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Sharjah turns to the debt market to raise investment capital

The government of Sharjah is tapping the debt markets to help fund large-scale infrastructure and economic development programmes. On March 8 the emirate closed the book on a dollar-denominated sukuk, valued at $1bn. The 10-year bond was listed on the NASDAQ Dubai with an initial price of 150 basis points over the 10-year mid-swap rate, which then tightened to 135 basis points. Demand was high and the bond was oversubscribed, at around $2.4bn. Book runners were local, regional and global lenders, including the Sharjah Islamic Bank (SIB), Dubai Islamic Bank, HSBC and Standard Chartered. In early February the emirate also became the first Gulf sovereign issuer to tap the Chinese interbank bond market, issuing a RMB2bn ($318.4m) Panda bond. The increased investment is expected to boost GDP growth, with ratings agency S&P anticipating growth of 2.5% per year by 2020.

Dentons advised banks on Islamic financing for Byrne Group sale

Dentons has revealed that it acted as legal counsel advising on the Islamic financing of the proposed $270 million acquisition of Byrne Group by Itqan Investments. Byrne is an equipment rental company servicing the construction, industrial, oil and gas industries in the GCC. Through the recently completed transaction, Itqan Investments purchased the entire share capital of Byrne Equipment Rental and its subsidiaries. The organisation hopes to enhance Byrne’s ambition to launch into the Asian market. The Dentons team was led by partner and head of Islamic Finance in the Middle East Qasim Aslam, with support from senior associates Atif Choudhary and Jane Flournoy.

Sharia #fintech in #Indonesia seeing early boom, but VCs need convincing

Indonesia has seen a rapid growth of sharia fintech. In fact, the country’s Sharia Fintech Association already has 28 members, although it was established only in February. The interest is understandable given the size of the market for Islamic fintech. According to a 2017 Sharia Fintech Business Study published by Telkom Indonesia, the market size for sharia lending is worth up to Rp 7.3 trillion ($525 million). However, venture capital firms still seem hesitant about pouring capital into the sector. Mandiri Capital Indonesia investment head Aldi Adrian Hartanto believes that sharia fintech startups would need a more convincing business model and market approach in order to attract investment. Focusing on sharia market alone is not seen as a strong differentiator amid tight competition in the country. Malaysia, however, seems to see it differently. The country has made various efforts to provide funding for Muslim-focused tech. Thus, Malaysia was ranked first for Islamic fintech by Bloomberg Intelligence, followed by the UK and UAE.

Islamic finance body AAOIFI issues #standard for agency contracts

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued its first standard covering wakala, or investment agency contracts. The guidance aims to address the use of wakala in areas such as over-the-counter instruments, treasury placements and Islamic bonds. Wakala is common as a standalone product, but AAOIFI opted to focus its standard on more complex instances where it is combined with other contracts. Islamic banks use wakala for both their short and long-term funding needs, and in recent years have incorporated the contract into hybrid sukuk versions. In wakala, one party acts as agent for another and the AAOIFI standard focuses on this principal-agent relationship. It states that the relationship does not transfer ownership rights of the assets to the agent, the principal should account for the assets in its accounting books. The standard also requires the principal to evaluate the nature of the investment at inception.

After downturn, Islamic finance eyes profits, #fintech: survey

Islamic banks and insurers are focusing on profitability and new financial products. Surveys by the General Council for Islamic Banks and Financial Institutions (CIBAFI) show a strong focus on fintech and digital transformation. Islamic banks are launching technology departments and forming joint ventures with fintech firms. The survey showed that technology-related risks have been steadily increasing and are now the biggest perceived risks. This means Islamic banks must ramp up product innovation efforts, as crowdfunding, P2P and payments platforms will be a major focus in the medium term. The CIBAFI survey on Takaful showed a mixed view on technology, suggesting concerns were focused on operational efficiency rather than innovation.

Islamic finance body IFSB to develop financial inclusion guidance

The Malaysia-based Islamic Financial Services Board (IFSB) plans to develop a technical note on financial inclusion. The technical note will cover regulatory issues including Islamic microfinance, financial technology and integration of social finance. The guidelines will be funded by a grant from the Islamic Development Bank to be implemented over the next three years. Tens of millions of people in the Muslim world lack bank accounts because of poverty, poor education and a lack of infrastructure, but religious reasons are also an important element. Research from the International Monetary Fund has shown that religious concerns play a role in keeping people out of the financial system in countries such as Afghanistan, Iraq and Tunisia.

Islamic Development Bank finalizing 4-year investment plan with #Turkey

The Islamic Development Bank (IsDB) is working on finalizing a four-year partnership strategy plan with Turkey. Walid Abdelwahab said the IDB aims to invest in various sectors that will fuel growth, such as infrastructure, energy, transportation and education. He said the bank aims to support value chain development in Turkey to enable the country to become more competitive through linking it with global value chains. He added that the bank appreciates Turkey's experience with high-speed railways. IsDB is preparing a documentary on this topic for other member countries of the Group that are interested in this technology.

Hong Kong Gov’t Report Says Bitcoin Poses ‘Medium-Low’ Risk In Financial Crime

The Hong Kong Financial Services and Treasury (FSTB) released a report on the status of money laundering and terrorism financing. The report concluded that virtual currencies, like Bitcoin, are not particularly involved in either type of financial crime. Hong Kong's financial regulators and law enforcement agencies are working together to look into risks associated with Initial Coin Offerings (ICO) and cryptocurrencies. In March this year, Hong Kong’s Securities and Futures Commission (SFC) halted an ICO in Hong Kong and made the company return the money raised. More recently, in mid-April, the SFC said that the type of fundraising done through ICOs is better suited to venture capital funds.

More than 70 countries commit to combat terror financing

More than 70 countries committed to bolster efforts in the fight against terrorism financing. Participants at an international conference in Paris vowed to improve international coordination and enhance transparency of financial flows. The two-day event was convened by French President Emmanuel Macron to coordinate efforts to reduce the terror threat in the long-term. Experts attending the conference noted terror groups are using increasingly hard-to-track tools like prepaid cards, online wallets and crowdfunding operations. They called for better information-sharing between intelligence services, law enforcement, financial businesses and the technology industry. They also agreed to improve the traceability of funds going to non-governmental organizations and charity associations.

Islamic Equity Class Should Explore Solutions To Stay Competitive - Sultan Nazrin

According to the Sultan of Perak, Sultan Nazrin Shah, the Islamic equity asset class needs to explore solutions and achieve critical mass volume in order to remain competitive. He delivered his keynote speech at the Franklin Templeton Investments 2018 Islamic Forum in Kuala Lumpur. He believes that Islamic finance must embrace the era of disruptive innovation, with a continued strong focus on product innovation. The global asset management landscape had been pushed to embrace new online investment platforms and failure to keep up with these changing structural dynamics could put the industry at an even greater disadvantage than at present. He said that Islamic investors could also capitalise on the emerging "green" or environmentally-friendly finance.

Dubai launches Sharia compliant #crypto assets backed with diamonds

Dubai's Al Kasir Group and Sheikh Ahmed bin Obaid Al Maktoum have jointly initiated the launch of a new crypto asset backed with diamonds. The crypto assets can be redeemed for diamonds of the same amount. Amit Lakhanpal, the founder of Al Kasir Group said this venture offers the convenience of a digital currency with the stability of a traditional asset. The name of the crypto assets unveiled at the event were Al Mas, Al Haqeek and Al Falah. Al Haqeek can be redeemed against precious gems. Al Falah can be redeemed against perfumes. The company plans to open 1,000 physical stores for customers across Gulf, South East Asia, Europe and UK. The crypto assets could be purchased over the counter.

One cryptocurrency thinks it is Sharia-compliant, but for Muslim investors the blockchain still has pitfalls

OneGram claims to comply with Islamic finance requirements with its gold-backed, Sharia-compliant digital coin. Muslim countries Saudi Arabia, Qatar, Oman and the United Arab Emirates issued warnings against the use of alternative digital currencies. Islamic jurists in South Africa have ruled in favour of cryptocurrencies, arguing that they have become socially acceptable and commonly used. According to Max Vehmeyer, client relations manager at Kagiso Asset Management, the compliance of cryptocurrencies with Sharia law is still a grey area. This is partly because cryptocurrencies have inherent risks of fraud and cheating because of a lack of regulation, which is not in line with Islamic commercial jurisprudence. Vehmeyer says the introduction of a virtual currency like OneGram limits speculation to some degree.

Global REIT: The First Sharia-Compliant REIT Launched in the #Cryptocurrency Market

Global REIT is the first ever Blockchain based Sharia-compliant REIT to be launched in the cryptocurrency space today. It is offering investors exposure to the real estate market on a global scale without the necessity of acquiring an entire property and shift the management and compliance obligations to the fund manager. At first, Global REIT will acquire assets from the UAE and rapidly acquire more assets from other jurisdictions worldwide. The first AUM (Asset under Management) will have a Net Asset Value of USD 75 million. Gradually by the end of 5 years, Global REIT is projecting an Asset Value of USD 10 billion. Global REIT has its pre-ICO scheduled to start from 1st May and ends 31st May 2018, during which it will offer Dual Utility tokens to its subscribers: Global REIT Fund Manager Token (GREM) and Global REIT Asset Token (GRET).

Al Hilal Bank and ADGM to collaborate on knowledge-based initiatives

Al Hilal Bank and Abu Dhabi Global Market (ADGM) have signed a Memorandum of Understanding (MoU) to develop a strategic collaboration. The MoU focuses on the utilisation of ADGM Academy, the newly established financial educational centre. The MoU provides Al Hilal Bank with The Academy’s network of trainers, internationally renowned curriculum and ADGM’s business ecosystem. Al Hilal Bank Senior Managing Director Sultan Al Mahmood said this partnership represents a unique learning and development opportunity for employees to develop a best practice financial education. The signing ceremony took place on Monday, 16 April 2018 at the ADGM Academy, located on Al Maryah Island. It was attended by H.E. Ahmed Ali Al Sayegh, Chairman of ADGM and H.E Khalaf Abdulla Rahma Al Hammadi, Vice Chairman of Al Hilal Bank.

Will #Iran’s banking sector collapse?

Financial experts are warning that Iran’s banking sector is at risk of a collapse due to toxic assets. It is no secret that over the past decade all Iranian banks were negatively affected by sanctions, internal mismanagement and corruption. Another disturbing factor in the financial sector has been the presence of unlicensed financial institutions. Government interference has led to the accumulation of tens of billions of dollars of bad debts that will continue to put pressure on the balance sheets of Iranian banks for some time to come. Besides the high ratio of nonperforming loans, Iranian banks have a high portion of overvalued and illiquid assets on their balance sheets that need to be adjusted. Now several Iranian banks are following government instructions and have started to sell their noncore assets. The Central Bank of Iran (CBI) will have no choice but to push for bank mergers and also to impose and implement tough regulations on the country’s banks in order to prevent a deeper crisis.

Iyad Asali, General Manager, Islamic International Arab Bank: Interview

In this interview, Iyad Asali, General Manger of Islamic International Arab Bank speaks about the future of Islamic banking in Jordan. The Central Bank of Jordan (CBJ) reported that 69% of the population in Jordan are financially excluded. This gives Islamic banks an opportunity to develop new financial services for this segment. Jordan’s Islamic banks are currently trying to take advantage of this situation to raise awareness of their services. They are also working to improve financial literacy through media, events, social networks and conferences. Over the past five years Islamic International Arab Bank has developed a new framework for sharia-compliant SME financing in coordination with the CBJ. This cooperation led to the founding of an Islamic tool for mobilising funds to SMEs at subsidised costs and the establishment of a sharia-compliant fund to guarantee start-ups financing. This programme empowers a large segment of SMEs across various sectors, especially those owned by young entrepreneurs and women, and those located outside Amman.

Lessons Learned in Designing an App to Build Financial Health

CFI and the Microfinance Centre (MFC) in Warsaw are working together to build a smartphone application to assist customers and improve their financial health. As part of the project, a simple financial health quiz was developed which will serve as the foundation of the application. Customers appreciated concrete, practical advice, particularly with regard to short-term money management. Instead of simply hearing what they "should" do in general terms, consumers want advice on "how" to do it. They also want help to prioritize among the many possible actions they could take. Too many tips can leave people overwhelmed and paralyzed. Users indicated that games, other quizzes, and memorable stories would help guide behavior and motivate ongoing engagement. The ability to print out tips, tools, advice, and a calendar for budgeting was suggested.

Islamic Development Bank grants $63.3 million to #Sudan

The Islamic Development Bank (IDB) signed a grant agreement worth $63.3 million for the establishment of facilities and services in South Darfur, Sudan. Earlier this month, the IDB agreed to lend Tunisia $185 million to finance developments including an electricity project. The bank agreed to finance an electricity link worth $150, as well as the construction of hospitals in Kasserine and Kef worth $34 million. The IDB is a Jeddah-based multilateral development financing institution. It began its activities in 1975. The present membership of the bank consists of 57 countries.

Richest 1% to own two-thirds of world's wealth by 2030: new study

As the wealthy continue to accumulate money faster than average income earners, the rich-poor divide will only widen over the next few years. According to the latest research by the UK’s House of Commons, in 12 years' time more than two-thirds of the world’s wealth will be in the hands of just 1% of the population. The remaining 99% have seen their wealth grow at a lower pace of only 3% per year. There are no similar analysis to determine the rich-poor divide within the UAE, but Dubai is increasingly becoming a magnet for the world’s wealthy. According to Knight Frank’s Wealth Report, the population of ultra-high-net-worth individuals (UNHWIs), each owning at least $30 million in assets, is expected to jump by 60% by 2026. Dubai is home to the highest concentration of millionaires and multi-millionaires and UNHWIs for any city in the Middle East.

How #cryptocurrency traders are wooing Islamic investors

The global surge of interest in cryptocurrencies extends into the Gulf and Southeast Asia, the main centres of Islamic finance. However, many Islamic scholars argue that cryptocurrencies are not religiously permissible, as they are products of financial engineering and objects of speculation. UAE-based OneGram is issuing a gold-backed cryptocurrency, which is certified as valid by Islamic advisors. Each OneGram cryptocurrency unit is backed by at least a gramme of physical gold stored in a vault. Tens of millions of dollars worth of the currency have been issued so far. About 60% of the planned number of coins remains to be sold. In Malaysia a similar initiative was launched in October. HelloGold launched an initial offer of its gold-backed cryptocurrency and received approval from Amanie Advisors. Among other experiments, UAE-based Halal Chain conducted an initial coin offer in December which is linked to data on Islamically-permissible goods.

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