Funds Global talks to the QFC Authority's head of asset management, Yousuf Al-Jaida, about the development of the industry and the plans for the future.
Yousuf Al-Jaida was appointed as director, strategic development responsible for asset management and banking in August 2010. The appointment followed the Qatar Financial Centre Authority’s decision to pursue a “three hub strategy” that focused on asset management alongside the captive insurance and reinsurance sectors.
Prior to his QFC Authority appointment, Al-Jaida was head of indirect investment at the Qatar General Retirement and Pension Authority which included overseeing the management of hedge fund, private equity, real estate, fixed income and equity portfolio investments.
The QFC Authority had devoted resources to asset management prior to August 2010 but it felt that it was important to appoint a Qatari national to oversee the development of the sector. A lot of the asset management firms are Qatari-run and Qatari-based and the drive to develop the sector was crystallised with Al-Jaida’s appointment.
Here he talks about what has been achieved in the past year, the growth of the asset management sector, the underlying economic foundations in Qatar and challenges that remain.
FG: You have been in the job since August 2010. What have you done in this time?
At the outset it was important that we consulted with our key stakeholders within the State of Qatar as well as the asset management industry to ensure that our strategy was aligned to the state’s fundamental objectives and, of course, the industry’s own requirements. It was also very important to review the regulatory regime and investment rules and guidelines.
To assist in this process we conducted several industry round table events as well as participation in various working groups to analyse the current and future development of Qatar’s financial services sector. We also held one-to-one meetings with key financial services institutions. And a new collective investment rulebook was released at the start of 2001.
FG: What are the objectives for Qatar’s investment management industry and what is your role in achieving these objectives?
The QFC Authority is Qatar’s financial services sector development arm, providing a uniquely sustainable platform for regional growth in asset management. Our objective is to build what we hope to be the pre-eminent hub for asset management in the region.
As a financial centre we have a holistic role to play in creating an environment for growth in financial services, such as advice on legal and regulatory refinement, encouraging the development of domestic and international business within Qatar as well as actively developing local talent through ventures such as the Qatar Finance and Business Academy.
We are always looking to engage with the industry and have regular meetings with both groups and individuals and to take on feedback. I think the recent regulatory changes are indicative of that consultative approach.
FG: The QFC Authority has a three-hub approach (asset management; reinsurance; and captive insurance). How does this work in terms of developing the asset management industry in Qatar? Are there some obvious synergies you have been able to draw on?
There are clear synergies. One way is through facilitating a vibrant reinsurance and captive industry. Regionally-based companies will inevitably keep more capital within the region – Qatar’s infrastructure development spending plans of $140bn (€98.9bn) to 2015 is a good example of the opportunity for increasing captive and reinsurance business. As that proportion of capital increases, the amount of assets to be managed increases. It is worth noting that regionally, McKinsey & Company [management consulting firm] estimated that asset management revenues in the GCC [Gulf Co-operation Council] region would increase by 10 to 15% annually from 2005 to 2015.
FG: Has there been much activity in terms of new asset managers setting up in Qatar or in new funds being promoted in the region? Are there particular areas of growth?
Yes, we have attracted and granted licences to Matrix, Concordia and JP Morgan to the QFC – all representing different strategies and company structures, from blue chips to niche firms to real estate. The amount of assets under management is increasing all the time but it is not just about numbers, it is about the type of operations. At the QFC we are mandated to build an industry, not just produce numbers. We are looking to build sustainable growth that will last for decades.
We have also seen major developments at the Qatar Exchange, whose equities trading platform was recently upgraded to more modern, world-class standards through the help of its strategic partner NYSE Euronext. Qatar’s strategic vision is for the stock market to act as a global exchange, working in accordance with the best international practices and standards. The exchange now has an important piece of infrastructure to comfortably work towards expanding the capabilities of the market with new products, such as bonds and other diversified exchange-traded instruments.
We spend a lot of time looking at asset classes within the GCC and consulting with various bodies to encourage more investment activity and create more depth and breadth of liquidity. There are some challenges involved but the move towards an upgrade in MSCI status from ‘frontier’ to ‘emerging’ will be very important.
FG: Describe the economic outlook for Qatar’s investment management industry?
The outlook is extremely bright, especially when you consider that Qatar as an economy is underpinned by an estimated $20trn of proven hydrocarbon resources to be monetised over the next 100 years.
We are an economy growing at an exceptional rate in comparison to other regions globally. As mentioned, we are increasing our infrastructure development in order to sustain our growth as a nation and also support future events such as the Fifa 2022 World Cup. The amount of current and future capital that requires professional management in Qatar will therefore continue to grow. On top of that, the availability of asset classes within the region needed to deploy this capital is also developing at a healthy rate.
FG: In the long term, what kind of mix of asset managers (local and international, long-only and alternative) would the QFC Authority ideally like to see in the region?
As before, we welcome companies of all types. Like any good portfolio, it is important to reach an ideal balance. In our case, we certainly anticipate that the industry can support a strong presence of both Qatari-headquartered and global firms – in fact, it will thrive on it. In terms of asset class, currently it is long-only and real estate. However, as economies continue to develop and regional exchanges become more sophisticated, more products will appear to meet those financing needs.
We are also focused on engaging with the universities to ensure that the various financial services courses available are an opportunity for local graduates in addition to the engineering sector which is very dominant in Qatar. We hope that participation in these university courses will encourage more sophistication and activity in the sector from investors as well as managers and other service providers.
Qatar is in a unique position as it can offer emerging market level returns at developed market risk levels. The growth has been great and we are also very proud of the robustness of the market.
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