Equities, investment funds boost GCC economies

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Traders at the Dubai Financial Market. Equity and investment funds remained the largest assets in the GCC countries in 2021. (AFP file)
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  • GCC countries will witness a rise in their wealth between 2021 and 2026 after two years of challenging time due to the Covid-19 pandemic, a report points out
  • Equities and investment funds will account for 64 percent of total personal wealth in the UAE in 2021, says the report released by Boston Consulting Group

Equity and investment funds remained the largest assets in Qatar, UAE, and Saudi Arabia’s wealth in 2021, while currency deposits and life insurance were considered the second rising sectors.

According to a recent report released by Boston Consulting Group, GCC countries will witness a rise in their wealth between 2021 and 2026, after two challenging years due to the pandemic.

The report’s title: “Global Wealth 2022: Standing still is not an option”, highlighted that staying still is not a good option, with expectations that all GCC countries will have better economies and assets in the upcoming years.

UAE: Equities and investments have it all!

According to a new report by Boston Consulting Group, equities and investment funds accounted for 64 percent of total personal wealth in the UAE in 2021. Moreover, they will grow fastest, with a CAGR of 8.8 percent, between 2021 and 2026.

Bonds only made up 3 percent of total personal wealth in 2021, while currency and deposits account for 29 percent, according to the report titled: “Global Wealth 2022: Standing still is not an option.”

Over the next five years, pensions and other life insurance will overtake real estate as the fourth largest asset class.

The report also predicts that the UAE’s financial wealth will grow at a healthy Compound Annual Growth Rate (CAGR) of 6.7 percent between 2021 and 2026, from a low of US$ 0.7 trillion to a high of US$ 1 trillion (BCG).

Moreover, Ultra High Net Worth (HNW) individuals, who own a net worth above US$ 100 million, accounted for about 41 percent of UAE wealth in 2021 and are projected to account for 43 percent by 2026. While those with a net worth above US$ 1 million accounted for about 28 percent of UAE wealth in 2021 and are projected to hold the same share in 2026.

Currency and Deposits are not that far behind

In 2021, equities and investment funds accounted for 46 percent of total personal wealth in Saudi Arabia and will grow at a compound annual growth rate (CAGR) of 6.9 percent between 2021 and 2026.

BCG report mentioned that bonds accounted for only 9 percent of personal wealth, while currency and deposits for 44 percent.

In the next five years, pensions and life insurance in Saudi Arabia will overtake real estate as the third largest asset class. At the same time, the financial wealth of Saudi Arabia will grow at a healthy Compound Annual Growth Rate (CAGR) of 4.8 percent, from US$ 1.3 Trillion to a high US$ 1.6 trillion from 2021-2026.

BCG estimated that by 2026, 23 percent of Saudi Arabia’s wealth would come from Ultra High Net Worth (HNW) individuals with a net worth of over US$ 100 million. However, wealth held by individuals with a net worth above US$ 1 million will rise from 32 percent in 2021 to 33 percent in 2026.

More GCC countries

  • Kuwait: Kuwait’s financial wealth will grow at a healthy Compound Annual Growth Rate (CAGR) of 4.3 percent, increasing from US$ 0.3 trillion to a peak of US$ 0.4 trillion from 2021 to 2026.
  • Oman: BCG’s new report predicts that Oman’s financial wealth will grow at a healthy Compound Annual Growth Rate (CAGR) of 5.2 percent over the next five years.
  • Qatar: Equities and investment funds are also the biggest in Qatar’s wealth in 2021, accounting for 46 percent of the total personal wealth; the industry with the highest expected growth is life insurance and pensions, at a projected CAGR of 5.7 percent. BCG’s report predicts that between 2021 and 2026, Qatar’s total wealth will increase from USD 0.3 trillion to USD 0.4 trillion, a compound annual growth rate (CAGR) of 3.9 percent.
  • Bahrain: Bahrain’s financial wealth will experience a sturdy Compound Annual Growth Rate (CAGR) of 3.9 percent in new wealth. It will grow from US$ 81.6 bn to US$ 98.7 bn from 2021 to 2026.

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