IslamicFinance.de

As salamu Alaikum,
Next saturday, May 13, 2023, at 15.00 I present as guest of Muslim Student Association in Zurich (@msazurich) on the 1st chapter of my book and then go into the banking crisis and money creation. The talk is in English.

Physical
???? Samstag, 13. Mai 2023
? 15:00 - 17:00
???? Building KAB, floor G, room 01
????? Kantonsschulstrasse 3, 8001 Zürich

Physical attendance - registration linked at @msazurich and in my link tree in Insta profile. (just confirm lengthy privacy in German).
Talk online accessible without registration: Click on Linktr.ee/islamgeldwohlstand - presentation on bigbluebutton/senfcall similar to zoom - no installation required or instagram @islamgeldwohlstand

My German book "Islam, Geld und Wohlstand - Ein Handbuch über Finanzen und Vorsorge" can be obtained:
Instagram:
DE: @islambooks24
CH: @IslamShop.ch
or any other bookstore or online dealer in German speaking countries - if you are publisher interested for your country, please contact me.

More and more Muslims consider investing in Crypto Currencies and participating in so-called Initial Coin Offerings (ICO). What is the background aside from the poster child bitcoin?

There are two main types of Crypo:

Security Token - Crypto which has some rights or assets attached. Regulators tend to require a prospectus and deem it akin to a security. It's value follows the rights and assets attached and need careful analysis. As Security Tokes are offered online, they may or may not be subjected to a regulator, and any misrepresentations could not be prosecuted. Fraud is frequent.

Utility Token - Crypto which has no rights or assets whatsoever attached to it. Regulators mostly leave it to the people taking the view that no disclosures are required if something is essential without any value. Analysis about the price can only be derived from market psychology. Fundamental values are not given. It is a kind of gift to the issuer from a regulatory point of view and thus no need to protect anybody out there. There is no material countervalue from a secular legal point of view.

Sharia point of view:

Ultra High Net Worth Middle Eastern families and individuals have a variety of jurisdictions to look to for succession planning and asset protection vehicles, but the three "go-to" jurisdictions are Cayman, Guernsey and Jersey. Historically, Ultra High Net Worth Middle Eastern families and individuals ("UHNW MEs") may have looked to the Cayman Islands and the British Virgin Islands when selecting a jurisdiction to base an offshore corporate structure. UHNW MEs now look to Cayman as a jurisdiction to house their succession planning vehicles. Guernsey and Jersey are both Crown Dependencies, which means they are not part of the UK but are self-governing dependencies of the Crown. Cayman is a British Overseas Territory, which means it has a constitutional link with, but does not form part of the UK and is similarly self-governing. This status of these three jurisdictions has provided them with the economic, legal and political stability to attract UHNW MEs and continually develop their respective financial services industries.

Arabesque is a UK based fund manager. Their basic premise is that they combine cutting-edge artificial intelligence and algorithms with a powerful ethical screening tool. Arabesque consists of academics coming from a diverse array of fields including physics, computer science, artificial intelligence, and engineering. Through machine learning, big data and over 2501 environmental, social and governance metrics (ESG), its help investors to make more sustainable decisions. It also live-captures news signals from over 30,000 sources from over 170 countries and quantifies this information to form part of the analytics. Arabesque Q3.17 Systematic is a global Shariah compliant fund launched in 2015, adhering to Shariah investment guidelines and utilising the Systematic strategy. The smart algorithms adhere to a strict rules-based, quantitative approach and incorporate the Islamic shariah guidelines from AAOIFI.

The desire for wealth transition means that many family businesses may have to change their approach and look outside the family to increase that longevity rather than simply relying on the next generation inheriting the family business. It may be that the skill set or appetite of the next generation to take on the family business is simply not there. Furthermore, the inheritance laws governing the transfer of assets locally may vary from those applicable to assets located abroad. Wealth planning company Julius Baer expects to see an increase in the number of Dubai International Financial Centre (DIFC)/Abu Dhabi Global Market (ADGM) Foundations to support wealth and succession planning for clients in the UAE.

According to Boston Consulting Group (BCG), personal wealth held by UAE residents surged to $400 billion between 2014 and 2019, with 48.5% of it held by millionaires in 2019. The consultancy reckons the ranks of UAE’s millionaires are expected to grow by 4.2% annually over the coming four years. The UAE represented 7.1% of the share of personal wealth pool in 2019 in the Middle East and Africa, having grown by 3.8% annually to $400 billion between 2014-19. The consultancy says the wealth management industry's value proposition will change over the next two decades, new forms of interaction will evolve, as well as new business models.

According to a new report released by Oliver Wyman and Morgan Stanley, Covid-19 will fundamentally change the way the Wealth Management industry in the Middle East operates. The report, called Wealth Management: After the Storm, highlights how a golden decade of growth for the Wealth Management industry has been drastically disrupted by Covid-19. Raji Souag, Partner at Oliver Wyman Middle East, sees global high net worth wealth declining by four percent, or $3.1 trillion in 2020. He believes that digitalisation and globalization will be among the immediate priorities of Wealth Management firms. Advisors will remain central to client relationships, however, they need to be supported with strong digital capabilities.

Women’s wealth in the Middle East is expected to grow to $1.1 trillion from the current $786 billion during the 2019-2023 period. As of 2019, more than 40% of women’s wealth in the Middle East is concentrated in the UAE and Saudi Arabia where women control assets worth $102 billion and $224 billion. According to Boston Consulting Group (BCG), women’s wealth is projected to grow at a compound annual growth rate (CAGR) of 8.3% to $140 billion in the UAE and of 5.1% to $273 billion in Saudi Arabia by 2023. Women are likely to set the region’s wealth management trend, if asset managers target this market segment as a business opportunity and personalise their approach. Women are more likely than men to invest on the basis of their values, favouring funds that perform well but also create a positive impact, as opposed to investing solely for performance.

The Financial Times published an article about Gulf sovereign wealth funds which are mobilising to buy assets whose valuations have been hard hit by the coronavirus pandemic. Sadly, distressed assets will no doubt soon be flooding the market looking for rescue investors. Yet there may be problems for bankers and asset managers taking potential deals to the sovereign wealth funds. The oil price is at a 20-year low as coronavirus depresses demand, and Gulf countries may need to support their domestic economies. Secondly, sovereign wealth funds have high visibility and there is strong competition for their attention. Much less is known about family offices. The Single Family Offices Database from Highworth is an online resource which provides detailed profiles of over 900 single family offices globally, including a number of sovereign family offices in Gulf countries.

The asset management industry in the Arabian Gulf is set to grow, as regional governments overhaul their hydrocarbon-dependent economies and ease regulations. According to Moody’s Investors Service, investment managers in the six-member economic bloc of the GCC had $260 billion (Dh954bn) of assets under management at the end of last year. The Gulf states are trying to overhaul their economies and cut their dependence on oil. Saudi Arabia and the UAE are pursuing their own economic reforms to develop alternative lines of revenue. Both countries have introduced laws to broaden their appeal to foreign investors. Moody’s expects global market leaders to expand their presence in the Saudi Arabia due to a relaxation of foreign ownership limits coupled with more transparent regulations.

In this interview FBNQuest Trustees managing director Kunle Awojobi speaks about the benefits of Islamic Estate Planning. Islamic Estate Planning is considered an act of purifying or cleansing the individual, which involves voluntary and compulsory distributions made after death. Islamic Estate Planning is a relatively new area in Islamic Finance in Nigeria. In 2017, FBNQuest Trustees began educating Muslims through its flagship programme the Legacy Series, both on radio and in press. They also established partnerships with key players in the Islamic Finance space. FBNQuest Trustees helps with the management of Islamic Wills, but also other instruments like Zakat, Wakaf, Hibah, etc.

At the Islamic Estate Clinic held on April 28, 2019 in Abuja, different speakers highlighted how Nigerians, both Muslims and non-Muslims can benefit from the Islamic Estate Planning system. The event was put together by FBNQuest Trustees, with Managing Director, Adekunle Awojobi, hosting it. The clinic featured sessions facilitated by Dr. Bashir Umar, a renowned Islamic Financial Scholar. The sessions covered Waqaf, Wasiyyah, Zakat, Hibah and Takaful, among other asset preservation and wealth transfer principles. FBNQuest Trustees said it remains committed to pioneering critical conversations such as this and helping Nigerians make sense of assets accrued in the course of their lives, without compromising their faith or values.

According to the Boston Consulting Group (BCG), private wealth in the UAE saw positive growth between 2016 and 2017 of 8% and this growth is projected to remain steady over the next five years. Private wealth is expected to reach $590 billion in investable assets by 2022. The main drivers were the bull market environment in all major economies and the significant strengthening of most major currencies against the dollar. While offshore share is expected to decline over the next five years from 30% in 2017 to 24.1% in 2022, it will continue to grow to reach $140 billion in the UAE in the same period. The report also showed that personal wealth in the Middle East rose by 11% to $3.8 trillion in 2017, a significant increase compared with the rate for the previous five years.

Noor Bank has launched Noor Wealth, a Shari’ah-compliant platform offering tailored product mixes. Noor Wealth targets customers with a minimum of AED 367,300 of assets under management or a minimum salary of AED 50,000. The bank offers mutual funds among other 10 lenders in the GCC and it also offers access to fixed-income products through its Sukuk platform and Islamic structured products. Noor Wealth collaborates with Knight Frank to offer global physical real estate services for its customers. Mufazzal Kajiji, Head of Retail Banking at Noor Bank, said that Noor Wealth currently serves clients from 10 countries and is in the process of expanding.

The objective of Islamic wealth management is economic justice through equitable distribution of wealth. This by no means restricts private ownership and entrepreneurship but a wider circulation of wealth and invested in socially beneficial economic activity. To serve social justice, wealth is not considered legitimately earned unless the risk-and-rewards are both shared in a financial contract: so one-sided no-risk-sharing contracts are not permitted. Islamic wealth management involves wealth generation, accumulation, preservation, purification and distribution. Creation of wealth is defined more broadly than in conventional practice. A set of filters are applied to financial transactions that ensure permissibility. Impermissible gains are expected to be distributed to the needy as a method of purification or cleansing. The process of cleansing applies in corporate finance and investment as well.

#Bahrain’s assets management industry is set to see continued strong growth in the next five years. Central Bank of Bahrain supervisor Abdulrahman Al Baker said this positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets. Other factors include the enchanced regulation on asset management and capital markets, the growing wealth of high net worth individuals, as well as the steady economic growth in the region.

Dynastic planning is increasingly topical in the Middle East as founders focus more attention on ensuring that the family remains in harmony. According to Laurence Black, Regional Director at Asiaciti Trust, establishing a structure to manage family dynamics and ensure a smooth transition of assets helps minimise family conflict. As families become more global from their Middle East bases, there are more and more issues to consider. Families are looking further out in wealth transitioning as well, thinking about their personal legacies, such as philanthropic interests. Well-structured dynastic planning helps mitigate dangers that might arise due to political instability or other forms of fragmentation like foreign ownership rules. Cross-border issues are ever more prevalent as asset classes and geographical dispersion become more diverse. Trust structures and other special vehicles are ideal for protecting assets and can maintain control for the principals in their lifetimes.

The typical GCC merchant family is facing many challenges to the maintenance, expansion and inter-generational transitioning of its wealth. According to Yann Mrazek, Managing Partner at M/HQ, there is some gradual increase in investment outside the region, but nearly three-quarters remains in the region. The focus remains concentrated on only three asset classes, the family’s own business, real estate, cash or deposits. While times are clearly changing and people from the GCC are spreading out further, their assets seem to become more concentrated. Moreover, the UAE economy is more open than ever before, implying greater competition for businesses. All this represents a wonderful opportunity for firms such as M/HQ. An estimated 30% of families are not thinking about estate planning, while 70% are receptive to legacy matters. For those with offshore assets, a trust or a foundation are likely to be compatible. For domestic assets, there are new tools being rolled out in the region. These include new SFO, trust and foundation regimes.