Wednesday, May 23, 2018

FW: Islamic Finance News Alert




Islamic Finance news Alert

Islamic Finance news Alert


Wednesday, 23rd May 2018


S&P 500 Shariah

Dow Jones Islamic World

FTSE Shariah All World

Russell - IdealRatings Islamic Global





+17.55 (0.73%)

+18.89 (18.89)

+10.19 (0.42%)

+7.23 (0.29%)


HIGHLIGHTS: Emirates NBD buys Turkey's Denizbank – Indian High Court extends time for authorities' response on Islamic banking – Alawwal Bank-SABB merger to take a year



PODCAST: Could Islamic finance be the answer?

Daily Cover

GLOBAL: Does the current climate represent a manifestation of endemic problems within the global financial system – and could Islamic finance provide the answer? That is the question that this week's IFN Podcast attempts to answer, as Khalid Howladar of Acreditus speaks to IFN to explain his belief that the current debt cycle can only end badly for everyone…

The former global head of Islamic finance and head of GCC banks for Moody's Investors Service, Khalid has 20 years of industry experience under his belt, and he has never been shy about speaking his mind. A familiar figure within Islamic finance, since striking out on his own in 2017 Khalid has been quick to identify the urgent issues facing the industry – and explore how things could change.

The current situation with President Donald Trump in the US, and Brexit in the UK, are, he suggests, the inevitably populist consequences of the financial inequality and insecurity rife in the world today – and they highlight the need for a more inclusive financial system that favors the investment principles of Islamic finance. The rich are getting richer and the poor are getting poorer, and Khalid believes that we need to move away from the "obsession with debt finance" toward a more inclusive and ethical form of capitalism.

"If you look at the world today, we got out of the last debt crisis by taking on even more debt. Globally we are US$165 trillion in debt, which is 225% of total global GDP – how is this ever going to get paid back? Islamic finance actually discourages debt-based income," Khalid pointed out.

"In a society where rich people tend to have assets (land, equity, investments), they can leverage those assets to borrow cheaply. So the rich get richer. Lower income people tend to keep their money in cash in the bank, which the bank then uses to lend. So to simplify it, rich people are using the money that poor people keep in the banks to leverage their wealth at low rates and make even more. In comparison, Islamic finance favors equity-type ownership. So if you want to use my money, you have to invest it in something tangible and give me a share of what you get back. This economic angle is currently missing from a lot of our discussions around Islamic finance. We are not here just to replicate the conventional products – there is an element to Islamic finance that makes it genuinely better suited to our society. Our current system is simply not socially sustainable."

This all sounds very noble and very ambitious – but in reality, is it really the case? Some of the best-known Islamic instruments for example are Sukuk – essentially a Shariah compliant form of debt. And much of the Shariah compliant funding pool derives from institutional and high-net-worth investors – rich people, getting richer. Islamic finance might have the power to solve these problems – but is it actually doing so?

"This is the crux of the issue," said Khalid. "The poster child of Sukuk is perhaps not a good flag-bearer for the values of Islamic finance. Sukuk instruments at their core should be asset-backed, risk-sharing instruments. But crucially, the two most important people in the market are the issuer and the investor. They want the equivalent of a bond or a debt-type instrument. That's just the way things are. It can still act as a good foundation to raise awareness however – we can't expect to go straight from A to Z on day one. Perhaps, on the alphabet scale, we have only made it as far as D or E – we still have a long way to go."

But we are seeing a lot more soul-searching and a lot more interest in the social elements – and perhaps now Islamic financial institutions could feel more of an impetus to move toward a more genuine value proposition based on this ethical trend. "I think it is developing, and with more education and more transparency, those that genuinely care can start to move things slowly in that direction. The issue is that a lot of the industry has a vested interest in the current system. In all these discussions, you need to look at the various stakeholders around the table – there is a whole industry of people practicing in this market, and you need to look at their agenda and motivation."

Whether or not you agree, one point Khalid makes rings chillingly true. "Right now, interest rates (and profit rates) are super low. We've seen a lot of quantitative easing from governments. But there is a real risk that as rates start rising, a lot of people who have taken on debt in recent years may once again find themselves struggling – and that is not good for anyone. We need to be mindful that this perpetual debt cycle that we are in could eventually end pretty badly in the future."

To hear the full conversation and learn more about Khalid's views on the future of Islamic finance, log on to





Algeria: A Correspondent Report

Algeria: The central bank's plan for Islamic banking
Just like in Tunisia, Islamic banking in Algeria started before the establishment of legal or regulatory frameworks. The first experiences were conducted by foreign Islamic banks like Al Baraka Bank and Salam Bank. Recently, Tunisia adopted a law including articles about Islamic banking but the regulatory framework is still not implemented.




Real Estate: A Correspondent Report

Summer slowdown?
As we are now in the holy month of Ramadan and with the thermometer and thoughts of summer starting to rise in the Middle East, we would normally expect investor interest in Islamic real estate investments to have started waning by now, which is certainly what I have seen in previous years. However, we seem to be getting more enquiries than ever, with no let-up in sight.




Today's IFN Alerts

MALDIVES: Maldives Monetary Authority issues two Mudarabah certificates worth a total of MVR170 million (US$10.78 million)

INDONESIA: Indonesian government auctions six Islamic papers; receives IDR31.48 trillion (US$2.22 billion) in bids

BANGLADESH: Bangladesh Bank sells six-month Bangladesh Government Islami Investment Bond

MALAYSIA: Bank Negara Malaysia raises RM13.98 billion (US$3.52 billion) via sale of five money market instruments

INDIA: Indian High Court extends time frame for authorities to respond to public interest litigation on the introduction of Islamic banking

GLOBAL: Emirates NBD acquires Turkey's Denizbank

SAUDI ARABIA: Merger between Alawwal Bank and Saudi British Bank to take a year, says Alawwal chairman

GLOBAL: NASDAQ Dubai to roll out equity futures on companies listed in Saudi Arabia

MALAYSIA: Bank Negara Malaysia permits Kenanga Investment Bank to begin acquisition negotiations with Interpac Securities

UK: KDM Hurst Street and KDM Tabley Street secure Islamic financing from Bank of London and The Middle East for development in Liverpool

IRAN: Bank of Industry and Mine and Vnesheconombank sign EUR1.2 billion (US$1.41 billion) contract

KAZAKHSTAN: WIEF Foundation postpones World Islamic Economic Forum 2018; no new dates given

MALAYSIA: CIMB Islamic Trustee divests shares in Eduspec Holdings

BANGLADESH: Shahjalal Islami Bank Securities withdraws two authorized representatives

SAUDI ARABIA: Arabian Shield Cooperative Insurance Company's extraordinary general meeting approves capital increase via bonus shares

IRAN: The US withdrawal from Iran nuclear deal increases geopolitical risk for Middle Eastern countries, says Moody's

SAUDI ARABIA: Al Sagr Cooperative Insurance Company gets Capital Market Authority's nod to increase capital to SAR400 million (US$106.6 million)

MALAYSIA: Ali Allawala takes over as CEO of Standard Chartered Saadiq Malaysia

MALAYSIA: Malaysian Rating Corporation names Kan Wai Sum as CEO

SAUDI ARABIA: Amanah Cooperative Insurance Company welcomes new vice-chairman of board of directors



GLOBAL: Dr Kamola Bayram is the new IFN correspondent for education sector

GLOBAL: IFN welcomes M Wail Aminou as new correspondent for the SRI, ethical and green sector

KAZAKHSTAN: Shaimerden Chikanayev joins IFN as correspondent for Kazakhstan

GLOBAL: Sohail Zubairi to author IFN's new 'Back to Basics' section

ALGERIA: IFN welcomes Dr Ahmed Tahiri Jouti as new correspondent for Algeria


REDmoney events

UK Islamic Finance Week 2018
5th September 2018 (London)

IFN Turkey Forum 2018
10th September 2018 (Istanbul)

IFN Indonesia Forum 2018
1st October 2018 (Jakarta)

IFN Africa Forum 2018
October 2018 (Africa)

IFN Americas Forum 2018
11th October 2018 (New York)

IFN South Africa Forum 2018
23rd October 2018 (Cape Town)

IFN Kuwait Forum 2018
5th November 2018 (Kuwait City)

IFN Saudi Arabia Forum 2018
7th November 2018 (Riyadh)

IFN Investors Forum 2018
26th November 2018 (Kuala Lumpur)



*all index data correct as at 11:00 GMT+8

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