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GCC Islamic fund managers remain resilient despite COVID-19 pressure: Moody’s

3 Oct 2020

A persistently strong demand for Sharia’a-compliant investments is helping the GCC Islamic asset management sector remain resilient amid the coronavirus-related market upheavals, Moody’s Investors Service said in a new report.

Net inflows into some large Islamic funds in the GCC countries have remained positive despite weaker markets and lower oil prices, in contrast to the net outflows experience by many western peers, Moody’s noted.

Moody’s expects growth in GCC Islamic assets under management to slow to 2 per cent to 4 per cent in this year and next. 

“Islamic fund managers in the GCC region benefit from bespoke mandates with a range of affluent clients, including high net worth individuals, family offices, sovereign wealth funds and other government institutions,” said Vanessa Robert, a vice president and senior credit officer at Moody’s. “These investors generally have high risk tolerance and long investment horizons.” 

Malaysia and Saudi Arabia are the largest Islamic finance markets in the world, accounting for almost two thirds of Islamic assets under management between them, as per Moody’s.

‘In Saudi Arabia, take-up of Islamic investments is rising rapidly, reflecting growing demand for Sharia’s-complaint products among both corporate and retail investors. The regulatory environment, characterised by coordination between the Ministry of Finance, the Saudi Arabia Monetary Authority, and the Capital Market Authority, is also supportive,’ the ratings agency said.

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