IslamicFinance.de

Zurich Insurance is set to take full ownership of Malaysia's MAA Takaful after the deal received regulatory approval, giving Europe's fifth-biggest insurer a foothold in the world's second largest Islamic insurance market. MAA Group said it had received central bank approval for the sale, a deal which was first proposed in November of last year. No size for the transaction was given. MAA Takaful held 1.2 billion ringgit ($306.7 million) worth of assets as of June 2015, a 5 percent increase from a year earlier.

In the years since the 2008 global financial crisis, austerity and balance-sheet repair have been the watchwords of the global economy. And yet today debt is fueling concern about growth prospects worldwide. The McKinsey Global Institute notes in a study that gross debt has increased about $60 trillion – or 75% of global GDP – since 2008. China’s debt, for example, has increased fourfold since 2007, and its debt-to-GDP ratio is some 282% – higher than in many other major economies, including the United States. A global economy that is levering up, while unable to generate enough aggregate demand to achieve potential growth, is on a risky path. But to assess how risky, several factors must be considered.

Pakistan has great potential of starting its own sustainable, digital turnaround. The country is embracing digital technology as a powerful tool which is not just limited to simple communication anymore rather it has become a life-changing catalyst. According to Alliedcrowd statistics, Pakistan currently ranks 22 among developing countries on the crowdfunding market with annual estimated business of $5.4M. The prospects for crowdfunding are quite positive in Pakistan as small businesses and young entrepreneurship is gaining popularity in the country.

The lifting of sanctions has not only enhanced Iran's economy but has also provided an opportunity for Shari'ah-compliant investment with diversification opportunities. Iran's Islamic banking assets are $482 billion, according to Dubai Government data from 2014. Islamic finance in Iran can benefit from the sheer volume of the post-sanction investments and such projects are reportedly high. This will in turn support the market growth and create growth opportunities for the banking system in Iran.

Fitch Ratings expects Turkish banks to have continued resilience to economic shocks as they still retain reasonable capitalization and liquidity. According to Fitch Financial Institutions Director Lindsey Liddell the agency expects their performance to remain reasonable, however the banks will face some challenges given the slower growth environment and margin pressure from competition. There will be further asset quality pressures, particularly considering the sector's high level of foreign currency lending and the sharp devaluation of the local currency in 2015.

Malaysian government investment fund 1Malaysia Development defaulted on a series of bonds on Tuesday, weighing on the country’s stock and currency markets and raising concerns that the government may eventually have to spend billions to bail out the fund. The cross default triggered by non-payment, the continuing stand-off with IPIC and a widening investigation across at least six countries into possible corruption and money-laundering connected to the fund are starting to affect the markets.

The upcoming Global Islamic Finance Forum 2016 to be held in Malaysia’s capital Kuala Lumpur from May 10 to 12 will see a special competition for financial technology, the Asean Fintech Challenge. Organised by credit card company Visa and the Association of Islamic Banking Institutions Malaysia, the challenge aims at bringing the most innovative fintech startups to compete. Here the teams have the opportunity to present their ideas to over 500 Islamic finance delegates from all over the world.

Indonesia seeks to expand Islamic banking and has sought Qatar’s help in developing Shariah-compliant banking in the South East Asian country. Indonesian ambassador Muhammad Basri Sidehabi recently visited QIIB headquarters where they held talks with the bank CEO Abdulbasit Ahmed al-Shaibei. Ambassador Sidehabi said the delegation’s visit to QIIB was aimed at benefiting from Qatar’s Islamic banking experience and further expanding the areas of cooperation. He spoke about the great efforts being made by the authorities in Indonesia, where there is a huge demand for Shariah-based banking services.

Deputy Governor Reserve Bank of India, Mr. H. R. Khan emphasizes the importance of bringing unbanked and unreached people into the formal financial system by leveraging technology, especially the mobile phone technology. Various studies have revealed the absence of Islamic financial system in the country as one of the major reasons of backwardness of Muslims in India. These studies revealed that Muslims in India have worst credit-deposit ratio due to unavailability of interest free loans which are compatible to the Islamic principles. With 97% workers engaged in unorganized sector, the Indian Muslims need interest free loans to improve their labour output ratio and value additions to foster inclusive growth.

The regional banking sector has entered a new paradigm with margin compression, tightening liquidity, moderate asset and profit growth, limited capital market activity, greater focus on cost reduction and a widespread need for greater capital and funding. KPMG, which analysed the results of 56 leading listed commercial banks in the GCC, noted Qatar's listed banks remain relatively resilient and their long-term outlook remains positive. Omar Mahmood, Head of Financial Services for KPMG said Qatar experienced the second highest growth rate in the region thanks to an increase in corporate lending as a result of the infrastructure boom.

The Islamic finance industry is still searching for a stance on to what extent conventional international law should be accepted in arbitration cases. Conservative scholars argue that non-Muslim courts should not be written into contracts as a reference for arbitrations. Islamic scholar Sheikh Saleh Abdulla al-Haidan said contracts, in which both parties agree that British law should be reference for the contract and therefore any arbitrations, violates Islamic law. According to the scholars contract parties should include arbitration centres compliant with sharia law as reference in contracts.

According to Kuwait Finance Centre Markaz the Middle East will see $58 billion in bond and Sukuk issuance in 2016 and $385 to $390 billion through 2020. The excess allocation towards real estate has been exasperated by the shortage of Shari'ah-compliant fixed income. The next few years may be challenging for the GCC and its Takaful companies if energy prices stay low because the low penetration rate of insurance and Takaful has led to an extremely competitive market. A pipeline of around $60 billion per year for the next five years will support banks and Takaful operators to manage their balance sheets and support growth.

Maybank Islamic, Asia Pacific's largest sharia bank, is not currently seeking a strategic partner, its acting chief said after earlier talk that it would merge with the country's second Islamic bank. Acting CEO Ibrahim Hassan said Maybank Islamic is only interested in partnerships for specific business products such as the joint issue of credit cards. Malaysian financial group BIMB Holdings also denied that it was in talks to merge its sharia banking subsidiary Bank Islam with Maybank Islamic.

National carrier Saudi Arabian Airlines (Saudia) has appointed HSBC as the lead arranger for a 5 billion riyal ($1.3 billion) sukuk issue. According to director general Saleh al-Jasser the sukuk would be sold in the second half of the year. Jasser said last month that the sukuk offering would finance fleet expansion, with the carrier aiming to operate 200 aircrafts by 2020.

The Council of Ministers presents Saudi Arabia’s vision for the future. Saudi Arabia will transform the Public Investment Fund into the world’s largest sovereign wealth fund. They will expand the variety of digital services to reduce delays and cut bureaucracy. Goals by 2030 include increasing non-oil government revenue from SR163 billion to SR1 trillion, raising the country's ranking in the Government Effectiveness Index from 80 to 20, raising the ranking on the E-Government Survey Index from a current position of 36 to be among the top five nations.

Sukuk linked to Consumer Price Index (CPI) rate will provide investors protection against rising inflation in Turkey. The short term sukuk, known as rental certificates in Turkey was issued with a maturity of 729 days. The issue was subscribed by means of a private placement at a profit rate of 3.39 % above the CPI rate.

Malaysian transportation provider Perak Transit aims to raise RM10mil in the form of a RM10mil term financing facility for three years via the investment account platform (IAP). Bank Muamalat is acting as the investment manager for the exercise, where the RM10mil is expected to generate a return of 6.5% per annum to investors. Investors can register at iaplatform.com to place their investments in Perak Transit, which starts at a minimum of RM10,000.

1MDB has confirmed the default in IPIC guaranteed bonds but assured that there are no cross defaults on the bonds guaranteed by the Malaysian government. 1MDB explained the limited default from the non-payment of USD50.3 million interest on the Langat Notes is due to non-payment by International Petroleum Investment Company and reassured investors of the company's intention to meet its financial obligations.

Wan Mohd Fadzlullah Wan Abdullah, CEO of Hong Leong MSIG Takaful (HLMT), a joint venture between Hong Leong Financial Group Malaysia and Japan’s Mitsui Sumitomo Insurance has resigned from the Islamic insurer. According to reports, Fauzi’s exit could have something to do with a dispute over HLMT’s future strategic directions with HLA Holdings, which is part of Hong Leong Financial Group Malaysia and owns a 65% stake in HLMT.

RHB Islamic International Asset Management (IIAM) has launched the RHB Islamic Asian Megatrend Fund, leveraging on the growth potential of Asian markets. According to RHB Group Asset Management managing director Eliza Ong the total assets under the fund stand at RM127 million. The fund is looking at a return of between eight and 12 per cent per annum over the next three to five years.