Asset managers in the Gulf Cooperation Council (GCC) countries will remain somewhat resilient to the impact of the coronavirus crisis and the accompanying drop in oil prices, due to their track record of strong performance and an affluent client base, Moody’s Investors Service said yesterday. Assets under management have fallen since the start of the coronavirus outbreak in mid-February, reflecting lower market valuations.
However, the fund inflows have remained positive for large players, contrasting with net outflows for some western counterparts.
“The GCC sector’s resilient inflows partly reflect its exceptionally strong performance last year, but we expect risk appetite to remain subdued and some diversification away from the region” says Vanessa Robert, a Vice President at Moody’s Investors Service.
GCC fund managers also benefit from bespoke mandates with a range of affluent clients, including high net worth individuals, family offices, sovereign wealth funds and other government institutions, which generally have higher risk tolerance and longer investment horizons.
Nonetheless, low oil prices will be a headwind for the region’s asset managers, as their customers rely on oil for the bulk of their revenues. Weaker oil prices also increase budgetary pressures on GCC governments.
