IslamicFinance.de

Retail investors will soon get to invest in Singapore’s first syariah-compliant real estate investment trust (Reit), the Sabana Reit – set to hold about $850 million of Singapore industrial properties. Maybank Singapore is offering smaller firms an Islamic commercial property loan that comes with one of the longest fixed interest rate terms here. The product, called Maybank Islamic Term Financing, will provide small- and medium-sized enterprises (SME) with financing for completed commercial and industrial properties, on a mid- to long-term basis. Maybank Singapore head of Islamic banking Ismail Hussein said the product had contributed significantly to Maybank’s Islamic SME financing portfolio.

While the UAE Government has launched a number of initiatives this year to support small and medium enterprises (SMEs), there are still industry executives who say that much more needs to be done – especially when it comes to the nascent Islamic economy. The UAE is especially keen to give Emiratis a chance of helping the economy by starting their own businesses, and a number of big companies are promoting the initiatives by inviting SMEs to be their suppliers. Banks have played their part in recent years as they recovered from the financial crisis of 2008. While criticism against banks for not doing enough to fund SME businesses was justified before the financial crisis, when banks were more focused on financing real estate and retail customers, that is no longer the case.

Azzad Asset Management has announced the launch of an online tool intended to help American Muslims observe Halal investing guidelines. Using input provided by shareholders of the Azzad Mutual Funds, an online Purification Calculator will provide a user-specific dollar amount that represents unintentional earnings that were potentially derived from religiously impermissible sources. Purification totals are calculated on a per share basis using Azzad's methodology for calculating unethical income. Azzad advises shareholders to give the indicated amounts to the charity or charities of their choice in order to avoid profiting from any activities deemed potentially harmful to society.

The GCC debt markets in 2014 had an active second quarter, particularly in corporate bonds and sukuk. The region's noteworthy issuances include Commercial Bank of Qatar issuing $750m bond. On the sovereign front, Qatar Central Bank (QCB) issued three government bonds amounting to $261m, $577m and $261m in Q2, 2014. UAE corporate bond issuances were dominant in the second quarter. The GCC's ability to shield itself from the regional instability was again on display in the second quarter. Dubai yields continued to decline to their lowest levels in a year, with the yield of 5-6 year bonds reaching 3.27 percent. On the region's IPO market performance, the second quarter of 2014 started off and ended on a high, with a total of seven IPOs, compared to two in Q1, 2014.

Bahrain based Gulf Finance House (GFH) announced its financial results for the first half of 2014 ended June 30, 2014. GFH reported a net profit of $10.6m for the period compared with $4.2m for the prior year period. The Bank’s consolidated profits rose by 152% in current period compared to the prior year period although an impairment of $10m was conservatively taken. Net profit for the second quarter of 2014 was $9.5m. Total income for the first half of 2014 was $88.2m compared with $24.5m for the same period of the year 2013. Operating expenses for the period were $67.6m. GFH made debt repayments of approximately $7m during the period, representing a reduction of approximately 3.5% of the Bank’s total financing liabilities.

A newly released report "Islamic Finance in Africa: Unlocking Opportunities for Growth" studies the evolution of the Islamic finance industry in Africa. Moreover, the report, a joint publication by Kuwait Finance House Research Limited (KFHR) and Malaysia International Islamic Financial Centre (MIFC), highlights the exciting growth prospects for the various Islamic finance segments on the continent. Africa's presence in the global Islamic finance landscape is growing, albeit from a small base. The sukuk market in Africa holds great potential over the medium-run, amid unprecedented funding needs for infrastructure building. Aside from the sukuk market, Africa's Islamic funds markets holds potential in the medium-run. The Islamic banking sector has recorded solid growth, and demand for takaful products in Africa islikely to increase.

This paper provides a survey on Islamic Finance in SSA. Ongoing activities include Islamic banking, sukuk issuances (to finance infrastructure projects), Takaful, and microfinance. While not yet significant in most Sub-Saharan countries, several features make Islamic finance instruments relevant to the region, in particular the ability to foster SMEs and micro-credit activtities. As a first step, policy makers could introduce Islamic financing windows within the conventional system and facilitate sukuk issuance to tap foreign investors. The entrance of full-fleged Islamic banks require addressing systemic issues, and adapting the crisis management and resolution frameworks. The IMF can play a role by sharing international experiences and providing advice on supervisory and regulatory frameworks as needed.

Emirates have secured a $425 million shariacompliant loan from a group of UAE banks to finance the acquisition of two Airbus A380 aircraft. Emirates used the loan to take delivery of its 50th A380 in Hamburg last month. The aircraft is scheduled to enter into service sometime in early August. Abu Dhabi Islamic Bank (Adib), Commercial Bank of Dubai (CBD) and Dubai Islamic Bank (DIB) were the joint book runners and initial mandated lead arrangers in the transaction. Emirates is the largest operator of the superjumbo A380 and have a further 90 on order. The airline’s president, Tim Clark, has previously said he is interested in ordering more of the superjumbos if Airbus is able to manufacture a more fuel efficient “neo” version.

Reactions are snowballing against the government's operation to force the closure of the participation bank Bank Asya as part of its fight against the Hizmet movement, with the matter brought to Parliament's agenda in the form of a parliamentary question from the Republican People's Party (CHP). CHP ?stanbul deputy Umut Oran directed a question at Deputy Prime Minister Ali Babacan to ask for the rationale behind the government's attempts to sink a private bank and risking a domino effect which could damage the entire economy. Two weeks ago, Prime Minister Recep Tayyip Erdo?an said that Bank Asya's financial situation was worsening. His remarks were criticized strongly as a premeditated act intended to damage the bank, which is a crime punishable with a jail sentence of between one and three years. After the prime minister's words, the bank's shares in Borsa ?stanbul (B?ST) plummeted.

For the second consecutive year, the Islamic Corporation for the Development of the Private Sector (ICD) presents findings from the Islamic Finance Development Indicator (IFDI), developed in collaboration with Thomson Reuters. The IFDI measures five key components that combine to depict the bigger picture of the state of Islamic finance in 92 countries: quantitative development, governance, social responsibility, knowledge and awareness. The number of Islamic finance conferences (>100 participants) worldwide surged by 41 per cent to 107 in 2013 from 76 in 2012, with 36 countries hosting conferences compared to 25 in 2012. Islamic finance in the UAE is most newsworthy, with Malaysia and rest of the GCC also make headlines. UK topped European coverage.

Bankers and officials from Bahrain to Indonesia are standardizing documents and bond structures to limit impediments caused by varying interpretations of Shariah law. Due to the lack of standardization, there is indeed too much reliance on scholars. A well-respected expert can charge between $500 and $1,000 an hour in the Middle East. The scholars' reputations can heavily influence the success of a product, driving demand for a select group of experts and leading to inflated earnings. A central Shariah board at the central bank level could easily take care of it or an international standards setter.

Emirates District Cooling LLC (Emicool) has signed a $245 million 12-year facility with Dubai Islamic Bank (DIB) which will largely refinance its existing debt and also fund the company’s expansion plans. The refinancing agreement was signed by Mr. Abdulaziz Bin Yagub Al Serkal, Chairman of Emicool, and Dr. Adnan Chilwan, CEO of Dubai Islamic Bank, recently in the presence of Mr. Adib Moubadder, CEO of Emicool, and DIB executives. Mr. Moubadder said that there is a huge potential for growth in the district cooling industry, and as one of the major players, Emicool is looking at investing in infrastructure, which will assist to offer quality products to capture a significant share of the market.

Islamic economies are set to become more important over the next decade with assets estimated to grow at 15 to 20 per cent a year. There are three powerful forces driving the growth: demographics, devotion and disposable income. Firstly, the Muslim population globally is 1.6 billion, or about 23 per cent of the global population. Secondly, this diverse and dispersed group of people, who span several continents, are drawn together by the devotion to their religion. Thirdly, with the inexorable shift in growth and wealth creation from the West to the East, and the rise in oil prices, the disposable income of this group is increasing. The Islamic economy, on the back of its value system, has the potential to cross religious boundaries and to attract participants with diverse backgrounds who are seeking ethical practices and values in all aspects of commerce-related activities.

Demand for Islamic finance training from non-Muslims rose more than fourfold in the past seven years as students seek to enter an industry whose assets are set to double to $3.4 trillion by 2018. Malaysia’s International Centre for Education in Islamic Finance had 2,000 people enrolled on its courses this year, of whom about 14 percent are from nations with small Muslim populations. That compares with 3 percent in 2007. While students from South Korea, Japan and the U.S. dominate the enlistees, those nations have yet to introduce Shariah-compliant legislation. The industry needs 1 million people with Islamic finance knowledge by 2020 as Shariah-compliant assets are set to reach $6.5 trillion by then.

Islamic credit unions are expanding in Thailand and offering investors sharia-compliant services. Worawit Baru, a former senator from Pattani, heads the Southern Thailand Islamic Co-operatives Network (Sticon), an association of faith-based credit unions. During his days in parliament, many businessmen in Bangkok were unaware of the popularity of the Islamic co-operative business model in the Deep South, he said. Today, the network of member-owned, non-profit savings and loan co-operatives has expanded to other parts of Thailand. Among the fastest growing faith-based credit unions is Hat Yai-based As-Siddeek Islamic Co-operative Limited (AIC). Under an agreement with other Sticon members, AIC has no plans to expand farther south.

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.

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.

Plans to levy capital gains tax on property owners who hold their homes through a company structure risk discouraging investment in the private rented sector, tax specialists and investors warn. Scott Nicol, vice-president of Gatehouse Bank, which channels Middle Eastern investors' money into UK property, said he was also worried about the proposals. Gatehouse backed Sigma Capital last year to develop 6,600 privately rented houses in a deal worth £700m. If all the homes are built, Sigma will become Britain's biggest private landlord.

The Islamic Research and Training Institute (IRTI) is pleased to announce the IRTI YouTube channel with plenty of valuable video lectures in all areas of the Islamic Economics, Banking and Finance. Please visit the following links:

IRTI YouTube Channel: http://www.youtube.com/channel/UCy-k4v4XdMUnu641FY_MF5Q

IRTI Facebook page: https://www.facebook.com/IRTIKSA

Saudi Arabia’s plan to open its $531 billion stock market to foreigners is prompting speculation that Islamic bonds will be next. The government’s approval of overseas financial institutions to trade equities may herald a similar relaxation of rules in the local-currency primary debt market. Opening the local-currency sukuk market would give foreign investors access to companies that sold 42 billion riyals ($11.2 billion) through a dozen sales in the past year. That’s more than three times the amount of dollar Islamic bond sales, which are open to overseas buyers. However, access to the kingdom’s debt market may appeal more to investors wanting to broaden their exposure than to those seeking yield since lots of Saudi debt prices very tightly.