Personal wealth growth in Oman to hit $59bn

Muscat: Personal wealth in Oman is projected to accelerate at a compound annual growth rate (CAGR) of 7 per cent and is expected to reach US$59 billion in terms of investible assets by 2022, according to a new report.
“Taking an in-depth look at wealth distribution, Omani non-investible assets are expected to increase at a CAGR of 18 per cent in the next five years, while investible wealth growth is projected to remain constant at a CAGR of 6 per cent,” said Markus Massi, Senior Partner & Managing Director of the Boston Consulting Group (BCG) Middle East’s Financial Services.
“When it comes to asset allocation, currency and deposits, at 65 per cent, were the highest proportion of assets in Oman in 2017, followed by equities and investment funds at 16 per cent, bonds at 10 per cent, life insurance and pensions at 5 per cent, and offshore assets at 4 per cent," revealed the BCG's Global Wealth 2018: Seizing the Analytics Advantage report.
"By 2022, currency and deposits, as well as life insurance and pensions asset classes are expected to increase to 67 per cent and 8 per cent respectively, equities and investment funds are expected to remain constant at 16 per cent, while bonds will experience a significant drop from 10 per cent to 5 per cent,” Massi added.
As the regulatory climate has tightened over the last decade, there have been significant flows back onshore. In Oman, this is signified by the expected one per cent decrease in offshore assets between 2017 and 2022.
At 9 per cent, life insurance and pensions drove growth by asset class between 2016 and 2017 in Oman. Other drivers of asset class growth included currency and deposits at 7 per cent, equities and investment funds at 4 per cent, and offshore assets at 3 per cent. Bonds experienced a significant global decline of negative 10 per cent, which reverberated in Oman via a negative 2 per cent growth in the 2016 to 2017 period, the NCG report said.
Looking to the future, growth by asset class will accelerate in life insurance and pensions at a CAGR of 18 per cent, while currency and deposits will grow at a CAGR of 8 per cent, and equities and investment funds at a CAGR of 7 per cent over the next five years. In the same period, growth in offshore assets will decrease to a CAGR of one per cent, and bonds will experience a decline of negative 6 per cent.
Offshore share is expected to decline over the next five years, from 4.5 per cent in 2017 to 3.4 per cent in 2022, and growth will be at a CAGR of 1.4 per cent in the same period.
According to the report, global personal financial wealth grew by 12 per cent in 2017 to $201.9 trillion. The main drivers were the bull market environment in all major economies—with wealth in equities and investment funds showing by far the strongest growth—and the significant strengthening of most major currencies against the dollar.
Personal wealth in the Middle East rose by 11 per cent to $3.8 trillion in 2017, a significant increase compared with the CAGR for the previous five years.
“The BCG research suggests that over 70 per cent of wealth management clients see hugely personalised services as a key factor in deciding whether to stay with their current provider or switch to another,” said Massi.
“Value creation opportunities touch all parts of the wealth management business and success depends on having or developing a foundation of key management capabilities,” he added. “We expect leading firms to further separate themselves from the pack over the next few years, a gap that will be increasingly difficult for slow-moving players to close.”