IslamicFinance.de

Heiko Hesse, Andreas Jobst and Juan A. Sole published on RGEmonitor on 13 February an analysis regarding Islamic Securitization and the grown interest for Islamic finance during the financial crisis.

Islamic finance is driven by the general precept of extending religious doctrine in the shari’ah to financial agreements and transactions. Predatory lending, deteriorating underwriting standards, and a series of incentive problems between originators, arrangers, and sponsors, of which all have infested the conventional securitization process, belie fundamental Islamic principles.

The article linked in the source relates the characteristics of this form of securitization to calls for enhanced disclosure and standardization, ratings agency reforms, and better transparency of origination and underwriting practices in conventional structured finance. In particular, it assesses the potential of conflicts of interest (which became apparent in the U.S. subprime mortgage crisis) to contaminate the integrity of the securitization process if it were conducted in compliance with shari’ah principles.

Rania El Gamal reported on 12 February on Arabianbusiness that the operations of Global Jordan unit were halted by court due to a dispute over a financing by Housing Bank by a Jordanian court. An agreement reached allowed the court to revert its ruling. Housing Bank was no longer willing to a accept a guarantee of Global Kuwait in favour of Global Jordan unit.

The size of Global's portfolio in Jordan in September was about USD 900 mn and included investments in real estate, financial services and industry. Global also opened a brokerage business for Amman's financial markets.

The board of Amlak Finance Jordan decided to reduce its capital to 1 mn Jordinian Dinar in order to preserve the rights of the shareholders, and in consideration of the global financial crisis, which hit specifically the mortgage markets.

The main investors in the company are cited, that the decision on this specific sector does not preclude high confidence in the Jordanian investment environment and the strength of the Jordanian economy, which is less affected by the crisis than other region and stressing that their investments in other crucial sectors in the Kingdom are still ongoing according to plans.

Iran Daily reported on 1 February that the director of Iran Privatization Organization (IPO) has said the organization plans to establish the first-ever cooperative development bank.

Press Release - full text attached:

New York (January 27, 2009) — Based on the close of trading on January 26, the global Dow Jones Islamic Market Titans 100 Index, which measures the performance of 100 of the leading Shari’ah compliant stocks globally, lost -5.55% month-to-date, closing at 1646.71. In comparison, the Dow Jones Global Titans 50 Index, which measures the 50 biggest companies worldwide, posted a loss of -9.00%, closing at 131.03.

- The Dow Jones Islamic Market Asia/Pacific Titans 25 Index, which measures the performance of 25 of the leading Shari’ah compliant stocks in the Asia/Pacific region, decreased -9.90%, closing at 1252.00. The Dow Jones Asian Titans 50 Index, in comparison, posted a loss of -11.40%, closing at 90.89.

- Measuring Europe, the Dow Jones Islamic Market Europe Titans 25 Index, which measures the performance of the 25 of the leading Shari’ah compliant stocks in Europe, closed at 1596.39, a loss of -7.60%, while the pan-European blue chip Dow Jones STOXX 50 Index lost -10.97%, closing at 1926.07.

Mushtak Parker reported in Arab News on 26 January about the launch of Falcom Sharia Index licensed by Tadawul (the Saudi stock exchange). The promoters claim that this index is the first of its kind on the Tadawul, and comprises some 112 companies which in turn comprise nearly 78 percent of the Tadawul All-Share Index (TASI).

Gulf News published based on Bloomberg 15 January an article regarding the governmental approval for Emirates Islamic Bank, Kuwait Syrian Holding, and two Saudi investors from the Al Rajhi family to partner with Bahrain-based Albaraka Banking Group, setting up Al Baraka Bank-Syria. The bank plans an IPO at the end of Q1 to sell 35 % according to Amir Assassa, a founding member of Albaraka Bank-Syria. Assassa said that Albaraka Banking Group will own 23 % in the Syrian bank, Syrian investors 16 %, Emirates Islamic 10 % and Kuwait Syrian Holding, which is partly owned by the Al Kharafi Group, 5 %, he said.

Iran Daily reported on 15 January that an insurance bank in Iran is proposed by Iran Insurance Company. Mohammad Javad Sahamian Moqaddam told Fars News Agency that the proposed bank will be set up after implementation the insurance laws.

Press Release

PARIS, January 14, 2009--Despite a dramatic decline in volumes in 2008, the long-term perspectives for global sukuk issuance are still good, said Standard & Poor's Ratings Services in a report published today "Sukuk Market Declined Sharply In 2008, But Long-Term Prospects Remain Strong."

"The decline in sukuk issuance in 2008 was as a result of global market turmoil, drying up of liquidity, widening of credit spreads, and investors' wait-and-see attitude," said Standard & Poor's credit analyst Mohamed Damak. "Although difficult to measure, part of this decline could also have been due to comments about the Sharia compliance of some sukuk by the Accounting and Auditing Organization for Islamic Financial Institutions.

More than 45% of sukuk issued in 2008 were "ijara" (lease financing), most probably as a direct consequence of the debate about Sharia compliance among some scholars. The value of sukuk issued in 2008 dropped by more than 56% compared with 2007, to $14.9 billion. "We do not expect the market to start reviving before the second half of 2009 or early 2010," added Mr. Damak.

Xinhua reported on 9 January that Gulf Finance House (GFH) launches a new USD 3 bn project in Tunisia, named "Tunis City Communication". In December 2007 GFH has already announced the "Tunis Financial Harbour", with an investment close to USD 3 bn.

Shveta Pathak reported in Business 24/7 on 30 December about the opportunity of micro finance in the Middle East interviewing Jack Lowe, President of BlueOrchard, USA, a Swiss micro finance company.

Jack Lowe, President of BlueOrchard, USA, sees the stable returns and low volatility offered by micro finance as key benefits making it a preferred asset class. The stable returns and low volatility are achieved because micro finance is closely linked to real economy, the society and has the advantage of managing the current situation better.

With the UAE Ministry of Economy having been assigned the task of launching a federal strategy to develop a programme to support and finance small start-ups in the UAE, micro finance institutions are hopeful of tapping the market Lowe told Emirates Business in an exclusive interview.

Excerpts from the interview: http://www.business24-7.ae/articles/2008/12/pages/12302008_f5a31399c6914...

The UAE is hosting the sixth International Humanitarian Aid & Development Conference & Exhibition - DIHAD 2009 from 7th - 9th of April 2009 at the Dubai International Convention and Exhibition Centre under the patronage of H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President, Prime Minister of United Arab Emirates, Ruler of Dubai. It is organised by Index Holding with the offical support of the United Nations and the UAE Red Crescent Society. The theme of the event is "Empowering Communities: From Disaster to Development". Specialised sessions are offered:

- Building Community Resilience and Capacity for Disaster Preparedness and Response
- Climate Change and the Global Food Crisis: How can Communities prepare and respond.
- Case Studies of Mitigation, Preparedness and Response to Disasters and other emergencies at the Community Level Urban and Rural Environments.
- Technologies, partnerships and approaches to support communities to prepare and respond to Disasters and direct their development.
- Recovery from Disasters and Sustainable Development -Community Mobilization, and Community Empowerment and Development through Micro-Credit: Global Experience.

Hedge Fund Review reported on 22 December about the Falcon Fund launched by Da Vinci Invest of Zurich, aiming to invest in the carbon markets and forestry.

The fund will actively trade the carbon markets on a short-term basis and invest in forestry for the long term. Da Vinci Invest expects this strategy provide consistent value growth, diversification and an environmental benefit. Rainforest Invest, Forest Finance and Miller Forest will source opportunities in Panama, Costa Rica and Paraguay.

Only land formerly used for agricultural will be planted. No rainforest will be cut to farm the plantations. The Da Vinci Green Falcon Fund will charge a 2% management fee and a 20% incentive fee.

Da Vinci Invest, incorporated in 2004 as a UK company, is based in Zug.

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Please post here any information, concepts and ideas to foster Islamic Microfinance.

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IslamicFinance.de

Arab News reported 28 April about Jordan Islamic Bank (JIB), being one of the oldest establishments along with Dubai Islamic Bank and Kuwait Finance House. Fitch Ratings end March 2008 assigned a 'BB-' foreign currency long-term issuer default rating (IDR) and a 'B' foreign currency short-term IDR to JIB with a long-term stable outlook.

JIB is a subsidiary of the Al-Baraka Banking Group (ABG), which is incorporated in Bahrain and is the restructured holding company of the financial services division of Jeddah-based Dallah Al-Baraka Group (DAG) headed by Saleh Kamel.

Musa Shihadeh is the general manager of JIB.

Source: http://www.menafn.com/qn_news_story_s.asp?StoryId=1093194499

Christopher Mangham reported on Arabian Business 19 April that Syndication markets for Mideast borrowers are increasingly difficult to price with higher margins coming up, while also country limits are often reached. The market remains, however, active with USD 37 bn in Mideast awaiting launch or are under syndication. It becomes more common that bank committments are held flexible in pricing and margins supposed to be increased.

Corporate lending in the Gulf, which did not exist in 2001-2002, totalled USD 67 bn in 2007.

Source: http://www.arabianbusiness.com/516908-loan-market-drying-up

Business 24/7 reported on 16 April that Dubai International Capital (DIC) talks with Dubai Islamic Bank about setting up a Shariah-compliant Islamic bank in Jordan.

Sameer Al Ansari heads Dubai International Capital. DIC manages a $500 million (Dh1.8 billion) fund investing in Jordan.

Source: http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=...

Business Intelligence reported on 14 April that the "First Persia Equity Fund", opened its second-phase of subscription and it aims to raise Euro 250 m, the fund was established in July 2007 with Euro 34 mn.

Shares listed on the Teheran Stock Exchange, TEPIX, which advanced 3.9% so far this year, trade at an average of 4 or 5 times earnings. That compares to a multiple of 15 for the MSCI GCC Countries Index, a measure of more than 140 companies in six GCC states.

Stephen Austen is the fund's Managing Director. The fund is said to have outperformed the benchmark so far.

Source: http://www.bi-me.com/main.php?c=3&cg=2&t=1&id=19192

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The Islamic Financial Services Board (IFSB) released on 1 April that the IFSB Council adopted two documents to further facilitate efforts towards enhancing the soundness and stability of the Islamic financial services industry.

In its 12th meeting held at the Islamic Development Bank's (IDB) headquarters in Jeddah on March 26th 2008, the Council of the Islamic Financial Services Board (IFSB) resolved to approve two documents that aim to further facilitate efforts towards enhancing the soundness and stability of the Islamic financial services industry. The two documents are:

Guidance Note in Connection with the Capital Adequacy Standard: Recognition of Ratings by External Credit Assessment Institutions (ECAI) on Shari'ah-Compliant Financial Instruments (Guidance Note)

Technical Note on Issues in Strengthening Liquidity Management of Institutions Offering Islamic Financial Services: The Development of Islamic Money Markets (Technical Notes)

Guidance Note in Connection with the Capital Adequacy Standard: Recognition of Ratings by External Credit Assessment Institutions (ECAI) on Shari'ah-Compliant Financial Instruments (Guidance Note)