IslamicFinance.de

The International Journal of Islamic & Middle Eastern Finance and Management has decided to publish a special issue of the journal, focusing on the latest financial crisis, and how this has related to Islamic financial institutions.

Other relevant points include:

• Proposed title of the special issue: Islamic Financial Institutions and the Global Financial Crisis 2008/09.

• Deadline for receiving papers: Friday, February 12th, 2010

• Date of publication: fourth issue of Volume 3 (2010).

• Papers will be reviewed in the normal fashion.

• Technical notes will also be acceptable, and they will be assessed in the usual manner.

• We are likely to have a total of five articles in the issue.

• Books relevant to this major event can also be reviewed for the issue.

• All branches of the Islamic financial services sector can be covered in materials within this issue, including banking, insurance (i.e. takaful), fund management, investment portfolios, business management etc.

The research think tank of Deutsche Bank published recently a research study with the title:

"The global food equation"

stating the challenge for future food security. DB Research believes that still believes that the growing population can be fed, provided the recommended actions are taken, requiring innovation, and a change in the system of production and distribution along with sustained productivity growth in an environmental and socially sustainable manner.

The report can be downloaded for free.

6.10.2010: Report is update and again free for download

3.9.2009:
Funds at Work, a strategy consultant for the fund industry, updated its analysis on Shariah scholars' engagement in financial service organisations in the GCC countries and now internationally covering companies with 956 (498) Sharia Board positions and 180 (121) scholars.

The study shows that the Top 5 scholars make up at least 30.15 % of the entire univese of almost 956 board positions. The Top 5 scholars internationally (ex GCC) out of 70 scholars active beyond the GCC - make 58.21 % of all positions (201 board positions).

The detailed summary of the study is free for download.

Press Release

PARIS, September 2, 2009--New issuance of sukuk (bonds compliant with Islamic law) topped $9.3 billion in the first seven months of 2009 compared with $11.1 billion during the same period in 2008, said Standard & Poor's Ratings Services in a report published today, "The Sukuk Market Has Continued To Progress In 2009 Despite Some Roadblocks."

"The smaller amount of issuance was due not only to the still-challenging market conditions and drying up of liquidity, but also to the less-supportive economic environment in the Gulf Cooperation Council countries, particularly in the United Arab Emirates," said Standard & Poor's credit analyst Mohamed Damak. "The medium-term outlook for the sukuk market remains positive, though, in our view, given the strong pipeline--with sukuk announced or being talked about in the market estimated at about $50 billion--and efforts to resolve the major difficulties impeding sukuk market development."

Lack of capitalisation of banks, households and the state is a key policy issue according to Professor Willem Buiter, who wrote a blog in the Financial Times online. Instead of defaults and bankruptcy with all its associated costs he suggests to turn debt to equity as the more efficient economic solution; calling explicitly the application of Islamic finance principles for this purpose as a possible solution.

A new McKinsey Report is released reviewing the performance of the so-called "new power brokers" being sovereign wealth funds, private equity and hedge funds during the financial crisis.

The power brokers' collective performance in the financial crisis, though better than the sharp declines in wealth of most institutional investors, masks an important shift: Asian sovereign and petrodollar investors emerged as more influential than ever, while hedge funds and private equity saw their previously rapid growth interrupted.

In a 2007 report, MGI labeled these four groups of investors the “new power brokers” because they had gained enough wealth and clout to influence global financial markets. MGI revisited the power brokers to examine how their fortunes diverged over the during the financial crisis that unfolded in 2008 and projects where they may go from here, using a scenario approach.

The full report can be downloaded for free after registration:

The first onshore Shariah-compliant real estate fund in the Australian market, The LM Australian Alif Fund, was officially launched at end of May in Bahrain. The fund is managed by LM Investment Management Ltd., a specialist Australian income funds manager operating internationally and which is aimed at Islamic investors who are looking for opportunities in alternative investments and in new markets.

Mushtak Parker interviewed Ken Scott-Hamilton, general manager (Middle East), LM Investment Management Ltd., for Arab News about the rationale behind launching the fund and the opportunities and challenges for Islamic finance in Australia.

The Global Association of Risk Professionals and the Banque du Liban recently announced the development of a new program, the Certificate in Risk Management for Islamic Financial Institutions.

The explosive growth in, and increasing sophistication of Islamic financial products has created the need for standards and guidelines for sound risk management approaches analyzing these financial instruments.

The Certificate is expected to be available in 3Q 2009

Istanbul Declaration Adopted By The First Meeting Of The Development And Cooperation Institutions Of The Member States Of The Organisation Of The Islamic Conference (May 13-14, 2009) Istanbul, Republic Of Turkey

Date: 16/05/2009 - View in: Arabic | French - Print

We, the Heads/Representatives of the Development and Cooperation Institutions (DCIs) of the Member States of the Organisation of the Islamic Conference (OIC) and the Heads of Delegations participating in the First Meeting of the Development and Cooperation Institutions of the OIC Member States held in Istanbul, Republic of Turkey on 13-14 May 2009,

Inspired by the OIC Ten-Year Programme of Action, adopted by the Third Extraordinary Islamic Summit held in Makkah Al-Mukarramah in December 2005,

Commending the OIC General Secretariat, the Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) and the Turkish International Cooperation and Development Agency (TIKA) for their initiative of convening the First Meeting of the Development and Cooperation Institutions of the OIC Member States,

MICROCAPITAL STORY: African Development Bank Group, Agence Française de Développement Group, European Investment Bank, Development Bank of Southern Africa, KfW Bankengruppe, Islamic Development Bank Group, and World Bank Group Launch USD 15bn Joint Action Plan for Africa Including Support for Microfinance Programs.

The Islamic Development Bank Group, through the Islamic Corporation for the Development of Private Sector, will contribute up to USD 250 million over the next five years, including USD 50 million for the development of Islamic banking industry and USD 50 million for SME development.

The contemporary definition on organized tawarruq is: when a person (mustawriq) buys a merchandise from a local or international market on deferred price basis. The financier arranges the sale agreement either himself or through his agent. Simultaneously, the mustawriq and the financier executes the transactions, usually at a lower spot price.

It is not permissible to execute both tawarruq (organised and reversed) because simultaneous transactions occurs between the financier and the mustawriq, whether it is done explicitly or implicitly or based on common practice, in exchange for a financial obligation.

Full text: English and Arabic at the link below.

Increasing number of defaults will lead to test the legal framework and stability of the Islamic finance structures in centres such as Dubai, Bahrain and Malaysia. Judges will have to weigh conventional law and sharia (Islamic law) used in contracts, and legal uncertainty over key contract provisions could hurt the industry's ability to bounce back when the global economy recovers. The industry will be watching to ensure any legal disputes are settled in a transparent manner which gives certainty to the contract terms entered into, said Davide Barzilai, a London-based Islamic finance lawyer with Norton Rose.

The new yearbook includes Standard & Poor’s latest analysis and rating methodologies on almost 40 rated Islamic debt issues and issuers, and an overview of its suite of global benchmark and investable Sharia indices.

While total global sukuk issuance more than halved to $14.9 billion in 2008 from $34 billion in the previous year, Standard & Poor’s believes the outlook for Islamic finance remains strong. Sharia-compliant assets now total about $700 billion after growth exceeding 10% annually during the past decade.

Full 70+ pages report for free download at:

http://www.gcc.standardandpoors.com/islamic_finance/Islamic%20Finance%20Outlook%202009%20(12).pdf

Paul Rosenberg and Hala Matar Choufany are giving in a contribution to 4hoteliers a set of criteria for Sharia compliant hotels, distinguishing it from merely alcohol free, "dry" hotels:

In order for a hotel to be fully Sharia-compliant, it is extremely important that most of the facilities (such as floors, spa, gym and guest and function rooms) be separate for males and females. This is especially significant at the development stage when designing floor plans of the hotel. Beds and toilets should not be placed in the direction of Mecca.

Neither alcohol nor pork should be served in any of the food and beverage outlets at the hotel and there should be no minibar in the rooms.

See full article for more details as below.

Research conducted by Shariah-Fortune screened around 810 companies in 50 countries worldwide offering Shariah compliant financial services. The Middle East covers more than half (around 56 %) of the Islamic Finance market. Around 450 companies are located in this region. Leading countries are the UAE, Bahrain, Kuwait, Iran and Saudi Arabia. Asian companies compound to a market share of about 20 %. In particular. Malaysia is one of the key players, not only in Asia, but also globally.

114 companies have been screened in Europe, which accounts for around 14 % of the global market share. On top position in Europe is the UK, boosted by the FSA´s regulatory initiatives. Compared to its global importance North America takes only a small part in the listing for Islamic Finance. Around 44 companies (ca. 5 %) are located in the USA and Canada.

FT has today a 4 page special on Islamic finance. The link below leads to its pdf version (size 10 MB), discussing standardisation issues, credit crunch and other topics.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will seek a mandate from its trustees to examine the degree of sharia financial products' compliance with its 40 standards, its secretary-general, Mohamad Nedal Alchaar, said according to Liau Y-Sing from Reuters.

Lack of common standards makes it difficult to sell products across borders, while possibly enhancing innovation.

A new report released today by management consultancy Arthur D. Little entitled “Islamic Finance Comes of Age” has identified a surge in activity around Islamic finance as a promising opportunity for the global financial services industry as it emerges from the current recession. With Islamic finance assets currently standing at USD 800 bn, Arthur D. Little expects this figure to surge to as much as USD 4 trillion in the next six years, representing a major opportunity for Western financial institutions looking to develop new partnerships and global markets.

The report can be downloaded after free registration at: http://www.adlittle.com/islamic_finance

Ernst & Young released a report saying that the takaful market may reach USD 7.7 bn contributions by 2012, compared to USD 2.5 bn in 2006 and USD 3.4 bn in 2007.

IslamicFinance.de installed on 18 April a new service to keep you updated with Islamic finance news by sending its content to a Twitter account allowing to follow news even by mobile phone, Wikipedia the online encyclopedia explains Twitter as follows:

"Twitter is a free social networking and micro-blogging service that enables its users to send and read other users' updates known as tweets. Tweets are text-based posts of up to 140 characters in length which are displayed on the user's profile page and delivered to other users who have subscribed to them (known as followers). [...] Users can send and receive tweets via the Twitter website, Short Message Service (SMS) or external applications. The service is free to use over the Internet, but using SMS may incur phone service provider fees." Source http://en.wikipedia.org/wiki/Twitter

Please feel free to use just another free service related to IslamicFinance.de by following the news via Twitter:

Go to: http://twitter.com/IslamFinance