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Saudi Arabia’s plan to open its $531 billion stock market to foreigners is prompting analysts’ speculation that Islamic bonds will be next. Saudi Arabia capital market authority said last week that the stock-market change would take place in the first half (H1) of next year. The move may lead to the country’s inclusion in MSCI indexes, which are used to measure performance by money managers with an estimated $9 trillion of assets. Opening the local-currency sukuk market would give foreign investors access to companies that sold 42 billion riyals ($11.2bn) through a dozen sales in the past year. However, access to the kingdom’s debt market may appeal more to investors wanting to broaden their exposure than to those seeking yield.

Alpha Capital Holding (AC) has been chosen to manage Wethaq Takaful Insurance - Egypt's launched-to-be mutual fund. Wethaq's planned fund will be at an initial capitalisation amounting to EGP 50 million. It is expected to be launched in local markets within the next three months. The Egyptian Financial Supervisory Authority (EFSA) has recently given its regulatory approval for the launch of six open-ended mutual funds by insurance companies, with total capitalisations worth EGP 450 million. Wethaq is currently completing the regulatory procedures required to launch its mutual fund. The fund's investment objective is to provide a savings and investment pool in order to give daily liquidity through accumulating daily returns on the fund's investments.

The Chairman of Islamic insurer Abu Dhabi National Takaful Co. (Takaful) resigned on Tuesday, according to a statement on the Abu Dhabi bourse. No explanation was giving for Khadem Al Qubaisi’s resignation. He has been replaced by Vice-Chairman Khamis Buharoon. Nasser M. Al Murr Al Za’abi has filled the vacated board seat, according to a separate statement on the bourse. Last month, Takaful reported a nearly 25 per cent drop in second quarter net profits. The company made Dh15 million in net profits for the three months ending June 30. Takaful said the fall in net profits was largely due to the increase in net claims incurred in the motor line of business. Earlier, Al Qubaisi was reported to have said that Takaful is in the process of obtaining an international financial rating.

Bahrain-based Islamic investment bank, Gulf Finance House (GFH), has repaid $25 million to debt holders marking total debt principal payments of $33m so far this year. In a statement to the Bahrain Bourse, the bank said this represents more than 15pc of its total outstanding facilities. The repayments highlight its ongoing commitment to meeting obligations to debt holders in line with the restructuring terms concluded in 2012 and the subsequent business plan, GFH said. The bank's outstanding facilities today stand at $169m, representing a leverage ratio of close to 0.28.

Islamic banks that previously did not allow their cards to be used to make purchases at tobacco-selling stores have now changed their policy, except for one of the capital’s major banks. However, all Islamic banking institutions still do not allow their debit and credit cards to make payments at liquor stores and bars. The capital’s national Islamic bank, Abu Dhabi Islamic Bank (ADIB), has implemented this only this year and is still strictly prohibiting their clients from using their cards at alcohol-serving locations. Meanwhile, other institutions such as Sharjah Islamic Bank (SIB) and Al Hilal Bank have more rigorous policies pertaining to the use of their cards at bars, tobacco-selling facilities and casinos. However, there is a loophole since customers can use the cards in places that serve alcohol but are not registered as bars or liquor stores.

Bahrain-based Al Baraka Banking Group B.S.C (ABG) announced a net profit of $143m for the first half of 2014. While balance sheet items increased moderately: total assets increased by 5%, total financing and investments by 5%, customer accounts by 5% and total equity by 3% at the end of June 2014 compared to the end of December 2013. With regard to the results of the second quarter of the year 2014 compared with the results of the first quarter of the same year, total operating income increased by 9% to reach $232m, while net operating income increased by a large percentage of 31% to reach $110m, and net income increased by 15% to $76m.

The Gulf banks are fast replacing European lenders in expansion within the Middle East region and into some of the fast growing emerging markets in Asian and Africa in the context of improving health of their balance sheets and strong support from shareholders. Banks from GCC, particularly those from the UAE and Qatar are in the forefront of overseas expansion.First Gulf Bank (FGB), for example, announced last month that it has a new representative office in South Korea as part of plans to expand its presence in Asia Pacific. Qatari banks have been seeking overseas expansion to cut dependence on local markets and access trade flows across the Middle East, Africa and Asia. Doha Bank is expanding its presence in Hong Kong, India and Saudi Arabia.

An increasing number of Kuwaiti lenders are moving away from traditional banking in a bid to tap into a booming market for Sharia-compliant financial products in the region - a move that could soon see Islamic financing overtake conventional banking in the Gulf state. Commercial Bank of Kuwait (CBK) is the latest to unveil plans to turn into a fully-fledged Islamic institution. There are already five other Kuwaiti Islamic banks; Kuwait Finance House (KFH), Boubyan Bank, Al Ahli United Bank, Kuwait International Bank, and Warba Bank, which was established in 2010. This compares with four conventional banks. Kuwait’s Islamic banking assets grew by 8.7% during the first nine months of 2013, reaching KD22.5bn ($79.7bn), while Islamic financing grew by 11.2% to hit KD13.5bn ($47.8bn) during the same period.

The pressure on Islamic lender Bank Asya is growing as it has pit two senior government figures against each other amid a whirlwind day that saw the annulment of deals with two state institutions and suspension of its shares’ trading at the stock exchange. The lender has been under scrutiny after contradicting statements from Deputy Prime Minister Ali Babacan and Prime Minister Erdo?an’s economic adviser Yi?it Bulut regarding the possibility of its acquisition by state-owned lender Ziraat. Amid the political figures’ ongoing row, the lender received another blow when the Revenue Administration and state social security institution announced ending service deals with the lender. Bank Asya downplayed the impact of the annulment, but vowed to use its legal rights against the decision.

Turkish Islamic lender Bank Asya said an exclusive deal with Qatar Islamic Bank (QIB) to acquire a stake in the Turkish lender was annulled, opening the way for alternative suitors. QIB and Bank Asya have reportedly ended the talks after a disagreement over price. Deputy Prime Minister Ali Babacan said on Wednesday that state-run Ziraat Bank, which is looking to launch its own Islamic banking unit, could buy Bank Asya. The bank's future looked dim after the authorities cancelled its tax collection and social security payment deals on Thursday - a sign according to observers that the government may be a step closer to winding down the lender.

Deputy Prime Minister Ali Babacan has said the public Ziraat bank is considering purchasing Turkey's Bank Asya, a move that many have interpreted as the authorities' latest effort to crush the lender as a form of vengeance against the Hizmet movement, with which Bank Asya is affiliated. However, Bank Asya said no such talks have taken place. Pressure on the bank intensified on Thursday as an agreement between the Finance Ministry and Bank Asya allowing the bank to collect taxes was canceled. The bank said it will take legal action against these decisions. A source involved in the financial market who asked to remain anonymous said the government has apparently launched a new campaign, this time trying to purchase the bank after numerous failed attempts to sink the bank earlier this year.

Pakistan’s second largest life insurance company informed members of the Karachi Stock Exchange (KSE) on Friday that it intends to enter the window Takaful business. The board of directors of EFU Life Assurance has approved changes in its memorandum of association under Takaful Rules 2012 to launch Takaful. The Securities and Exchange Commission of Pakistan (SECP) replaced Takaful Rules 2005 with Takaful 2012 two years ago, which allowed conventional insurance companies to set up Islamic windows to conduct shariah-compliant business. EFU Life Assurance is not the only company that has shown interest in setting up Islamic window operations. Jubilee Life, the largest player in the life segment in terms of gross premiums, is also eyeing the Shariah-compliant business after the implementation of Takaful Rules 2012.

THE government has been advised to look into the possibility of enacting a law to regulate establishment and operations of Takaful in the country. The Commissioner of Insurance, Mr Israel Kamuzora, said this in Dar es Salaam recently when briefing the Minister of State in the President’s Office (Special Duties) on the activities of the Tanzania Insurance Regulatory Authority (TIRA). He said the proposed law would provide guidelines in establishment and operations of insurers providing services that are in compliance with Shariah - Takaful. In Tanzania only few banks including the National Bank of Commerce (NBC), Amana Bank, People’s Bank of Zanzibar (PBZ) and KBC Bank offer Shariah compliant services. The Minister for Finance, Ms Saada Mkuya Salum, last month encouraged more local banks to provide Shariah compliant banking services to attract more Muslim customers.

Hajara Adeola, managing director, Lotus Capital Limited, has spoken on the benefits of the forthcoming listing of first Sharia Compliant Equity Exchange Traded Fund, the Lotus Halal Equity Exchange Traded Fund (LHEETF) on the floor of the Nigerian Stock Exchange via an initial offer for subscription. he TLHE ETF will be very liquid, he said, since its units can be bought and sold any time on the Exchange. More so, investors who hold a minimum of 5,000,000 units of the LHE ETF can exit by exchanging their LHE ETF units for the relevant number of the Fund’s underlying shares. Investors can either subscribe via a cash subscription or via in-kind subscription by the delivery of the stocks of the constituent companies of the NSE- LII in exchange for units of the ETF.

There are several issues which appear to indicate that Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim's integrity has been compromised. Shah Alam MP Khalid Samad said he hoped Abdul Khalid will clear the air over several issues, including his out-of-court settlement with Bank Islam over his RM66.67 million debt. Another issue Abdul Khalid is expected to clarify is his claim that he will be suing Permodalan Nasional Berhad (PNB) and will win RM300 million. Khalid also expressed doubts over the awarding of a RM591 million contract to Eco World to build 2,400 affordable houses in Sungai Sering, Ukay Perdana. PKR has been pressuring Abdul Khalid to step down from his position with party president Datuk Seri Dr Wan Azizah Wan Ismail chosen to replace him.

Dubai Islamic Bank Pakistan (DIBPL) has appointed Mufti Muhammad Hassaan Kaleem as the Bank’s new country Head of Shari’a. Mufti Hassaan has also been appointed a member of the Bank’s Shari’a Board by the Board of Directors of DIBPL, subject to approval of State Bank of Pakistan. Mufti Hassaan has vast experience in matters of Shari’a teachings and advisory and has been teaching various courses in Islamic Studies and Arabic at Darl-ul-Uloom Karachi for the last 17 years. He is a member of several institutions and boards, including Dar-ul-Ifta, JamiaDarul-ul-Uloom Karachi, Chairman Shari’a Board of Securities & Exchange Commission of Pakistan (SECP) and others.

State Bank of Pakistan’s (SBP) five-year strategic plan will drive strong asset growth in the Islamic finance sector, given the high domestic demand for Islamic banking. SBP’s plan targets a 15 per cent share of banking system assets for the sector by 2018, up from around 10 per cent as of December 2013. The National Bank of Pakistan will convert around 6 per cent of conventional branches into Islamic-banking branches over the next two years. Although the sector is expanding rapidly, the Islamic operations of the top five banks — National Bank of Pakistan, Habib Bank, MCB Bank, Allied Bank, and United Bank are small and currently account for less than 2 per cent of their assets on average. Moreover, rapid growth in the sector is likely to weaken asset quality.

EFU insurance group will offer shariah-compliant insurance products in Pakistan through its general and life units. Both EFU Life Assurance and EFU General Insurance plan to open takaful windows. The plans come two months after regulators cleared the way for conventional firms to offer Islamic products, part of regulatory effort to increase insurance penetration in Pakistan. EFU General had Rs13.9 billion ($140.8 million) in written premiums in 2013, representing roughly a quarter of the industry’s total. EFU Life has a branch network of over 150 branches around the country. A source at one of the units said the takaful windows could be operational in two to three months.

Standard Chartered Saadiq expects 2014 to be good for the Malaysian sukuk industry, driven by the strength of the economy. Chief Executive Officer and Global Head, Consumer Banking, Standard Chartered Saadiq, Wasim Saifi, said the bank is already in discussions with several customers in looking at setting up specific sukuk issuances. Despite expectations of a further hike in Malaysia’s key interest rate, he said it would not hold back issuances, as borrowers are unlikely to defer raising money even if the cost of doing so goes up. Malaysia’s Overnight Policy Rate (OPR) was raised by 25 basis points to 3.25 per cent on July 10, the first increase for the past three years.

Brunei Darussalam’s only Islamic bank hopes oil industry investment will help stoke a sukuk market now dominated by government issuance of short-term Shariah-compliant bills. Bank Islam Brunei Darussalam is seeking to arrange as much as B$2 billion ($1.6 billion) of corporate debt in the next 12 months as companies seek to fund projects aimed at boosting crude oil output. Islamic banking assets total about $6.8 billion in the Southeast Asian sultanate, which funds investment largely with its oil wealth. Bank Islam currently supplies Shariah-compliant loans and a global corporate sukuk it was underwriting two years ago never came to fruition.While Brunei’s corporate sukuk has been in a lull, the formation of a central bank is a positive development for the market.