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Franklin Templeton is evaluating opportunities to expand its Shariah business, which grew 32 percent in 2017. Franklin Templeton funds have become Qualified Foreign Investors (QFI) in Saudi Arabia, allowing the funds to invest directly in the kingdom’s stock market, it was announced on Monday. Sandeep Singh, Franklin Templeton’s regional head of Central and Eastern Europe, Middle East and Africa and head of Islamic Business said, that they operated in the Middle East and North Africa for almost 20 years and that they will remain dedicated to growing their business alongside the region’s growth.

Dubai Islamic Bank (DIB) has announced a successful closing to its capital raising programme. The issuance of 1.6 billion additional shares at price of AED3.11 per share was announced in April with the aim to boost the core capital of the bank by over AED5 billion ($1.36 billion). According to DIB's Group CEO Dr Adnan Chilwan, growth remains on the horizon as the bank’s financial position has become stronger than ever before with improved asset quality and balance sheet. He added that the capital boost will help maintain the bank's "competitive edge".

As financial technologies continue to develop, one region in particular stands to benefit: the Gulf. This isn’t a revolution that is far off, it is happening today. For the countries of the GCC, fintech couldn’t arrive at a better time. The countries of the Gulf are all working to diversify their economies away from a dependence on fossil fuels. Bahrain has already launched its FinTech Bay, which has the mission of accelerating local early-stage fintech companies, as well as foreign companies to establish regional offices in Bahrain. In September this year DIFC’s FinTech Hive will launch the second edition of its accelerator programme for fintech innovators. The 2018 edition has also been expanded to include "insurtech", as well as Islamic finance and regulatory technology ("regtech") solutions.

Noor Financial Investment Company will divest a portion of its 49% stake in Pakistan's Meezan Bank. The company is in preliminary discussions with foreign institutional investors for a proposed divestment of 9.59% of the total issued and paid up capital of Meezan. Noor has been mulling a sale since at least 2013. Meezan Bank is Pakistan’s fastest growing bank, it posted a profit in each year of operation and its net profits grew 13.5% in 2017 to $93 million. Noor’s stake in the bank was valued at $375 million in 2017.

In this interview, Al Hilal Bank CEO Alex Coelho gives his regional and global assessment of market threats and opportunities. Coelho still lectures at New York University and those theoretical discussions help feed into the practical decisions he makes in his day job. He’s bullish about recent stock market volatility and doesn’t seem overly concerned at the possibility of the US economy overheating. Now he is more concerned by geopolitical rather than economic upsets. Coelho refuses to predict the future price of oil and sees no correlation between oil prices and their activity as a bank. He says this is due to government focus on diversifying output. He thinks Dubai’s Expo 2020 will have a positive effect on the UAE economy, as such events have high impact in economies that are in growth mode, such as the UAE and GCC.

According to Moody’s, Islamic banking has grown in a decade from less than a third of the GCC banking market to account for 45% of the sector. Moody's senior analyst Nitish Bhojnagarwala said that growth in the Islamic finance sector would continue to outstrip that of conventional assets in coming years. In his view, growth will be supported by governments looking for diversification, as well as by continued demand for Islamic products from individuals. Another growth factor will be Islamic insurers' penetration into Southeast Asia and North Africa. Annual sukuk issuances have more than doubled to $100 billion from $42 billion from 2008 until September 2017. Moody's expects a similar level of activity in 2018.

Dubai Airport Freezone Authority (DAFZA) has announced the launch of Goodforce Labs, a startup incubator focused on supporting ethical startups in the fields of Islamic economy and Halal industries. Goodforce Labs will select a group of startups and small and medium enterprises and support them towards a $50 million in annual revenues and measurable social impact. Most Islamic economy startups face many problems and struggle to grow and survive. A number of startups have joined the incubator like Growmada, an e-platform for selling handicrafts from developing countries, Waqf 2.0, a cloud-based platform for managing Awqaf, Zileej, a company specializing in disciplined entertainment products and Rabia Z, which designs modest women’s clothing.

In 2017 the exceptional performance of sukuk was driven by good liquidity conditions, alongside certain countries’ desire to develop their Islamic finance industries. However, the outlook for sukuk in 2018 is more uncertain. According to Mohamed Damak, S&P Global Ratings’ Head of Islamic Finance, tighter global liquidity conditions, mounting geopolitical risks and slow progress on the standardisation of Islamic finance products will continue to hold the market back from its full potential. While sukuk issuance may decrease in 2018, there are a couple of interesting trends. These include the more stringent application of the profit-and-loss-sharing principle supported by several Sharia scholars. The sukuk investor base is broadening, but there is a lack of a specific regulatory framework to protect retail investors.
Dubai Islamic Bank (DIB) has successfully issued a $1bn sukuk with a five-year tenor. It is the first US dollar benchmark sukuk transaction from the GCC in 2018. The issuance emanates from DIB’s $5bn sukuk programme and carries a profit rate of 3.625%. The instrument will carry a dual listing on the Irish Stock Exchange and Nasdaq Dubai.

Bahrain-based Ithmaar Bank plans to add more than 100 branches in Pakistan this year through its subsidiary Faysal Bank. Ithmaar's deputy CEO Abdul Hakeem al-Mutawa says banking penetration is less than 20% in Pakistan, so there are good opportunities to grow. Ithmaar Bank's parent company, Ithmaar Holding, listed recently on the Dubai Financial Market. Al-Mutawa believes the company is well established now to approach the capital markets and the bank has no imminent plans to raise funds through a bond or loan. Ithmaar Holding is also exploring the sale of its 25.4% stake in Bahrain's BBK, which has operations in Bahrain, Kuwait, India and Dubai. Al-Mutawa declined to comment on the timeframe for the disposal of the BBK stake.

UAE-based Residential REIT has completed new property transactions worth AED772 million ($210.1 million). The deals were closed with Abu Dhabi Islamic Bank, Arcapita and an unnamed large Saudi institution. Abu Dhabi Islamic Bank has contributed 165 residential units located in three buildings in Marina Square on Al Reem Island in Abu Dhabi. Arcapita and the Saudi institution have contributed three buildings with a total of 285 residential units located in Saadiyat Beach Residences on Saadiyat Island in Abu Dhabi. Following the new acquisitions, the Residential REIT's portfolio includes a total of 1,069 units across Abu Dhabi, Ras Al Khaimah and Dubai.

Saudi Arabia has asked banks for proposals to refinance its $10 billion international syndicated loan. The refinancing of the loan, which was raised in 2016, will include a repricing of the facility and the extension of its maturity to 2023 from 2021. An Islamic finance tranche using a murabaha structure will be added to the loan. Fahad al-Saif, president of the debt management office, said the plans were a step towards Saudi Arabia's ambition of establishing a prominent position in international debt markets as part of its economic reforms. The country's $10 billion syndicated loan in early 2016 was followed later that year by a $17.5 billion debut bond issue, the largest bond ever sold by an emerging market issuer.

The UAE Central Bank has warned against Bitcoin, terming it as unofficial and lacking sufficient supervision. According to Governor Mubarak Rashed Al Mansouri, it can be easily used in money laundering and in funding terror activities. Al Mansouri also said the central bank has completed the formation of a committee for developing Islamic Sharia-compliant products in order to support the Islamic finance sector. On the level of the UAE financial exposure to global capital markets, the governor said local markets have a slight exposure as the existing liquid assets now account for 17% of the banking sector's total assets. He added that UAE banks are robust enough to deal with risks as they have sufficient capital on account of the rising level of individual deposits.

Investors in Saudi Arabia are betting insurance stocks will be key beneficiaries from allowing women to drive. An index composed of 33 insurance stocks rose the most in three months. The Company for Cooperative Insurance, or Tawuniya, increased the most in seven months, other beneficiaries include Al Rajhi Takaful and Walla. The announcement to allow women to drive is one of the most dramatic moves in the government’s bid to open up society. Accroding to Jaap Meijer, head of research at Arqaam Capital, the number of cars in Saudi Arabia is likely to increase at least 20% in the next ten years as a result of the decision. He added that the increase is expected to be gradual. Net loss ratios on female drivers is likely to be lower than for men, as empirical evidence suggests that women are in fact safer drivers than men.

Islamic finance is exploring green bonds in order to develop Sharia-compliant financial products to invest in climate change solutions. Green Sukuk are Sharia-compliant investments in renewable energy and other environmental assets. Over $30bn worth of green bonds were issued in the second quarter of 2017. Issuance from emerging markets has jumped from $2.3bn to $9.2bn year-on-year versus 16% a year ago. Malaysia has the opportunity and ambition to be a leader in this space on the premise that Malaysia is already a leader in Islamic finance. Another active player on this front is the United Arab Emirates (UAE), which launched the Green Finance and Investment Support Scheme to promote green projects. Green Sukuk is a good model to finance sustainable infrastructure as well as help bridge the gap between conventional and Islamic finance. The most important challenge for Sukuk is gaining acceptance by international investors due to lack of standardisation and legal enforceability risk. Other challenges of green Sukuk include investor’s awareness, demand for energy supply, government support and demand for energy financing.

The gas producer's decision to declare its own Shariah-compliant bonds unlawful has baffled investors all over the world. Sharjah-based Dana Gas said it no longer considered its two Islamic bonds totalling $700 million issued four years ago as Shariah compliant under UAE law. The move comes after Dana Gas announced plans in May to restructure the debt. The company is owed about $1 billion from Egypt and the self-governed Kurdish region in northern Iraq. Dana Gas plans to replace the current sukuk with four-year bonds paying less than half of the current profit rates and without a conversion feature. The Sharjah Federal Court of First Instance has issued an injunction while it considers Dana Gas’s application. Dana Gas said it won’t pay its next two profit distributions on July 31 and Oct. 31, and that they will be accounted for as part of the new instrument.

Mahmood Hashim Al Kooheji, the head of Bahrain’s sovereign wealth fund, Mumtalakat, is intent on brokering safe, considered deals that yield long-term growth. The wealth fund is taking an increased interest in the comparatively stable sectors of healthcare, education and industry. As evidence of this strategy, Mumtalakat last year took an undisclosed equity stake in Italian healthcare firm KOS Group. In October 2015, Mumtalakat took a majority stake in UAE-based GEMS Education as part of an investment group that included US private equity firm Blackstone. Al Kooheji expects another deal to be reached next year to launch GEMS schools in Bahrain. He also points out that Mumtalakat announced six new deals in 2016, a significant number for a small fund. According to Al Kooheji, Mumtalakat is now truly diversifed in the GCC, US, UK and Europe and this will continue in the future.

Noor Bank CEO Hussain Al Qemzi has ruled out possibilities of any possible mergers in the UAE’s Islamic banks. The last merger is between First Gulf Bank and National Bank of Abu Dhabi, expected to complete by end of first quarter 2017. The merged entity is likely to create one of the largest banks in the Middle East and Africa, with assets of $175 billion (AED642bn). Al Qemzi said Islamic banks need innovation to integrate and position themselves to offer value and a better choice for Muslim and non-Muslim customers in order to grow. The CEO said a shortage of Sharia scholars was also impeding growth of the Islamic finance industry with many institutions in the country sharing advisors.

Dubai-based Emirates Islamic Bank has priced a $250 million tap of an existing Islamic bond issued in May. The tap was priced at 170 basis points over midswaps, the order book was worth $706 million. The 'new' deal is a copy of an existing bond with the same terms and conditions. Emirates Islamic's tap came off a $750 million five-year sukuk issued on May 23. That deal was priced at 220 bps over midswaps and carried a coupon of 3.542 percent. Chief Executive Jamal bin Ghalaita said the cash would support the bank's long-term growth and development plans. The new offering was arranged by Bank ABC, Dubai Islamic Bank, EMCAP and Standard Chartered.

Hackers have leaked files online containing data on thousands of customers of Sharjah-based Investbank UAE. The files were stolen last December when an individual tried to blackmail the bank for $3 million. When the bank refused to pay, the hacker threatened to dump the stolen files online, yet they never appeared. Security expert Mohammad Amin Hasbini warned that the hackers are going to release data from a second attack. According to Softpedia, the hacker group is Bozkurtlar, the same group that claimed responsibility for the Qatar National Bank data breach two weeks ago.

Abu Dhabi’s new financial centre has been running for six months but the corridors still feel quiet. Almost 200 people have been hired to work for Abu Dhabi Global Market (ADGM) since its inception in 2013 but they are nowhere to be seen. Commentators have warned that ADGM’s established neighbour the Dubai International Financial Centre (DIFC) could prevent it from flourishing, and argued it is unwise to locate two financial centres in such close proximity.