According to #Indonesian Economic Coordinating Minister Darmin Nasution, the development of the country’s sharia finance industry will increase female participation in the economy. He said Indonesian fashion and halal cosmetics were among the well-performing industries and most businesspeople in the two industries were women. Indonesia is one of the top five Islamic fashion industries in the world, with a total spending of US$12.7 billion annually. It is also in the world's top five regarding the sharia cosmetics/pharmaceutical industry with an average spending of $4.8 billion per year, according to data from Bank Indonesia (BI). BI deputy governor Hendar said inspite of the global slowdown, Indonesia's sharia industry was still giving positive signals.
According to Finance Minister Ibrahim al-Assaf, Saudi Arabia may follow its first international debt issuance with an Islamic bond sale. The size of future borrowing hasn’t been determined, but it will not be limited to bonds. Assaf said that part of it will be by the way of sukuk, but he didn’t specify whether the sukuk sale would be local or global. Saudi Arabia raised $17.5 billion this month in the biggest-ever foreign bond from an emerging-market nation. The kingdom is seeking to finance a budget deficit that ballooned to about 15 per cent of economic output last year.
Istanbul Sabahattin Zaim University (IZU) is opening its International Research Center for Islamic Economics and Finance (IRCIEF) on Oct. 28. The IZU hopes to become a center for academic studies in the field. Launched by Kuwait, Turk and Albaraka Turk participation banks, the International Research Center for Islamic Economics and Finance will offer market-based education to its students. By offering courses in Turkish and Arabic, the IZU will enable Turkish and foreign students to be specialized in the field. University rector and professor Mehmet Bulut said the center will train equipped students in undergraduate, postgraduate and doctorate programs. He promised that students will be educated in this center with the understanding of making Turkey stronger and noting that the accomplished projects will be carried out in collaboration with the participation banks.
The Silk Road Economic Belt and 21st Century Maritime Silk Road, or the One Belt, One Road (OBOR) initiative is central to China’s evolving role in the global economy. OBOR, unveiled in 2013, is China’s ambitious policy of revitalising the infrastructure of the ancient Silk Road trading routes and forging new trade routes. It offers great opportunities for the GCC in terms of inbound investments from China as well as the chance to deepen economic, cultural and diplomatic ties with Beijing. For the UAE is particularly important to showcase Dubai’s ability to provide China with a gateway to accessing regional liquidity and its expertise in Islamic finance. However, there are constraints arising out of stakeholders’ lack of familiarity with Islamic finance and the current Chinese policies and laws, which only cater for conventional financing methods.
The Islamic Development Bank (IDB) has appointed nine banks to arrange a new Islamic bond issue likely to be in excess of $1 billion. The mandated banks include Boubyan Bank, Credit Agricole, Gulf International Bank, JP Morgan, Mizuho, Natixis, NBAD, RHB and Standard Chartered for a five-year debt issue. The mandate was given at the end of last week and the notes will be sold only after the U.S. elections on Nov. 8. IDB sold its last U.S. dollar-denominated sukuk in March. That issue, of $1.5 billlion, offered 50 basis points over midswaps and was priced at par at 1.775 percent.
A l’occasion de la rencontre préparatoire du Salon International de la Finance Ethique et Participative SIFEP Mohammed Tahri, directeur général adjoint à la Société Générale Maroc a annoncé que son institution envisage de créer une dizaines d’agences dédiées à la banque participative. Dans l’attente de l’agrément de Bank Al-Maghrib, la Société Générale Maroc se prépare à exercer l’activité de banque participative à travers des succursales pour tester le marché. Le responsable de la Société Générale Maroc a annoncé que les résultats d’une étude de marché confiée par la banque à un cabinet marocain en coopération avec un cabinet français spécialisé en finance participative indiquent une attente manifeste du public marocain vis-à-vis de la finance participative.
Deputy Prime minister in Charge of the Economy Mehmet Simsek said the size of the Islamic banking sector globally was projected to grow to $3.5 trillion in the next five years and Turkey aimed to manage a sizeable portion of this huge sector. He said the government was committed to help the sector thrive in Turkey. Furthermore, he indicated that the total size of assets of participation banks reached $183.93 billion by the end of 2015. Pointing out that the participation banks' share in the overall banking sector was 5.1%, he stressed the goal set by the representative of the sector was to attain 15% by 2025. The Turkish Treasury elaborated on the action plan called "Strengthening Interest-free Finance and Participation Banking" as a component of the Istanbul International Financial Center (IFC Istanbul) program. It was decided that the board would work on the issues raised at the meeting to develop the interest-free finance sector.
The President of Kazakhstan, Nursultan Nazarbayev met with the President of the Islamic Development Bank (IsDB), Dr. Bandar Hajjar, on an official visit to the Kingdom of Saudi Arabia. President Nazarbayev praised the cooperation between IsDB and his country and congratulated Dr. Hajjar on his recent assumption of duties as the new IsDB Group President. President Nazarbayev plans to launch the program 100 Steps, which is designed to introduce structural and economic reforms to Kazakhstan. The program also envisages the launching of Astana International Financial Center as a center of excellence for financial services at regional and global level. President Nazarbayev called on IsDB to provide technical support in the fields of development and Islamic finance. Dr. Hajjar assured that the IsDB Group would provide the required technical assistance to support President Nazarbayev’s initiatives.
The Islamic Financial Services Board (IFSB) launched its annual Survey on the Implementation of IFSB Standards. The Survey is directed to the member regulatory and supervisory authorities (RSAs) to assess their progress in implementing the IFSB Standards. According to Jaseem Ahmed, Secretary-General of the IFSB, the Survey is useful in providing feedback on the progress and major constrains faced by the authorities. In 2015 a total of 39 RSAs from 27 countries responded and overall 18 RSAs have implemented at least one IFSB standard. In the banking sector, nine RSAs have already implemented more than 50% of the standards. The results of the Implementation Survey 2016 are planned to be presented to the IFSB Technical Committee and Council in early 2017.
Malaysian Minister of International Trade and Industry, Mustapa Mohamed underscores the importance of promoting its sukuk market to Qatar. Mohamed suggests to promote Malaysia’s sukuk industry and to invite the Qatar Financial Centre (QFC) and Qatar-based Islamic banks to Malaysia and explore avenues for partnerships. The minister was in Qatar yesterday for a brief visit and met with major Malaysian companies and witnessed the signing of an MoU between Masskar Hypermarket and Infinity Channel. The minister said that there are several Malaysian companies in Qatar that would want to do more business in the fields of construction, services, consultancy, IT, and engineering. Malaysian ambassador Ahmad Jazri Mohamed Johar added that the minister’s visit also aims to enhance bilateral relations between Qatar and Malaysia, whose trade volume stood at around $1bn in 2015.
Abu Dhabi Islamic Bank (ADIB) and Thomson Reuters have announced the three finalists for their Ethical Finance and Innovation Challenge and Awards (EFICA). The three finalists will present their entries at the fourth edition of the awards ceremony that will take place on 26th of October, 2016 in Dubai. The Ethical Finance Initiative Award carries a $100,000 prize, and is for innovative solutions or initiatives that promote ethical practice in the financial services industry. The three finalists are: EthisCrowd, as the world’s first Islamic Real Estate Crowdfunding platform, LaunchGood, as the world’s leading crowdfunding site for Islamic Finance and the Islamic Finance Institute of Southern Africa’s micro finance initiative in Indonesia. The EFICA Lifetime Achievement Award will also be presented at the event.
According to law firm Hogan Lovells, the launch of Sukuk bonds by three West African governments will open up a vast financing channel for the region. Hogan Lovells advised the Islamic Corporation for the Development of the Private Sector (ICD) as lead arranger on the issuance of three sovereign Sukuks in West Africa. These include Cote d’Ivoire, Senegal and the Republic of Togo. The Sukuks were listed on the Bourse Régionale des Valeurs Mobilières (BRVM), Abidjan, Cote d’Ivoire. Altogether with the debut issuances for Senegal and Cote d’Ivoire, the combined listing value was CFA 766 billion. Imran Mufti, who led the Hogan Lovells’ team, said the landmark Sukuk bonds will enhance the development of Islamic finance in West Africa.
Oil’s rally from a 12-year low has gone far enough to revive demand for Islamic bonds, but not so far that frequent issuers aren’t still in need of funds. Stimulus efforts in oil-producing nations helped drive sales of Islamic bonds up 34% to $37.5 billion in 2016, after dropping to a five-year low in 2015. A two-year slump in energy markets has compelled governments in Malaysia and the Middle East to boost debt sales to finance projects built in partnership with private companies. S&P Global Ratings estimates that weak energy prices will leave Gulf Cooperation Council countries with $560 billion of funding needs from 2015 through 2019. According to Apostolos Bantis, head of credit research at Commerzbank AG in Dubai, GCC sukuk activity will rise next year and there will be some first-time issuers.
More than 400 Islamic banks and financial institutions are now operating in over 60 countries from different regions. The Dubai Center for Islamic Banking and Finance (DCIBF) has released its second annual report on Islamic economy during the third Global Islamic Economy Summit in Dubai. The report focuses on the efficiency performance of 131 Islamic banks operating globally and other various key facets of Islamic banking. The Kuwait Finance House (KFH) received the highest efficiency score, followed by Al Inma Bank from Saudi Arabia, which obtained the top score in terms of cost-efficiency. Although it is expected that Islamic banking will continue to grow globally, the report warns that it may face challenges especially in countries that heavily rely on oil and other commodity prices. In this regard, diversification of the industry and further expansion is essential for its sustainable growth.
Ahli United Bank (AUB) has concluded the subscription of its issue of a $200 Million Perpetual Additional Tier 1 Sukuk. The Bank’s Chairman, Anwar Al Mudhaf, expressed his appreciation to the Central Bank of Kuwait and the Capital Markets Authority, to the many investors both in Kuwait and abroad and to the Bank’s team. CEO Richard Groves said the sukuk had been oversubscribed by over three times more than the targeted amount. This was achieved in less than one week from the date of the announcement, with a roadshow covering meetings in Asia, the Middle East and Europe. The Perpetual Additional Tier 1 capital issue Sukuk is issued in compliance with the requirements of Basel III, the regulations of the Central Bank of Kuwait as well as in compliance with the regulations of the Capital Markets Authority.
Gulf Finance House (GFH) has approved the proposed settlement with assets of an estimated $350-450 million, subject to counterparties' fulfillment of their obligations. The company said the estimated value of the assets is preliminary and subject to regulatory approvals before being recorded in GFH’s financial statements. The recoveries after realisation will have a positive impact on GFH’s financials for the fourth quarter of 2016. GFH shares, which have outperformed the Dubai index, were up nearly 1 per cent to be at Dh1.14.
#Malaysian banks may have dominated the sukuk market but in value terms the world’s top three sukuk managers, namely HSBC, Standard Chartered and JPMorgan Chase are ahead of any of the local top banks. Second Finance Minister Datuk Johari Abdul Ghani said that despite accounting for 54% of the global sukuk issuances, the country still lags behind global banks. He said local banks could not compete on this front because Malaysia lacks the presence of an Islamic mega bank. Malaysia had in the last 12 months issued 25 of the 30 largest sukuk issuances which collectively totalled US$37 billion (RM154 billion) in value. Thirteen of these sukuk offerings were domestic offerings. Johari urged the 57 member states of the Organisation of Islamic Cooperation (OIC) to consolidate their capabilities to produce higher global gross domestic product (GDP).
The Kingdom of Jordan closed its inaugural local currency Sukuk, which was more than three-times oversubscribed. The Kingdom raised Jordanian Dinar JOD 34 million (USD 47.9 million) maturing in 2021, with an expected profit rate of 3.01%. The Islamic Corporation for the Development of the Private Sector (ICD) acted as Transaction Technical Support and Advisor. The sovereign issuance is part of a comprehensive joint-Technical Assistance Package provided by Japan International Cooperation Agency (JICA) and ICD. According to Finance Minister Omar Malhas, Jordan aims to widen the use of Sukuk in the short-term. The Sukuk will play a critical role in increasing the effectiveness of the financing mechanisms of government needs to cover the budget deficits.
Ahli United Bank Kuwait has opened books on a perpetual dollar sukuk after wrapping up investor meetings on Monday. Books were oversubscribed and were due to close on Tuesday. Citi, Credit Agricole and Credit Suisse ran the roadshow, which started in Abu Dhabi and Dubai last Wednesday before taking in Zurich and Geneva, London and Singapore. Books were opened at 5.75% area on Monday before guidance was refined to 5.5%-5.875%.
Despite the efforts of the #Kenyan regulators, some toxic products have been allowed into the market under the banner of Islamic finance. The lack of clarity among regulators has allowed unscrupulous managers to mask certain offerings as Islamic, which has tainted the sub-sector’s reputation in recent months. Chase Bank was placed under receivership in April after special purpose investment vehicles it had classified as Islamic products were contested. Juma Makomba, the Sharia compliance manager at Takaful Insurance of Africa, said Chase Bank was not brought down by Islamic banking products because the facility would have qualified as a Qard-Hassan. He added that Qard-Hassan is given to somebody who is in distress, but the product they were calling a Qard-Hassan was in fact Musharakah.