Thomson Reuters identifies Saudi Arabia as a key player in the Islamic asset management space

Initial findings of Global Islamic Asset Management Report 2014 based on global survey of investors and asset managers, AUMs in Saudi Arabia exceed USD 6 billion, accounting for 20% of the global market.

Thomson Reuters identifies Saudi Arabia as a key player in the Islamic asset management space

Thomson Reuters identifies Saudi Arabia as a key player in the Islamic asset management space

Riyadh, KSA – Thomson Reuters , the world’s leading provider of intelligent information for businesses and professionals, announced today the initial findings from its Global Islamic Asset Management Report 2014, prepared in collaboration with Lipper.

Earlier this year, Thomson Reuters launched the global Islamic asset management survey to gather market consensus on the state and direction of the global Islamic asset management sector. The survey targeted both investors and asset managers in order to present a fuller picture of the Islamic asset management space.

The report provides unique insights into the development of the sector, highlighting key milestones reached this year, critical challenges to growth, as well as proposed solutions to further develop the Islamic asset management sector.

Russell Haworth, Managing Director, Middle East & North Africa, Thomson Reuters , said: “The Islamic asset management space continues to lag behind in terms of growth compared to Islamic banking. Thomson Reuters is committed to building greater insight and analysis of the Islamic Finance sector overall, and Shar’iah complaint asset management is a critical component of that industry. This year’s report will act as an important benchmark for the industry as it continues to grow.”
Key findings include:

  • With Assets Under Management (AUMs) in Saudi Arabia exceeding USD 6 billion, the Kingdom accounts for 20% of the global market and is the second largest market for Islamic funds globally
  • Saudi Arabia is also the second largest hub for Islamic funds with over 163 domiciled funds
  • The number of funds has doubled since 2007 to 786 globally
  • 2013 saw the highest number of fund launches in four years; 20% of issuances were in Gulf countries, mainly due to a large number of Saudi funds launched during the year
  • Assets under management (AUM) of global funds stand at just over USD 62 billion, with mutual funds accounting for the bulk of this amount, with over USD 46 billion
  • However, AUMs have only increased marginally over the last few years, and declined by 1.7 percent in 2013
  • The sector is primarily retail driven, with only 20% of AUMs derived from institutional investors
  • The underdevelopment of takaful operators and pension funds in Islamic countries has a knock-on effect on the Islamic asset management space
  • Compulsory registration and preceding authorization of Islamic funds with the capital market authority in Saudi Arabia has led to smaller asset managers exiting the market.

Dr Sayd Farook, Global Head of Islamic Capital Markets for Thomson Reuters , said: “Attracting institutional investors is seen a key requirement for the growth and long-term sustainability of the Islamic asset management industry. Despites the lack of institutional participation, we see positive signs, such as the development of pension assets in Islamic countries. We estimate GCC pension assets to be USD 180 billion. Attracting a small portion of these could significantly increase assets under management for Islamic asset managers.”

“Saudi Arabia is a step ahead other GCC countries as asset managers adopt innovative strategies to increase their investor base. For example, this year SEDCO Capital is coming out with their first Islamic fund that will be compatible with socially responsible investment parameters. The fund will have environmental, social and corporate governance principals incorporated into the fund investment strategy, broadening its appeal to a new range of investors.”

The Islamic Asset Management Report 2014 will be launched at the Global Islamic Economy Summit, organised by Thomson Reuters and the Dubai Chamber of Commerce & Industry, on 25th & 26th November 2013 in Dubai, United Arab Emirates. For more information and to register for the event, please visit

About Thomson Reuters:

Thomson Reuters is the world’s leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world’s most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs approximately 60,000 people and operates in over 100 countries. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information, go to

Tarek Fleihan
PR Manager, Middle East, Africa & Russia / CIS, Thomson Reuters
Email: [email protected]

© Press Release 2013

IFN Forum: Saudi Arabia key market to watch for sukuk

Islamic Finance News Forum 2013 began in Riyadh on Monday with focus on Saudi Arabia’s exceptional growth in the Islamic capital market and its immense potential in Islamic issuance space.

IFN Forum: Saudi Arabia key market to watch for sukuk

IFN Forum: Saudi Arabia key market to watch for sukuk

The two-day forum features an issuers and investors’ day and addresses key issues pertinent to the current economic scenario in the Kingdom and follow up on the latest developments within the country’s Islamic financial market, including recent governmental efforts.
The forum will explore the opportunities within the country for Islamic issuers, investors, corporate and financial institutions.

Islamic finance is a booming industry with a strong growth rate that is attracting participants from all over the world as the flaws in the conventional industry are increasingly exposed and countries seek alternative means of diversifying their financial bases.

Speaking to Arab News Khalid A Al-Mulhim, acting CEO of Alkhair capital and one of the forum panelists, said: “The Kingdom is considered to be one of the key markets to watch as it has proved its potential in the capital market’s issuance space in the last fiscal year, with a slew of high-profile issuance of Islamic bonds (sukuk) backed by the government.”
The Kingdom issued the single largest sukuk in January 2012, which was worth $4 billion, by the General Authority of Civil Aviation (GACA) and its sukuk market is considered one of the largest in the world with Malaysia.

Commenting at his company headquartered in Bahrain, he stated that it seeks to provide the market with an integrated and comprehensive range of Shariah-compliant investment products and services with emphasis on delivering exceptional value and tailored solutions to clients and shareholders.

“Alkhair has the unique advantage to issue Islamic financing securities (sukuk) with a strong track record, and a strong access to the Malaysian sukuk market and expertise, as we have a fully licensed Malaysian sister company AlKhair Malaysia,” he said.

“AlKhair Capital Saudi commands the skills and the capabilities to create suitable Islamic financing solutions to our clients,” he added.

Bank Alkhair, a Bahrain-based Islamic investment bank founded in 2004, is the major shareholder in Alkhair capital, he said, adding that it is an Islamic wholesale bank with subsidiaries in Malaysia and Turkey.

Saudi Property Stokes 3-Times Bigger Bond Gains Islamic Finance

Dar Al Arkan’s Islamic bonds have returned more than three times the regional average as the property developer benefits from Saudi Arabia’s plan to build at least 500,000 new homes.

Saudi Property Stokes 3-Times Bigger Bond Gains Islamic Finance

Saudi Property Stokes 3-Times Bigger Bond Gains Islamic Finance

Dar Al Arkan Real Estate Development Co.’s $450 million sukuk due February 2015 earned more than 7 percent this year including profit rate, the most among Islamic bonds in the Gulf Cooperation Council, according to data compiled by Bloomberg. Dubai-based Emaar Properties PJSC’s (EMAAR) 2016 sukuk was second-placed with a return of 5.7 percent. The average gain was 2.1 percent.

Real estate companies in the Gulf are profiting as economic growth accelerates, with yields on sukuk from Emaar and Nakheel Properties PJSC tumbling amid surging Dubai property prices. Saudi Arabia’s construction program, part of a plan to avoid unrest that toppled governments in Egypt, Tunisia, Libya and Yemen, helped Dar Al Arkan pay a $1 billion sukuk last year, easing concern over its finances.

“There have been some major projects coming to the Saudi real estate market, and Dar Al Arkan is one of the companies that has benefited most,” Ahmed Shehada, head of trading at Qatar National Bank Financial Services in Doha, said by phone Nov. 3. People know the scale of real estate developments in Saudi and how property companies will gain, he said.

Yields Slide

The yield on Dar Al Arkan’s (ALARKAN) 2015 percent notes tumbled 130 basis points this year to 4.8 percent at 12:13 p.m. in Dubai, according to data compiled by Bloomberg. The yield on Emaar’s $500 million 2016 notes fell 80 basis points to 3.61 percent. That compares with an average 81 basis-point, 0.81 percentage-point, jump to 3.73 percent on Nov. 4 for sukuk from the six nation GCC, according to HSBC/Nasdaq Dubai indexes.

“This is a 2015 maturity, and we’re getting close to that,” Samer Mardini, Dubai-based vice president of fixed income at SJS Markets, said by phone yesterday. “Investors in Saudi who are aware of the company and its strategy, and the prospects for being repaid, are happy to hold to maturity.”

Dar Al Arkan, Saudi Arabia’s third-biggest real estate developer by market value, repaid a $1 billion sukuk in July last year. The price for the debt fell below 70 cents on the dollar in 2009 on concern over the company’s financial position.

‘Walk Out’

Now could be the time to sell the 2015 sukuk, QNB’s Shehada said. A market rally following the Sept. 18 decision by the Federal Reserve to maintain bond buying, boosted by the U.S. Congress’ October deal to raise the debt ceiling, pushed the yield on the Islamic bond 134 basis points lower.

“This is a great opportunity to walk out,” Shehada said. “The U.S. problems remain, they have just been pushed down the road. For those who bought when the price of this debt was low, there is no reason to take a risk over what will happen next.”

Dar Al Arkan’s cash and equivalents declined 17 percent in the third quarter from the previous, according to data compiled by Bloomberg. Profit fell 17 percent from a year earlier to 183 million riyals ($49 million) amid lower margins on property sales and finance charges, the company said in a statement.
While Dar Al Arkan’s cost of funding has improved, the company pays more than many Saudi borrowers because of its cash flow, Mardini said. The company is rated B+ by Standard & Poor’s, four levels below investment grade.

Needing Development

Dar Al Arkan’s 2015 notes were sold in 2010 with a profit rate of 10.75 percent. The company raised a further $450 million by selling sukuk in May that pay 5.75 percent. The notes currently yield 6.41 percent, according to data compiled by Bloomberg.

Saudi Arabia needs to build 85,000 homes a year to keep up with a population of 28.4 million that’s growing 2.5 percent annually, Mike Williams, head of MENA research at CBRE, wrote in a March report. Dar Al Arkan’s pipeline includes the Al Qasr project in Riyadh that will provide homes for 13,000 people, and the Shams Al-Arous project near Jeddah that will include more than 10,000 units.

“The prospects will be good for Dar Al Arkan, because real estate works in the long term,” Mardini said. “Investors will judge that the company will be around a long time because it’s a Saudi real estate company and Saudi needs a lot of development.”

To contact the reporter on this story: Samuel Potter in Dubai at [email protected]
To contact the editor responsible for this story: Claudia Maedler at [email protected]