Saudi Arabia: A flood or a trickle?

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
13th May 2015 (Volume 12 Issue 19)
New prospects, new horizons While Islamic finance has expanded rapidly and impressively in recent years, it can be easy to forget that while we are approaching the mainstream we remain a niche industry compared to the broader global financial markets. However big we grow, there will always be new markets to conquer, new achievements to attain and new sectors to enter. This week we focus on the exciting opportunities facing the Islamic finance industry in 2015 – with a cover story that looks at the biggest move of all: the opening up of Saudi Arabia’s stock exchange to international investors. Could this really be the step the nation needs to launch itself into the global market as a major player – or will it remain a big fish in the small pond of the GCC? Our IFN reports continue the theme of new beginnings and new horizons: with a look at the latest Islamic financing deal in Myanmar; along with Islamic financing within the oil and gas industry and at an exciting Islamic crowdfunding platform using Bitcoin. Our correspondents talk to you on Kenya, Sri Lanka, Bahrain and syndicated finance; while our feature contributes a look at commodities by Barwa Bank. We also have an exclusive analysis on global Sukuk yields by RHB Research and special reports on financial inclusion and Sukuk by ISRA and Millenia Global Research House respectively. As the industry grows and opportunities grow with it, we can sometimes lose sight of the founding principles, paths and pioneers that brought us to where we are today. Here at IFN, as we gear up for the 2015 IFN Asia Forum being held in Kuala Lumpur soon, we look forward not only to exploring all the exciting steps forward but also celebrating the foundations that support this momentum. I look forward to seeing you there! Cover Story Saudi Arabia: A flood or a trickle? Following the announcement from the Saudi Capital Markets Authority (CMA) confirming access to the Saudi stock market for qualified foreign investors from June 2015, all eyes are on the OPEC nation as domestic competition heats up and foreign participants scramble to prepare for the pounce. But with rigorous restrictions in place and lingering concerns over transparency and accountability, will the 15th June bring a bang or a whimper for one of the world’s biggest Islamic equity markets? LAUREN MCAUGHTRY explores. IFN Reports • Horizons expand for Islamic investment as Irish firm seeks Southeast Asian opportunities • Islamic financing mitigates risks as prices recover • B20 Turkey Financing Growth Taskforce receives Islamic finance recommendations • Waqf — finally in the spotlight? • Focus: Blossom Finance • Sovereign Sukuk: Indonesia and Oman auctions soon • Islamic funds industry to gain from ASEAN advantage • Fundamental shifts for Kuwait Finance House • Islamic bank invests in Scotland • IFN Weekly Poll: Should Islamic finance be recognized as just another asset class in the greater banking industry, or as an entirely separate system? • IFN Global Trendswatch IFN Country Correspondents • Ijarah fulfills the need for education finance • Kenya partners with Qatar and the KCB officially launches its Islamic banking products • Rising to the challenge: The CBB introduces a new liquidity management instrument IFN Sector Correspondent • Islamic syndication market dips slightly IFN Country Analysis • Iran: Waiting to be unleashed IFN Sector Analysis • Commodities in Islamic finance Shariah Pronouncement A financing facility has been approved for a customer, whereby it was allowed to utilize the facility through multiple Murabahah transactions under the facility limit during the facility period. Case Study Inaugural Sukuk: Noor Bank Noor Bank last week successfully completed the issuance of its debut US$500 million Sukuk Wakalah. With the order book closing in excess of US$2.1 billion, representing an oversubscription of 4.3 times, the issuance was one that was well received by the industry, particularly from international investors. Speaking to Noor Bank and Latham & Watkins, legal advisor to the deal, NABILAH ANNUAR provides a detailed account of this historical transaction. Special Reports RHB Global Sukuk Markets Research RHB Fixed Income & Currency Research (RHBFIC) views that the US dollar (US$)-denominated Sukuk primary market will be driven by sovereigns, as oil countries firm up budget needs. An estimated US$6-8 billion of US dollar Sukuk issuance in the second quarter of 2015 (2Q15) is expected, as RHBFIC expects the US interest rate to stay low in 2Q15, hence supporting our view of the bullish Sukuk market to resume. Financial inclusion: The future of a sustainable economy Malaysia’s central bank, Bank Negara Malaysia (BNM), aimed at becoming a strategically-focused, outcome-driven and a sustainable organization in its three-year business plan (2012-14). The business plan focused on developing a more inclusive financial system for a sustainable high performance of the institution regionally and globally. DR SYAHIDA ABDULLAH provides an overview of financial inclusion in Islamic finance. Sukuk: Show me the money All of us are familiar with Tom Cruise’s favorite line: “Show me the money.” While writing his previous piece, “What does Islamic finance have in common with Madoff?”, HUSSAIN KURESHI had to research the list of investors that had filed cases against Madoff in various courts, and in this article, he elaborates on his findings. Feature Commodities and Islamic financing Shariah compliant banking is proving to be a more practical and safer alternative to conventional banking. And what could be an industry-shaping trend in the long term, will also be promoting ethical investments that enhance society. SAMAR HABIB KIDWAI writes.  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