IslamicFinance.de

The Middle East's billionaires – with a combined net worth of US$354 billion – hold a higher percentage of total wealth than in any other region in the world, findings from the Wealth-X and UBS Billionaire Census 2013 show. Forty percent of the Middle East's ultra high net worth (UHNW) wealth is being held by the region's 157 billionaires, compared to 28 percent in Europe, 22 percent in North America and 18 percent in Asia. Saudi Arabia leads the region with the most billionaires (64). Middle East is the region with the fourth most billionaires – after Europe (766), North America (552) and Asia. Middle Eastern billionaires increased their wealth in the last year by US$39 billion (12.4 percent) with five additional billionaires (3.3 percent).

The Gulf Monetary Council has dismissed media reports that it had set a date for the launch of a single currency for Arab Gulf countries. The Monetary Council is mandated with placing regulations for the establishment of the Gulf Central Bank and completing the establishment of the Monetary Union. Media reports this week said that four of the six Gulf Cooperation Council (GCC) countries would announce the introduction of a common currency by the end of December. The common currency to be announced by Bahrain, Kuwait, Qatar and Saudi Arabia will be pegged to the Dollar, the reports said. The GCC countries have been discussing a currency union similar to the Eurozone for more than 15 years.

More measures to encourgae the development of the Hong Kong’s Islamic financial market, particularly the sukuk and the Islamic fund management industry were discussed during the first meeting of the Joint Finance Forum which was held in the special administrative region. The forum participants agreed to identify potential sukuk issuers and encourage cross-border sukuk issuances between Hong Kong and Malaysia. Moreover, they also agreed to consider launching Islamic funds and make use of the established mutual recognition framework for Islamic funds between Hong Kong and Malaysia to facilitate cross-border Islamic financial activities.

Hong Kong's government has proposed a new law allowing it to issue Islamic sovereign bonds. This is a grand plan but maybe a little too ambitious. This is not the first time the government has promoted Islamic finance but not much has been achieved. The Hong Kong government now plans to issue sukuk. But whether a government issue will encourage other companies to follow with their own offerings remains a big question mark. The government has already launched the government bond and ibond programme but the local debt market is still not very active. Brokers speculate the Hong Kong government wants to promote Islamic bonds because Beijing wants to have a good relationship with Middle Eastern countries. If that is true, it may be up to some mainland companies to issue sukuk.

The 55-year-old American economist Nouriel Roubini is considered one of the leading economic thinkers of his generation. For 2014, the good news according to him is that there is an uneven but meaningful recovery under way pretty much everywhere. The bad news is that asset inflation and “frothiness” could create the conditions for another bust. Quantitative easing leads to a risk of financial instability, and greed in financial markets can still cause bubbles and crashes, he warned. But when he turns to the Middle East economies, and to the growing sector of Islamic finance, his tone brightens noticeably. The Islamic system is less volatile and potentially more stable than conventional financial systems. The advanced economies can learn from the Islamic system in this respect, he said.

AAOIFI Accounting standards reflect concept and essence of Islamic finance transactions and can enhance confidence of users of Islamic finance products and promote growth of demand. This was the conclusion at the AAOIFI-World Bank Annual Conference on Islamic Banking and Finance which was held in Bahrain on 18 & 19 November 2013. The conference also discussed venture capital from an Islamic finance point of view, proposing a model based on a musharaka/partnership arrangement. Moreover, the main types of risks faced by Islamic financial institutions such as non-compliance risks, operational risks, financial risks, and so on were outlined. The conference wrapped up by presenting some guidelines about how AAOIFI standards can be promoted in countries that follow international accounting standards or IFRS.

The Islamic fund industry manages about $46 billion, only a tiny part of the total global asset management figure, which stands at $60 trillion. The issues that need be addressed for the Islamic asset management and investments to grow were discussed at the first Global Islamic Economy Summit 2013. Performance of the funds is key to bringing in clients, both institutional and retail. In a region, such as the GCC, where the retail component is extremely small, funds have to ensure capturing all the sectors in the market. Moreover, savings ratio in Muslim countries is low and awareness of mutual funds among retail groups is very low. With an attractive performance and support from the sovereign funds and pension funds and the governments, the sector may grow substantially.

The Islamic Finance market has an estimated market of around Rs 300 billion and with the operation of currently five commercial licensed banks, three finance companies and other institutions, Sri Lanka’s total deposit base is nearly Rs 35 billion and the total loan base is Rs 24.8 billion. In Sri Lanka the Banking Act No 30 of 1988 was amended in March 2005 to accommodate the concepts of Islamic banking. Major banks such as HSBC, Standard Chartered Bank ABN Amro have dedicated Islamic Banking subsidiaries or Islamic Banking windows. Islamic finance is considered a key opportunity to bring in funds via different agencies, countries and foreign currencies. Introducing new Shariah-compliant instruments and products is important for expanding the Islamic finance industry in the country.

Draft Islamic banking and insurance regulations have been prepared in Morocco and could be passed by parliament before the end of next year. Morocco has been seeking to develop Islamic finance for about two years, partly as a way to attract Gulf money and fund the huge budget deficit. The government originally planned to issue its first sovereign Islamic bond this year but that plan appears to have been delayed. The Islamic finance laws could clear the way for Morocco to see its first conventional bank with an Islamic window, as well as sukuk issuance by private firms. Two or three private firms could tap the market fairly quickly after the laws are passed.

The European Union will maintain sanctions against all but two Iranian firms that won challenges to the bloc's sanctions regime in EU courts in September. The EU will on Wednesday formally announce it is maintaining sanctions against almost all the firms by "re-listing" them for new sanctions breaches. The EU hopes that by re-listing companies and providing additional evidence, it can secure its Iran sanctions regimefor the foreseeable future.

Thomson Reuters today released its new “State of the Global Islamic Economy” report, which represents the global Islamic economy as core sectors and their ecosystem structurally affected by Islamic values driven consumer lifestyle and business practices. Collectively the majors sectors of Islamic economy identified and covered in the Report are: Islamic finance & Insurance, Halal food, and Islamic values influenced travel, clothing, pharma / cosmetics and media recreation sectors.
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Dubai is in talks with Islamic endowments, or awqaf, in other countries to promote its drive for the industry to become more efficient and profit-oriented. Dubai wants to become a centre for modernising awqaf and coordinating their activities in order to make them more financially successful. The Emirate plans to establish an international body during the first half of next year that would handle cooperation with other emirates and countries. It would be managed jointly by members and include non-awqaf charities that operated in similar ways. In March, Dubai said it was launching the new asset management firm NoorAwqaf that would specialise in handling awqaf assets. With 10 million dirhams ($2.7 million) of paid-up capital, the new firm would offer services including due diligence, financial analysis and assisting awqaf to develop their strategic objectives.

Standard Chartered Saadiq (Saadiq) and Credit Guarantee Corp Malaysia (CGC) have collaborated to launch Malaysia’s first Islamic portfolio guarantee (PG) scheme to provide financing to small and medium enterprises (SMEs) in the country. The term-financing facility, which offers financing from RM100,000 to RM800,000 over a flexible financing tenure of between 12 and 84 months, is expected to benefit about 400 SMEs within the next one year. Up to RM200mil will be offered under the Islamic PG agreement between Saadiq and CGC. Under the agreement, CGC would guarantee 70% of the approved total principal amount undertaken by SMEs and assist to verify the credibility of applicants in consultation with Saadiq. The scheme is expected to have a shorter turnaround time in terms of approval and disbursement to enable SMEs to gain quicker access to financing.

According to Kuwait Finance House (KFH) CEO Mohammed Al-Omar, the continuous increase in profit over five consecutive quarters underlines the success of the restructuring process and the management's decision to focus on main operations to achieve sustainable profit, offer better returns to shareholders and depositors, and easing burden off the institution. He explained that that a rearrangement of the real estate portfolio is occuring, to benefit from current developments in the real estate market, in terms of rates and shifting to certain kinds of real estate and land. Furthermore, Al-Omar noted that the strategy that KFH adopted regarding its overseas banks, has played a role in cementing their roles and making them more profitable.

The Philippine Stock Exchange (PSE) will release a list of Shariah-compliant stocks this month to draw Muslim investors to the stock market. PSE tapped a third-party consulting firm to assist the exchange in selecting companies that will be part of the list. The PSE is on the first year of a three-year plan to expand liquidity by offering more products and services. The PSE has been introducing new products including real estate investment trusts (REITs) and exchange traded funds (ETFs) to boost volumes. For next year, the PSE should attract the same number as this year’s initial public offerings (IPOs), mainly from the consumer-related and infrastructure sectors.

EIIB-Rasmala, a venture between London-based European Islamic Investment Bank and Dubai's Rasmala Group, has launched a sharia-compliant trade finance fund as a low-risk investment product. The Cayman-domiciled fund is linked to emerging market trade transactions and the firm hopes to attract $100 million into the fund over the coming year. The fund targets a return of 4 percent with low volatility as the firm continues to expand its sharia-compliant product range. Since last year, EIIB-Rasmala has launched three Islamic funds including a leasing fund and a sukuk fund seeded with $25 million of the company's own capital.

According to the African Development Bank (AfDB), Nigeria has an infrastructure deficit of $360 billion. However, the adequate physical infrastructure in the country has been identified as one of the major factors to support sustained and broad-based strong economic growth. Addressing these challenges will require a substantially larger annual level of investment in infrastructure. However, access to finance, to fund the development of most of these critical sectors has remained a challenge. One of the alternatives today is Islamic finance. Moreover, Islamic finance products have the capacity for ensuring financial inclusion of significant segment of the population.

According to Thomson Reuters' Islamic Finance Development Indicator (IFDI), Saudi Arabia has the second largest Islamic finance sector, after Malaysia, with Islamic finance assets in excess of $270 billion in 2012. Saudi Arabia was also in the top ten countries for educational infrastructure. Moreover, the kingdom performed well in terms of awareness and Sharia governance. However, it did not fare as well in terms of governance. Saudi Arabia has yet to introduce dedicated regulations for Islamic finance institutions and continues to score poorly in terms of financial disclosures compared to its peers. The IFDI was developed in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD) and will be officially launched at the Global Islamic Economy Summit.

Emirates Islamic Bank has launched a four year Wakala investment option for customers, with an expected profit rate of 2.57 per cent per annum. Available on investment amounts ranging from AED 100,000 to AED 5 million, Emirates Islamic Bank’s latest product closely follows the launch of the three-year special Ramadan Wakala, introduced earlier this year. The four year Wakala investment option differs from conventional Wakala investments, with the profits being paid out on an annual basis to customers. Faisal Aqil, the bank's Deputy CEO - Consumer Wealth Management, said that customers are encouraged to develop a culture of saving through the launch of the bank's Sharia-compliant savings products.

Somaliland President Ahmed Mohamed Silanyo has received a delegation from Islamic Development Bank (IDB) as the president congratulated the delegation for the ongoing development projects run by the Organization in the country. The delegation from the IDB has been in the country for the last 4 days. The Islamic Development Bank is currently implementing several ongoing development assignments including projects relating enhancing Hargeisa main hospital's infrastructures, as well as, Hargeisa and Gabiley Orphanage centers. The delegation and the President of Somaliland have agreed to continue expanding their co-existance and make their cooperation more effective than ever before.