re-inject it into securities such as stocks, bonds, and short-term debt.
“Based on IMF reports, the asset management that pertains to mutual funds in the US is equivalent to around 148 percent of their GDP,” noted Ghouth. “If we look at the situation in Saudi Arabia, it is less than 5 percent.”
“Forty-seven percent of the source of funding that gets channeled through the ecosystem of the mutual fund business in the US comes from retirement, pensions, saving plans and schemes,” added the CEO.
However, when it comes to the saving and retirement schemes in Saudi Arabia, there is a modest level of penetration in its market.
Gouth disclosed that this places a significant responsibility on “regulators, market participants and fund managers to assess the private and semi-private sector to develop retirement and saving schemes for the people.”
In addition to promoting growth in the Saudi Arabia, this supports Vision 2030 as it brings to light the awareness of the importance of saving plans to the nation’s public.
Gouth added: “The expected amount of funding to be generated from those schemes could be material enough to push asset management to the next level, and to be perceived as a sector that is a major contributor to our economic growth.”
He noted that the Kingdom is currently managing around SR700-SR800 billion worth of assets, which is equivalent to almost 20 percent of the country’s annual gross domestic product.
On the other hand, the US “asset management industry manages more than $50 trillion worth of assets. That’s actually equivalent to two times their GDP.”
“Is there any source of funding that we missed, and they have captured? The answer is yes,” said Ghouth.
He attributed the impressive asset management position of the US to their mutual funds which are primarily sourced from the nation’s retirement schemes.
Mutual funds are vehicles or entities that pool money from multiple investors and re-inject it into securities such as stocks, bonds, and short-term debt.
“Based on IMF reports, the asset management that pertains to mutual funds in the US is equivalent to around 148 percent of their GDP,” noted Ghouth. “If we look at the situation in Saudi Arabia, it is less than 5 percent.”
“Forty-seven percent of the source of funding that gets channeled through the ecosystem of the mutual fund business in the US comes from retirement, pensions, saving plans and schemes,” added the CEO.
However, when it comes to the saving and retirement schemes in Saudi Arabia, there is a modest level of penetration in its market.
Gouth disclosed that this places a significant responsibility on “regulators, market participants and fund managers to assess the private and semi-private sector to develop retirement and saving schemes for the people.”
In addition to promoting growth in the Saudi Arabia, this supports Vision 2030 as it brings to light the awareness of the importance of saving plans to the nation’s public.
Gouth added: “The expected amount of funding to be generated from those schemes could be material enough to push asset management to the next level, and to be perceived as a sector that is a major contributor to our economic growth.”