Stating the obvious

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
5th November 2014 (Volume 11 Issue 44)
Stating the obvious While much is made of innovation and sophistication, with new instruments and asset classes held up as the ultimate goal for the progression of the industry, sometimes it is worth sitting back and taking stock of where we are, how far we have come, and what we can do to utilize and enhance the tools we already have, before we plunge forward with further additions. This week our cover story looks at how a new strategic concept could revolutionize asset management for Islamic investors through a simple update of active index allocation, in an exploration of the exciting ideas behind advanced beta. Our IFN reports maintain the concept of simplicity bringing its own pace of growth: with an overview of sovereign Sukuk seeing exciting entries this week from new markets such as Mexico; along with a look at how straightforward Sukuk funds are driving forward the asset management industry; a review of Singapore's opportunities in the Islamic space; a new look at the UK's property market; and the potential for Islamic REITs in Sri Lanka. Our correspondents come to you from the Maldives, Qatar and Turkey; while our case study features an in-depth analysis of Luxembourg’s maiden Sukuk and our in-house analyses this week cover trade finance and Kenya. Our features this week are contributed by Majid Pireh from the Securities and Exchange Organization of Iran, writing on futures contract in the republic’s Islamic capital market; and Paul Simpson from First Capital Cashflow on the instrumental role of technology in boosting Islamic finance competitiveness; while we also have special reports from Louise Groom, Joanna Hossack and Ian Montgomery on the use of offshore SPVs in Shariah compliant transactions post-FATCA, and on green Sukuk by Lee Irvine, Michael P Grifferty and Alice Cowman. We also bring you asset management features from Giorgio Medda of AZ Global Asset Management in Turkey as well as Haliza Abd Rahim of Arabesque. The Islamic finance industry is progressing apace, but we must remember the firm foundations on which it is built – and be reminded that progress does not always mean a change of product – sometimes it can just be a change of approach. Cover Story Advanced beta strategies: A no-brainer for Islamic asset management? Alternative beta has been used in the conventional market for years to enhance return and smooth out bumpy market pricing. But what can the strategy specifically offer Shariah compliant investors in terms of advantages over traditional active and passive management? LAUREN MCAUGHTRY explores the opportunities inherent in a whole new approach to Islamic investing. IFN Reports • Sukuk sector drives growth of Islamic asset management in Turkey • The UK means serious business in the Islamic finance world • REDmoney pioneers groundbreaking Islamic finance student forum to confront human capital conundrum • Islamic REITs: The next step for Sri Lanka • UK real estate sector boasts healthy growth figures in spite of upcoming general elections • Sovereign Sukuk: Mexico explores Islamic options • Where next for Singapore? • IFN Global Trendswatch • Maybank Asset Management debuts US-denominated global Sukuk fund • IFN Dealogic round up: Slow month for Sukuk • IFN Weekly Poll: Will the slump in global commodity prices have a negative impact on the commodity-reliant Islamic industry? • Company Focus: NBF Islamic • EIIB-Rasmala reveals expansion strategy, strengthens asset management focus • Eiger Trading becomes an affiliate of the London Platinum and Palladium Market IFN Country Correspondents • Maldives to establish Islamic Finance Center • Turkish central bank maintains interest rates on inflation concerns • Qatar: A positive third quarter • New strategic directions to be formulated for Islamic capital market development in Maldives IFN Sector Correspondent • New attitude in Islamic treasury products IFN Country Analysis • Islamic finance in Kenya: On the cusp of a breakthrough? IFN Sector Analysis • Islamic trade finance: An avenue of leverage Shariah Pronouncement While preparing a manual for vehicle financing through a Murabahah structure, an Islamic bank wanted to adopt a provision of security deposit Case Study First sovereign euro-denominated Sukuk: Luxembourg After much anticipation from the global Islamic markets, Luxembourg successfully priced its Sukuk on the 7th October 2014. NABILAH ANNUAR speaks to Rami Falah, the head of Islamic banking at BNP Paribas Najmah Middle East, lead arranger for the issuance, for an insight into this historic deal. Special Reports The use of offshore SPVs in Shariah compliant transactions post-FATCA In recent years and in the wake of the global financial crisis, international financial centers (IFCs) such as the British Virgin Islands (BVI) and the Cayman Islands (Cayman) have faced unprecedented political and regulatory pressure from governments and international organizations to open up and become more transparent in their business practices. Green Sukuk: The race to be first One of the largest barriers to large-scale clean energy deployment is access to capital and investment. Limiting temperature rise to 2° globally will require an additional US$44 trillion in clean energy investment between now and 2050, according to the International Energy Agency. Features Futures contract in Iranian capital market After the Islamic revolution in Iran in February 1979, the new constitution enforced financial policy makers to avoid any contract that contradicts Shariah rules and regulations. MAJID PIREH explores the implications this has for futures contracts in the Iranian capital market... Why is Islamic finance competitiveness reliant on modern technology? As the Islamic finance industry expands, it is crucial to ensure that its progress is effectively and rigorously monitored, regulated and supervised and that policy challenges are overcome. PAUL SIMPSON outlines some new solutions that technology can offer to assist in this effort... Where next for Islamic asset management? Today, the world’s richest 85 people have a combined wealth of GBP1 trillion (US$1.6 trillion), the same amount as the poorest 3.5 billion of the population, according to a 2014 Oxfam report. In the 1950s, there were 75 cities whose population exceeded 1 million; now there are more than 500... Islamic asset mangement and Sukuk: Exciting opportunities Since 2012, investor perception of Sukuk instruments has advanced beyond the natural boundaries of Islamic capital markets and reached mainstream global finance. GIORGIO MEDDA explores the exciting opportunities for Shariah compliant funds to capitalize on this growing asset class – and discusses why this has not yet fully taken off...  CONTACTS Editorial: Sasikala Thiagaraja Direct Line: +603 2163 7800 ext 34 Finance: Faizah Hassan Direct Line: +603 2162 7800 ext 26 Sales: Dubai: Geraldine Chan Direct Line: +971 4 427 3628 Kuala Lumpur: Steve Stubbs Direct Line: +603 2162 7800 ext 55 Subscriptions: Dubai: Mithun Gangolli Direct Line: +971 4 427 3638 Kuala Lumpur: Siti Amilia Amir Amzah Direct Line: +603 2162 7800 ext 27