IslamicFinance.de

The Shariah-compliant sector has grown to $1.6 trillion in assets over the past three decades. That's why Muslim and non-Muslim financiers from around the globe have noticed the growing investor pool with enough cash to make a serious impact. In Africa, a handful of countries have already laid the groundwork to enable Islamic banking, and some of London’s newest landmarks were built thanks to Shariah-compliant bonds. Other countries have also made forays into the sector. However, there's a general lack of understanding of what Shariah entails, particularly relative to the financial world. Given the fact that a large proportion of the populations in developing countries in the Middle East, South Asia and Africa will be looking for Shariah-friendly ways to finance their projects, the sector is likely to continue its growth.

Islamic Bank of Britain (IBB) has revealed findings from the first national survey to look into British consumers' understanding of, and attitudes towards Islamic finance. The survey was conducted among 300 British Muslim and non-Muslim consumers by independent research company 2Europe. Around two thirds of those surveyed felt that Sharia finance is appropriate in a modern western society and relevant to all faiths. 58% considered Islamic finance to be an ethical system of finance and one which considers the impact of its activities on society. Moreover, 81% of IBB 's customers are likely to use Sharia compliant finance again. The survey shows that there is strong potential for further growth of Islamic finance.

According to Grant Felgenhauer, a portfolio manager at Euphrates Iraq Fund, the opportunities offered by Iraqi equities overshadow anything else in the world today. Felgenhauer returned 28 percent last year with bets on Iraqi shares such as Bank of Baghdad, compared with a 9.5 percent decline for Iraq’s ISX General Index. That helped make New York-based Euphrates the fourth-best performing emerging-market fund managing more than $50 million in 2013. Iraq is drawing investors from specialized hedge funds to global banks including Citigroup and Standard Chartered as the oil-rich nation rebuilds 11 years after the U.S.-led invasion. The economy will expand 6.3 percent this year and crude production is estimated to rise to 9 million barrels a day by 2020.

The central bank of Pakistan is stepping up its push to develop Islamic banking, encouraging lenders to expand their operations in the world's second most populous Muslim nation. As of September, Islamic banks held 926 billion rupees ($8.8 billion) of assets or 9.5 percent of the total, up from 8.1 percent a year earlier. The central bank aims to double the industry's branch network and reach a 15 percent share of the banking system in the next five years. To achieve that, the central bank named a new deputy governor to focus on Islamic banking and enlisted renowned scholar Muhammad Taqi Usmani to its sharia board. Moreover, the central bank's media campaign is expected to intensify in coming months and such educational efforts could attract previously unbanked clients to the sector.

Turkish Islamic lender Bank Asya said it had weathered mass deposit withdrawals, which the media said were orchestrated by government supporters as part of a backlash against a corruption scandal blamed on an influential cleric. Turkish media say state-owned companies and institutional depositors loyal to Prime Minister Tayyip Erdogan have withdrawn 4 billion lira ($1.79 billion), some 20 percent of the bank's total deposits, over the last month to try to sink the lender. The bank is reportedly not at risk because new deposits worth more than half that amount were placed in the bank by ordinary citizens. The government has declined to comment.

For many years we see in the media experts believing in inflation and even hyper inflation. However, in the same time we face proponents warning against deflation. So far we all noticed.

Only a about a week ago I read an article by Myret Zaki clarifying that unfortunately inflation and deflation co-exists.

Myret Zaki's thesis is that we face inflation on financial markets, and deflation in the real economy (in French):

http://www.bilan.ch/myret-zaki/redaction-bilan/inflation-et-deflation-co...

In my view there is a general major shift in the price matrix and I still try to figure the magnitude and implications thereof. It is a bit irritating as at University we learned about neutrality of money:

http://en.wikipedia.org/wiki/Neutrality_of_money

This means any extra supply will increase prices equally, 5 % more money, all prices going up 5 %. Pretty plausible at first hand. However, it seems it does not work in reality any more (or never did).

Abu Dhabi Equity Partners (ADEP) has successfully initiated Brazil's first Shari’ah-compliant livestock finance programme of $25 million, to fund fattening of 70,000 cattle heads - the metric tonne equivalent of entire U.A.E.'s annual import of beef. ADEP's Brazilian Shari’ah livestock transaction allows a select group of Brazil's "Top 40" cattle feedlot operators to increase their capacity utilization. The financing was structured as a combination of Wakala and Murabaha agreements enabling investors to buy and take title from Rancher, of liquidly traded cattle, insured and stored physically in separate feedlots inspected and supervised by a global monitoring company. Shari’ah-compliant funding of the growing multi-billion US Dollar Halal food industry is a natural yet untapped market segment.

The combined wealth of the world's richest 85 people is now equivalent to that owned by half of the world's population according to a new report from Oxfam titled "Working for the Few". The global aid and development organization detailed the extent of global economic inequality created by the rapidly increasing wealth of the richest. According to the report, 210 people have become billionaires in the past year, joining a select group of 1,426 individuals with a combined net worth of $5.4 trillion. This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Oxfam is calling on the global political and business leaders attending the World Economic Forum in Davos to take steps to turn around the rapidly exacerbating inequality.

The Islamic Development Bank Group (IDB) announced its intention to invest into four new EXPO-2017-oriented projects in Kazakhstan in 2014 through the Islamic Corporation for the Development of the Private Sector (ICD). ICD, Baiterek Holding and LGK Holdings signed a memorandum to create the Central Asian Fund of Renewable Energy with the initial capital of $50 million. Moreover, ICD is going to cooperate with the Investment Fund of Kazakhstan in the development of float-glass production in southern Kazakhstan, a project worth$200 million. Besides, ICD will provide $10 million for procurement of manufacturing lines and raw materials during the first year of a new Aluminum Extrusion Plant's operations. ICD has also achieved an agreement with OLZHA Holding to cooperate in the construction of a grain terminal and elevator western Kazakhstan. The construction is expected to begin this summer.

Dar Al Takaful has announced today that it has opened a new managed investment account with Daman Investments.
According to Mr. Saleh Al Hashmi, Managing Director of Dar Al Takaful, Daman Investments is one of the most venerable companies in the MENA Investment Arena and this is the start of a mutually beneficial business relationship. Mr. Shehab Gargash, Managing Director of Daman Investments, said that Dar Al Takaful is a respected Islamic Insurance company and opening this new managed account demonstrates their confidence in his firm's abilities to manage money in the UAE economy. Dar Al Takaful’s account will be managed under a Shari’ah compliant investment mandate.

The Islamic Bank of Britain (IBB), the UK’s only wholly Sharia compliant retail bank, has been acquired by Al Rayan (UK), the UK subsidiary of Masraf Al Rayan (MAR). The acquisition follows a cash offer made on 28 November 2013 for which MAR received over 95 per cent of valid shareholder acceptances, together with approval of the Prudential Regulation Authority for MAR to take control of IBB. MAR considers the acquisition an opportunity to expand its footprint and introduce its range of products to a fertile market with potential for continued growth. It will also enable Masraf Al Rayan to offer its existing Gulf-based customers additional services as they expand their activities into the UK.

Assets held by the takaful sector in Brunei recently have grown significantly while those of conventional types of insurance have been declining, the monthly report from Brunei's monetary authority AMBD showed. In the year ended Sept. 30, takaful assets rose 21 percent to 425 million Brunei dollars ($336 million). Conventional insurers saw a drop of 1.3 percent in assets during the same 12-month period. At end-September, Brunei's takaful market accounted for 33 percent of total insurance assets. Although insurance assets have seen rapid growth in Brunei in the past decade, industry players say there is still poor awareness about insurance among its population. Brunei has four takaful operators.

DRB–Hicom has yet to finalise the new party for its divestment of a 30 per cent stake in its banking unit, Bank Muamalat Malaysia. The dilution of the stake in the country’s third largest Islamic lender has been a prolonged process as the conglomerate is looking into a strategic partnership or an exercise that could add value and increase the bank’s penetration into the Islamic financial business in Malaysia. It was reported earlier that Bank Negara Malaysia (BNM) had mandated DRB-Hicom to dilute some of its 70 per cent stake in Bank Muamalat. It was also reported that DRB-Hicom had negotiated with Affin Holdings on a potential acquisition but talks were called off due to pricing issues. The bank remains sidelined as it currently has no new products to introduce or new branches to launch.

Federal Finance Minister of Pakistan Ishaq Dar Wednesday urged to further push the process of Islamisation of banking and finance in the country at the roundtable conference on ‘Potential of Islamic banking in Pakistan’. He said that a committee had already been constituted on the subject with a fairly broad mandate assigned for the realisation of its cherished goal. The committee which would suggest a road map and timeframe for progression of various phases of Islamic banking in the country by December 31, 2014, has initially set the following key areas of investigations: removal of all difficulties being faced by the existing Islamic financial institutions in the operations vis-à-vis conventional institutions and design of new products that may enable government to conduct its resource mobilisation operations through Shariah compliant methods.

Bahrain-based investment firm Gulf Finance House (GFH) has agreed a partial sale of its stake in English football club Leeds United. GFH said the sale was agreed with British investors, whose details the firm did not specify. The investment firm did not provide details on the stake value or the size of the stake sold. GFH bought Leeds United in December 2012 through its Dubai-based subsidiary, GFH Capital, but its financial statements showed that the firm disposed off more than half of its holding less than six months later.

In Pakistan, Mudaraba companies and Mudarabas (Non-Banking Islamic financial institutions (NBIFIs)) attracted the major business groups of the country since the early 80s. The Mudaraba sector recorded rapid growth until 1996, when the fall back of NBIFIs began and the country witnessed a large number of closures and mergers during the next fifteen years. This left many of doubts and questions as to the future, viability and adoptability of Islamic finance. The causes of failure can be categorized into seven M's: management, money, major defaults manipulation, mismatch, moral hazards and monitoring. However, most of the national NBIFIs managed to survive and generate lucrative profits for their investors, which shows that it was not failure of the Islamic financial system rather a failure of the management.

Al Wefaq Islamic Society, led by Shaikh Ali Salman, explicitly sought to achieve its political goals by putting Bahrain's leadership in an economic stranglehold. Al Wefaq failed but this organisation has cost Bahrain a lot in purely financial terms. Money was wasted on policing, rebuilding vandalised property and compensating those harmed by the unrest. The economic growth slowed down to a record low of -6.6pc in March 2011. It is estimated that the total loss to Bahrain is in the region of $3bn to $5bn. This, however, fails to reflect the sufferings of small businessmen and their families who have lost everything. Other damage done by Al Wefaq cannot be quantified, such as the economic impact when commercial banks permanently relocate to Malaysia or Dubai, and the damaged reputation.

There is a lack of understanding of Islamic finance, so people misunderstand or underestimate the topic. Islamic finance deals with financial aspects in our day-to-day activities, and forms a very small part of Islamic law (Shariah). Islamic finance tries to achieve - insofar as the financial sector is concerned - mostly the preservation and protection of property. However, financial products in line with Shariah are not miraculously different from conventional ones, but there are subtle differences. Islamic financial institutes aspire to objectives greater than the accumulation of wealth. They aim for social stability and progress. An Islamic financial system also plays a major role in wealth distribution through Zakat, Waqf etc. Individuals as well as the society as a whole can benefit from Islamic finance.

Nakheel plans to prepay in 2014 more than half of its bank debt of AED6.8 billion, originally due for repayment in September 2015. The company will pay AED2.35 billion in Q1 2014, and plans an additional prepayment of approximately AED1.65 billion in Q3 2014. Moreover, Nakheel plans to make additional payments of AED3 billion by Q3 2015. Other amounts will be paid ahead of the due dates. The trade creditor sukuk, due in August 2016, will be paid on time. The company says that a robust financial performance that has significantly exceeded its revised business plan, has led to improvements of approximately AED22 billion to date over the plan period. Over the past 28 months, since the successful completion of the financial restructuring, Nakheel has continued its focus on delivering the revised business plan and creating a long term sustainable business. Besides, Nakheel also launched new development projects to revive its core business activity of property development.

The South China Sea reportedly holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas; some experts estimate even more. Unfortunately, there's no clear way to define who "owns" these resources, as China, Vietnam, Malaysia, Taiwan, the Philippines, Indonesia and Brunei all believe some, or all, of these resources belong to them. Many of these countries are forced to import a considerable percentage of their overall demand. Investors need to keep an eye on Southeast Asia, and the South China Sea in particular. The oil in place under that sea, as well as its importance as a trade route, could push some nations to the boiling point as they rush to secure their supply of oil. That's a catalyst for some stocks, while a big risk for others.