Running the numbers

15 days to go Home Contact Us Subscribe Advertise Events Training REDmoneyGroup Running the numbers We talk a lot about trends and potential and future prospects, but sometimes it all boils down to hard facts and figures. This week, we take a look at the real face of the Islamic financial markets with a cover story focusing on Shariah index performance and the concurrent boom in ETF and index-linked products. Our IFN reports continue with a run-down on the progress of Sukuk structures; an evaluation of what Dubai has really done so far in terms of Islamic economy initiatives; an analysis of the complex relationships between Iran and the GCC; an exploration of the growing Islamic proportion of official institutions investment; a look at the growing world of Islamic online banking; and a further update on the ongoing sovereign Sukuk race. Our country analysis looks at opportunities in Brazil, while our sector analysis covers Islamic trade finance. Our IFN country correspondents bring you news from Bangladesh, Lebanon, Morocco and Turkey; while our sector correspondents look at recent developments in the Tahawwut (Islamic hedging) Master Agreement from IIFM, as well as an update on UK real estate from 90 North and an overview of the new Sukuk regulations in Turkey. We have special reports from Mujtaba Khan of the UK Islamic Finance Council proposing a new Shariah impact rating methodology, along with a look at the unification of Musharakah contracts in Iran. Our feature is brought to you by Alvaro Taiar Jr and Felipe A Bitar of PwC Brazil on the country’s recent developments in Islamic finance. Cover Story Passive performance: A new frontier for Islamic index investing The world of passive investing is growing in influence as new strategies emerge, more sophisticated products are developed and benchmark returns are exceeded. The Islamic space has hitherto failed to keep up with the pace of the conventional market – but with an expanding universe of Shariah compliant indexes and a growing interest in ETF products, could this be the year the Shariah sector steps back to embrace its passive potential? Islamic Finance news takes a closer look at the intertwined industries of indexes and ETFs. (Click to read full report) Shariah Pronouncement: A customer has sought a financing facility from an Islamic bank in order to procure a running commercial property from a third-party seller (Click to read full report) IFN Reports: Sukuk race: South Africa out of the game? DIEDC’s execution plans for Dubai Iran — rebuilding regional relationships Sukuk structures: A matter of necessity and precedent Islamic banking redefined Official institutions expand into Islamic investments IFN Country Correspondent: Conventional banks converting to Islamic Morocco’s parliament begins discussions on Islamic banking project law Lebanon Zakat Fund Recent amendments on real property taxes IFN Sector Correspondent: Developments on the TMA and Netting Opinions Overview of the Sukuk regulations in Turkey Student accommodation: Attractive fundamentals IFN Country Analysis: Eye on the prize: Islamic finance in Brazil IFN Sector Analysis: Shariah compliant trade finance Special Reports: The unification of Musharakah contracts in the banking system of the Islamic Republic of Iran Shariah impact rating methodology — a new way to rate Shariah compliant products Feature: Brazil and recent developments in Islamic finance initiatives Brazil is hoping to leverage its business relations with the Islamic financial market, and during recent business trips to the Middle East ALVARO TAIAR JR and FELIPE A BITAR have heard much positive feedback due to the country’s stable economy, size of market and well-regulated financial system. However, concerns remain over the lack of Shariah compliant assets to offer to investors. Brazil already boasts a good level of trade flow with Islamic countries... (Click to read full report) DEALS Abu Dhabi’s Tourism Development & Investment Co secures financing for US$1 billion Sukuk repayment due in October. Fawaz A Alhokair & Co holds investor roadshow for proposed Sukuk Jordan plans local and foreign currency Sukuk issuances for 2015 Indonesian finance ministry sells IDR890 billion (US$76.9 million) in Sukuk but misses predicted target Changing market sentiments may drive Shariah compliant banks in Turkey to issue Sukuk earlier than intended, according to observers Periodic distribution payable on the 6th June for OCK Setia’s RM150 million (US$46.33 million) Sukuk Murabahah Saudi Electricity Company Sukuk 2 to be delisted following redemption, according to bourse statement Ras Al Khaimah considering Sukuk issue in 2014 according to sources Hong Leong Islamic Bank issues first tranche of RM1 billion (US$312.53 million) subordinated Sukuk Ijarah program using unique structure BTMU to issue Sukuk in Malaysia, tapping the country’s solid Sukuk market Autoriti Monetari Brunei Darussalam issues 105th Sukuk Ijarah, bringing total value of issuance since debut to BN$7.33 billion (US$5.75 billion) Dar Al Arkan Real Estate Development Company lists three Sukuk on NASDAQ Dubai worth a total of US$1.15 billion Public Islamic Bank raises RM500 million (US$156.26 million) through the first tranche of its subordinated Sukuk Murabahah program NEWS ASBB, BMI Bank and Meethaq in trilateral pact for the advancement of Islamic banking activities Almaty to model its development on the City of London in its role as IDB Central Asia financial hub Affin Islamic Bank makes RM400,000 (US$123,806) Zakat contribution to Tabung Baitulmal Sarawak Islami Bank Bangladesh to distribute 18% dividend comprising 10% stock and 8% cash to shareholders for the year 2013 Social Islami Bank shareholders agree on 12% cash dividend for 2013 financial year Ziraat Bank potentially eyeing stake in Bank Asya as it plans to enter Shariah compliant banking sector, according to reports Pakistani government commissions committee to finalize recommendations for its Islamic banking industry by the end of the year Bangladesh’s finance ministry considering Sukuk amendments to broaden its use and allow for a sovereign issuance, says central bank Islamic finance a growing interest for Singapore according to regulator Islamic banking assets in Riau up by 6.56% quarter-on-quarter, according to central bank official RAM Holdings adopts new expansion strategy, looking at possible partnerships to grow rating business in the GCC Emaar Malls Group holds investor meetings for prospective Sukuk auction Potential exists for Pakistan to become a regional hub for Islamic finance, says senior industry player Indonesian Ministry of Tourism and Creative Economy introduces Halal tourism to attract Shariah-seeking tourists Industry players calling for the exemption of tax on Zakat payment in Bangladesh Shariah compliant investments still not fully understood by Malaysian investors according to poll EFG Hermes subject to EGP1.84 billion (US$256.68 million) bid for 20% share from New Egypt Investment Fund Maybank agrees US$15 million Shariah compliant financing facility for Atlantic Navigation Holdings HamkorBank engages AlHuda CIBE Pakistan as Islamic banking advisor in efforts to boost Shariah banking activities in the country RAM Ratings believes that discerning investors will be the key driver of credit ratings in the future, in light of removal of mandatory credit rating for Sukuk and bonds in 2017 European Islamic Investment Bank to seek approval for share buyback Simply Sharia’s pioneering Green Energy Enterprise Investment Scheme will utilize a Wakalah structure, says CEO Institutional investors could play a key role in enhancing funding for large infrastructure financing, according to Moody’s managing director IDB commits US$180 million in financing to renewable energy projects in six African countries through new initiative for poverty reduction Dubai Islamic Bank completes acquisition, now owns 24.9% stake in Indonesia’s Bank Panin Syariah BankIslami Pakistan and Finance Accreditation Agency Malaysia agree to advance with accreditation of the institution’s Islamic banking training program IDB signs new agreements with Sudan promising US$100 million for project funding Agreement for cooperation signed between Malaysian and Iranian industry organizations Kazakhstan’s Islamic finance industry still in its infancy, opines S&P Kuwait Finance House-Bahrain extends offer of help to develop Brunei’s Islamic finance industry Abu Dhabi Islamic Bank launches second car manufacturer investment note following success of inaugural issue Dubai aims to be a reference point for the Islamic economy according to Islamic economy initiative head GIB Capital receives regulatory approval to increase capital to SAR200 million (US$53.32 million) National Bank of Abu Dhabi signs partnership to expand its global markets e-commerce services Sovereign fund Mumtalakat registers net profit of US$292.6 million in 2013 and now looks to a profitable future after five years of losses UAE banks on board for Smart Government Mobile Wallet initiative Investors warm to the UAE as it moves up the Global FDI Confidence Index to 11th place Al Baraka Islamic Bank collaborates with Extra for launch of new Taqseet card promotion RAKBANK confirms increase of foreign ownership limit to 40% on Abu Dhabi Securities Exchange Aldar Properties reduces average cost of its debts and looks to monetize its land assets Barwa Bank upgrades banking technology to Shariah compliant ETHIX system Noor Bank joins National Bonds Company distribution network Shura Council to consider proposal for establishment of Saudi sovereign wealth fund Central Bank of the UAE to consult with banks on new liquidity and capital rules in line with Basel III Bank Nizwa expands consumer banking suite with new Shariah compliant home financing product Emirates Islamic files official report against collector for alleged forgery and embezzlement Mid-sized banks face a struggle but Moody’s predicts Oman Arab Bank to come out on top Islamic finance growing at an annual rate of 15-20%, according to DIFC CEO Dana Gas receives approval to increase share capital via convertible Sukuk Warba Bank launches new branch in Jahra Rising property prices in Dubai and Abu Dhabi trigger warning from UAE central bank Barwa Bank sells stake in Barwa Real Estate to General Retirement & Insurance Authority and Military Pension Fund UAE banks display systemic strength according to Financial Stability Report Ahli United Bank reopens Sanabis branch following renovation Bank Muscat considers sale of brokerage division according to bourse statement TAKAFUL IBank expands bancaTakaful distribution channels through three Thai insurers Trading of Weqaya Takaful Insurance and Reinsurance Company shares suspended on Tadawul by the Capital Markets Authority Takaful Islami Insurance approves 15% stock dividend Takaful Ikhlas plans to expand beyond Malaysian market into European region with a focus on family products ASSET MANAGEMENT PineBridge Investments Middle East raises US$140 million for its Shariah compliant real estate fund, surpassing initial target by 40% RATINGS MARC withdraws rating of fully redeemed Tele-Flow Capital Sukuk Moody’s assigns ‘Baa2’ rating for Emaar Malls Group and a provisional rating for its proposed Sukuk Saudi Investment Bank rated ‘A-’ with a positive outlook by Capital Intelligence S&P affirms ratings for Oman with a stable outlook based on solid net external and general government asset positions Majid Al Futtaim’s Sukuk vehicle receives ‘BBB’ rating from Fitch RAM Ratings assigns ‘AAA(bg)/Stable’ rating to Bank of Tokyo Mitsubishi UFJ's US$500 million multi-currency Sukuk program Tanjung Bin Power’s RM4.5 billion (US$1.41 billion) Sukuk receives ‘AA2/Stable’ rating from RAM MOVES Saudi Hollandi Bank names May Mohammed Al Hoshan as head of human resources Takaful Islami Insurance re-elects public shareholders directors