Business | Investment
Hedge funds eye massive expansion in Middle East
The top echelons of the global hedge funds industry discussing the outlook at the ninth annual Hedge Funds World Middle East Conference in Dubai yesterday said that despite the challenges faced by industry due to the credit crunch it is set for an unprecedented boom in the Gulf region.
- By Babu Das Augustine, Banking Editor
- Published: 01:05 March 5, 2008
Dubai: The top echelons of the global hedge funds industry discussing the outlook at the ninth annual Hedge Funds World Middle East Conference in Dubai yesterday said that despite the challenges faced by industry due to the credit crunch it is set for an unprecedented boom in the Gulf region.
The industry has grown rapidly, with global hedge fund assets now estimated to exceed $1.8 trillion having almost doubled from $1 trillion in 2005.
Speaking at the conference Peter Clarke, CEO of Man Group, the parent company of Man Investments said that against a backdrop of increasing diversity and texture in the industry, the growth story for hedge funds continue to remain persuasive.
"We are moving into a period where hedge funds are recognised as a core component for investor portfolios with institutional quality providers setting the pace."
Antoine Massad, CEO of Man Investments in the Middle East said, that government-owned funds and investment firms are increasingly using hedge funds for asset allocation.
"With the bulging surpluses of the regional governments there is certain urgency to deploy these assets, and many institutions including sovereign wealth funds are using hedge fund strategies to deploy their resources," he said.
He added that the turmoil in global financial markets in the past six months has set an intriguing backdrop for examination of hedge funds in the Middle East region.
Although currently most hedge funds invest outside the region, Massad said the trend is likely to change soon as a result of strong demand for hedge funds that invest in local markets.
Mirabaud, a banking group based in Geneva said in a report that the Middle East is set to become increasingly active in the global hedge fund industry, with the UAE and Qatar playing potentially dominant roles in the region.
"Globally, hedge fund centres have emerged from the most sophisticated financial centres, such as New York, London, Hong Kong and Singapore. The relevant defining attribute of each of these locations is the maturity of their capital markets. While Middle East capital markets have not yet reached the same level of maturity, they are quickly moving in the right direction," said Gilles Rollet, CEO of Mirabaud (Middle East).
Increased institutional investment in the regional capital markets, especially the UAE, is another sign of the maturity of markets here, Mirabaud said.
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