State Street Corporation has announced the opening of its first Abu Dhabi office, which will be located in the Abu Dhabi Global Market (ADGM), the country’s international financial centre. This is the firm’s second office in the United Arab Emirates, building on its 26-year presence in Dubai. To mark this milestone, State Street also unveiled a research1 paper that draws on survey responses from 306 institutional investors based in the Middle East and North Africa (MENA) responsible for more than USD $4.9 trillion in assets under management (AUM), who were asked about their outlook for growth and future economic trends in the region.
According to the research, more than three quarters (78 percent) of those surveyed are optimistic about their own growth prospects in the Middle East. As a result of this optimism, 75 percent foresee growing inflows into Gulf Cooperation Council (GCC) domiciled funds over the next five years.
“To find this level of concurrence and optimism among major institutions is unusual,” said Liz Nolan, chief executive officer (CEO), EMEA, State Street and chairperson for State Street Global Advisors, EMEA. “The results show there is an almost universally positive outlook and prediction of growth in MENA. Having had a presence in the region for more than a quarter of a century, we have a unique perspective on the institutional investor community, and their positive outlook mirrors our own.”
In a sign of growing sophistication and increasing risk appetite, 91 percent plan to diversify their portfolios to historically complex asset classes including: emerging market equities, hedge funds, and infrastructure. Furthermore, 42 percent state they will increase their allocation to exchange traded funds (ETFs); and almost three quarters (73 percent) believe there will be growth in demand for funds which are led by environmental, social and governance (ESG) considerations.
Amongst the major initiatives identified as providing impetus for the development of the GCC region as a financial hub, Saudi Arabia is seen as an engine of growth, with key drivers of inflows cited by 83 percent of respondents as the inclusion of Saudi stocks in emerging market indices, as well as the Saudi Vision 2030 economic plan, which was cited by 74 percent of participants.
The optimism about the economic outlook for the region is complemented by State Street’s expansion. The firm’s new office will strengthen its current service offering for its Middle East clients in areas including global custody, accounting, risk and performance analytics, and securities lending, as well as indexed, overlay, multi-asset and active investment management.
“We extend our heartiest congratulations to State Street Corporation and welcome them to the ADGM family. State Street joins a rapidly growing list of global financial institutions that have chosen to anchor their operations in ADGM to better serve a fast-growing region with dynamic business and investment needs,” said Richard Teng, CEO, Financial Services Regulatory Authority, ADGM. “The strong endorsement by State Street demonstrates its confidence in the exciting prospects and opportunities offered by Abu Dhabi and the region. Their branch office attests to ADGM’s strengths as a fast-growing and award-winning international financial centre. We look forward to supporting State Street in its global growth aspirations.”
The firm’s presence in the Middle East will be led by Oliver Berger, senior executive officer for State Street Bank and Trust, and Emmanuel Laurina, senior executive officer for State Street Global Advisors.
View State Street’s full 2018 Middle East and North Africa Regional Survey to find out more on drivers for growth, evolving investment strategies and data management outlook.
1 State Street commissioned Oxford Economics to conduct a survey of 306 investment professionals in the Middle East and North Africa (MENA) region, during August and September of 2018. Respondents represented sovereign funds, central banks, asset managers and pension funds. The survey captured views on MENA capital markets trends and evolving investment strategies.