| DUBAI, June 11
DUBAI, June 11 Nomura Asset Management, one of
Asia's biggest asset managers, said it had opened its first
Middle Eastern office in Dubai after its business in the region
more than doubled in the past five years.
Many foreign fund managers service clients in the six-nation
Gulf Cooperation Council from bases in Western financial centres
such as London. Nomura Asset Management said it had had GCC
clients for over 25 years and was now setting up a five-person
office to provide a local presence.
The company's Middle East unit currently manages about $7
billion of assets for sovereign funds, banks, pensions and other
institutional investors from the GCC. It invests this money
mainly in Asian securities markets as well as global fixed
Nomura Asset Management, which manages about $300 billion
globally, is part of Japanese financial giant Nomura Holdings
High oil prices mean the Gulf oil producers are earning huge
sums, much of which are reinvested abroad. The Saudi Arabian
central bank's net foreign assets climbed 9 percent from a year
earlier in April to $729 billion.
Traditionally, most Gulf money has gone to Western markets,
but growing trade ties with Asia are starting to shift the
"Our forecast is that some time in coming years, on an
incremental basis more investment funds from the GCC will flow
east than flow west," Tarek Fadlallah, chief executive of Nomura
Asset Management Middle East, said in an interview on Wednesday.
A decade ago, tens of millions of dollars of portfolio
investment moved from Gulf institutions to Asian markets
annually; that volume is now estimated in the billions and it
will eventually reach the tens of billions, he predicted.
Appetite for Japanese assets among Gulf sovereign wealth
funds is higher than it has been since the mid-1990s, partly
because of growth-oriented economic reforms being pushed by
Prime Minister Shinzo Abe, Fadlallah said.
Nomura Asset Management operates an Arabian equities fund
for Japanese retail investors that was launched in 2007 with a
value of $500 million. It is preparing to launch a frontier
markets fund that will allocate as much as half of its money to
GCC markets, and is expected to total $400-500 million.
For the time being, however, investing foreign money in Gulf
equities will remain a minor focus for the company, despite
MSCI's upgrade of the United Arab Emirates and Qatar to emerging
market status last month.
That is because both markets are still only tiny components
of MSCI's global emerging market index, Fadlallah said. Although
foreign interest is rising in Saudi Arabia, the Arab world's
biggest equity market, that bourse remains closed to direct
"The game-changer, the event that would get the whole world
interested in the GCC, would be the opening of the Saudi market.
That would immediately create more depth and give exposure to
the highly desirable oil and petrochemical firms."
It remains unclear when the Saudi market will open.
Authorities are prepared for the reform and it could happen very
quickly, but concern about flows of speculative money and
foreign ownership of national assets could delay it for a while
longer, Fadlallah said.
(Reporting by Andrew Torchia)