Regulatory reform and fiscal deficit to spur sovereign and corporate Sukuk in Saudi Arabia

24th June 2015 (Volume 12 Issue 25)

Trading on success Trade is at the cultural and historic heart of Islam, with its spread echoing the reach of ancient trade routes across the world and acting as a centralizing force to encourage integration, collaboration and poverty alleviation. Those tenets are as true today as they were a thousand years ago, and in this week’s cover story we explore the opportunities – and challenges – facing the current trade finance sector for Islamic players. Our IFN reports bring you an exploration of the latest in Muslim philanthropy, while our IFN Correspondents update you on New Zealand, Iran, Pakistan and Brunei and our special reports are provided by NCTM Studio Legale Associato on investment opportunities in Italy, INCEIF on corporate Waqf for microfinance and Millenium Capital on the economic and legal effects of Ijarah. Features come from the Bank of Korea, Hikmah Capital Corp and Elixir Capital while our in-house analyses this week look at Sudan and private equity and venture capital. During this quiet period of fasting, we hope that this jam-packed issue provides you with ample food for thought – succoring the mind and spirit while the body strives towards peace and reflection. Cover Story Trade finance: A double-edged sword Trade finance — sleeping giant, unsung hero or simply a solid foundation for financial activity? Despite a decline in commodity prices and overall sluggish global trade growth, Islamic trade finance is booming — with new markets, new players and new products expanding its horizons and impressing its investors. LAUREN MCAUGHTRY gives a rundown of recent activity.  The world in numbers International trade has seen slow growth since the financial crisis and the previous year was one of the worst on record. IFN Reports • Western philanthropy enters Islamic arena • Regulatory reform and fiscal deficit to spur sovereign and corporate Sukuk in Saudi Arabia • Long-term Sukuk the new flavor • Malaysian Sukuk market — uncertain times ahead • Sovereign Sukuk: Welcoming a new player • IFSB focusing on microTakaful to promote financial inclusion • IFN Global Trendswatch • IFN Weekly Poll: In regards to asset management, there are computer programs that can enact portfolio calculations in real time. Once the criteria and tolerance levels are set and approved, do these funds really need an ongoing Shariah board? IFN Country Correspondents • Removal of the government KiwiSaver NZ$1,000 (US$697.58) contribution • Equity portfolio futures in Iran • First Islamic property fund launched in Pakistan • Islamic banking moving ahead in Brunei IFN Country Analysis • Sudan: Solid contender IFN Sector Analysis • Private equity and venture capital in Islamic finance Case Study Garuda Airlines Sukuk: First unrated US dollar Sukuk from an Asia Pacific issuer Garuda Indonesia on the 27th May 2015 successfully priced a US$500 million five-year Sukuk offering. On the back of positive response from investors, Garuda launched the transaction at a price guidance of 6.25%. Special Reports Corporate Waqf as a vehicle for Islamic microfinance — a proposal worth attention Ever since the 1970s, microfinance has become one of the schemes for poverty eradication and economic redevelopment strategies around the world. Investment opportunities in Italy: Shariah compliant minibonds? Italy, as with many other countries in the western world, is facing a deep economic and financial crisis, which has affected the loan market and the ability of businesses to obtain bank financing. Economic effect versus the legal effect blessings of Ijarah The critics of Islamic finance have focused on the economic effect of Shariah compliant financial transactions and not the legal effect of the transactions. Features Islamic finance in Korea: Is it different this time? Islamic finance has been growing rapidly over the past decade as it broadens its investor base across the world. In terms of Islamic finance, Korea has been a latecomer in East Asia. Technology and the Islamic banking and finance industry In the author’s previous article about mobile finance and its applicability to Muslim markets, it was pointed out that over a billion people (the majority of whom are Muslims) do not have bank accounts and are invisible in the modern world of finance. Arcapita on a selling spree Earlier this month Arcapita, a wholly-owned investment management firm of Bahrain-based Arcapita Bank, announced the sale of its US real estate portfolio of senior care communities. The sale comes on the heels of several large dispositions this year.  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