The turning of the tide

20 days to go Home Contact Us Subscribe Advertise Events Training REDmoneyGroup The turning of the tide While the last few years have seen the resurgence of Sukuk, it looks as if in 2014 the tide is turning towards the equity markets, with investment currents across the Islamic (and conventional) markets shifting away from fixed-income to seek higher returns as economic conditions improve and risk appetite increases. Our cover story this week looks at how this trend is altering the face of Islamic investment in the Middle East, as growing demand stimulates greater supply and the competitive landscape adjusts in response. This shift towards new growth trends is continued in our IFN reports, which look at the growing power of the Saudi Arabian consumer, the strong developments in sub-Saharan Africa, the growth of Sukuk in East Asia, the potential impact of Iran on the global Islamic markets, the effects of consolidation in arbitration, the new ISRA standards and the possible delays in the hotly anticipated Luxembourg Sukuk. Our country focus this week is on Brunei Darussalam and we bring you both an in-house country analysis and a country feature from James Chiew of Abrahams Davidson on the new emphasis on Shariah product compliance in the country. Our IFN correspondents cover Indonesia, Oman and Pakistan, while we are also delighted to provide a special report on Malaysia’s new Islamic Finance Services Act 2013 from Mahbubi Ali and Dr Syahidah Abdullah of ISRA. Our sector analysis this week investigates the recent events in Islamic securitization, while we also have a special report from Dr Mahmood Ahmed of Islamic Bank Bangladesh on the complexities of Islamic bank profit. We round of this week’s issue with an excerpt from the latest book from esteemed Islamic authority and author Brian Kettell on ‘Sukuk: Case Studies’. Cover Story Shifting tides: A transformation in GCC Islamic investment The GCC is seeing its equity markets surge and investor interest swell as overall economic performance improves, the UAE and Qatar await their upgrade to Emerging Market status, and a booming infrastructure pipeline drives development. All this is having transformative impact on its investment landscape, with key trends emerging that look set to change the face of the Islamic marketplace. (Click to read full report) Shariah Pronouncement: Is it permissible for an Islamic bank to issue preferred shares or to invest in a company having preferred shares? (Click to read full report) IFN Reports: Africa’s Islamic potential attracts increased interest from global banks The power of the Saudi consumer Sukuk in emerging East Asia: An ADB perspective Luxembourg Sukuk: A matter of perspective Sukuk taxation: Legal form or economic substance? One Islamic finance arbitration center for all? The paralysis of the Iranian banking system: What does it mean for the Islamic finance industry? Which standard to meet? IFN Country Correspondents: Islamic construction finance in Oman The potential of corporate Sukuk in Indonesia Former Bahrain’s minister praises Islamic banking growth in Pakistan IFN Country Analysis: Islamic finance in Brunei Darussalam IFN Sector Analysis: Islamic finance: Securities and securitization Special IFSA Report: IFSA: Charting the future direction for Islamic finance Special Report: The economics of Islamic bank profit Feature: Brunei Darussalam: A shift in emphasis towards product Shariah compliance Brunei has a long history of Islamic banking, but recent regulatory and legislative steps have begun to push the industry towards the development of new products and structures that are driving it further towards the true goal of Shariah compliance. JAMES CHIEW investigates... (Click to read full report) Extract: The ZamZam Towers Sukuk Al-Intifa’a ZamZam is the name of the well that provides the water that billions of people, have thirstily drunk from throughout history, especially during the Hajj pilgrimage... (Click to read full report) DEALS Indonesia misses US$131.55 million indicative Sukuk sale target by US$20 million Sabana REIT to issue US$67 million-worth of trust certificates under existing US$394.11 million multicurrency Islamic trust certificate program Dubai Investments Park lists US$300 million Sukuk on NASDAQ Dubai State Bank of Pakistan declares rental coupon rate of 9.73% for government’s Sukuk Ijarah NEWS Islamic banking assets set to almost double to 40% by 2020 from current 25%, according to Standard Chartered Saadiq CEO RHB Capital’s IGNITE 2017 transformation strategy includes driving Islamic banking business to account for 30% of its assets Lower yields on Malaysian Sukuk could prompt new government issuances, says industry players Islamic capital market in Malaysia grows to US$456.85 billion, according to Securities Commission 2013 annual report Turkish Banking Association chairman confirms that work has started on setting up Ziraat Bank’s Islamic banking arm Islamic banking asset base reaches US$9.98 billion for the first time in Pakistan IDB expected to provide US$150 million to Pakistan this month to shore up foreign exchange reserves among others Bombay Stock Exchange to rebalance Shariah index following special trading session on the 22nd March Filipino central bank looking at ways to establish Islamic windows in a bid to push Islamic banking industry forward AmIslamic Bank shifts focus to non-retail segment with commodity Murabahah instrument slated in June Dubai Islamic Bank Pakistan forges marketing alliance with Junaid Jamshed ABZ Agro Foods seeking Islamic finance to establish buffalo meat plant in India Pakistan’s central bank blocks sale proposal of Noor Financial Investment Co’s 49.1% stake in Meezan Bank Islamic Bank of Britain to hold event today to raise awareness on Shariah compliant financial products Luxembourg’s Council of State asking for greater clarity on Sukuk proposal following perusal IDB agrees financing of US$3.14 million for education development program in Chad IDB boosts job opportunities in Africa through partnership with Dangote Group Development of tax legislation a must for the growth of the Sukuk market according to RAM Ratings IFRS Foundation chairman emphasizes the importance of Shariah compliance as a component to IFRS for it to be widely adopted Malaysia highlights Islamic banking and finance as possible areas of collaboration with Mauritius in light of upcoming MoU GCC banks will face no problem accommodating Basel III standards by deadline, according to Kuwaiti central bank governor GCC bond market to benefit from the region’s improving macroeconomic climate, according to experts GFH Capital successfully places central London property Muscat Securities Market would benefit from privatization according to bourse director general National Bank of Abu Dhabi approves 40% cash dividend for 2013 OIC secretary-general calls for the consolidation of Islamic Federation of Arbitration Centers in the OIC and IDB’s International Islamic Center for Reconciliation and Arbitration Mashreq Al Islami launches new package with increased customer online interaction Qatar International Islamic Bank working on foreign expansion but will remain focus on domestic market presently, indicates CEO Saudi Arabian Airlines procures Shariah compliant financing worth US$1.92 billion to fund purchase of 26 aircraft Bank Nizwa hopes to integrate Islamic banking course in education system by hosting Islamic finance program for school teachers Kuwaiti central bank governor projects an economic growth of at least 3% for Kuwait in 2014 with non-performing loan rate shrinking Sources expect operation volume of Jeddah Islamic Port to increase in the coming period IDB becomes largest Islamic debt issuer listed on NASDAQ Dubai with the listing of its US$5.44 billion Sukuk Emirates Islamic extends special Friday promotions at Dubai Festival City branch Sultanate of Oman only to introduce new Shariah compliant liquidity instruments after debut sovereign Sukuk is issued, says central bank executive president Emirate of Sharjah will raise government spending by almost 7% in 2014 due to increase in public sector wages and operating expenses Dubai Islamic Bank looks to Kenyan and Indonesian markets for expansion Abu Dhabi and the UAE central bank agree on refinancing Dubai’s US$20 billion debt Warba Bank introduces Shariah compliant investment saving account as part of product expansion strategy The private sector will drive Saudi Arabia’s economic growth this year to meet IMF forecast of 4.4%, says central bank governor Facebook and Twitter become new components of the UAE Banks Federation communications program Shariah compliant savings scheme National Bonds sees 23% increase in the number of savers Abu Dhabi Commercial Bank plans additional buyback of shares this year S&P upgrade anticipated for Saudi Arabia by industry players BMI Bank introduces four-month promotion on Salaf personal financing package Dubai Financial Services Authority launches new initiative targeted at enhancing financial knowledge of UAE youths Fajr Capital acquires substantial minority stake in GCC manufacturing firm Dubai proposes new fund category to attract investors to Dubai International Financial Center National Bank of Bahrain reports net profit of US$130.6 million for 2013 Sharjah Islamic Bank reports 12.9% increase in 2013 net profit and approves 10% cash dividend for shareholders Bank Alkhair returns to profit with US$4.7 million net earnings in 2013 Qatar General Insurance and Reinsurance reports 33% increase in gross written premium for Takaful business Bank Rakyat’s 2013 net profit up 8.7% TAKAFUL Pakistani Takaful operators to comply with SECP’s centralized information sharing system by the 1st May 2014 Takaful Ikhlas projects 10% expansion in policyholder base this year amid anticipated financial growth outperforming 2013 ASSET MANAGEMENT Islamic real estate opportunities in the UK extends beyond London Emirates REIT to raise US$136.1 million via IPO Amana-Candor Shariah Fund returns tax-free dividend to unit holders on the back of 10.99% appreciation in 2013 Forty two percent of Malaysians believe Shariah funds could provide higher returns relative to conventional funds, according to Franklin Templeton survey Alkhabeer Capital exits fund with net returns of 85% for investors Sovereign wealth funds interest in M&A activity slows Sidra Capital advises investor on UK real estate investment exit RATINGS Kinsteel’s US$30.47 million Murabahah debt receives lowest junk rating from MARC following missed profit payment AM Best assigns stable ratings to National Takaful Company IJM Corporation’s US$914.88 million Sukuk receives ‘AA3/Stable’ rating from RAM MOVES Acting CEO of Alizz Islamic Bank resigns, replaced by chief financial officer temporarily Coutts chief investment officer resigns for post at National Bank of Abu Dhabi according to reports