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Islamic Finance Briefing 25.Mar 2010

Posted on 25 March 2010 by Laxman |  Email|Print

From Reuters: Malaysia’s central bank announced rules to tighten sharia compliance at Islamic banks including raising sharia advisers’ accountability and independence, and requiring audits on banks.

Disputes on the compliance of certain products such as a recent case involving Kuwait’s Investment Dar have put the spotlight on the role of sharia advisers in approving products and their relationship with bank management……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Theedgemalaysia.com: Bank Negara Malaysia (BNM) will issue seven more banking licences - five for conventional banking and two for Islamic banking.

Its governor Tan Sri Dr Zeti Akhtar Aziz said the five conventional licences will be issued to those from Asia, Europe and the Middle-east……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Csrdigest.com: Asian Finance Bank (AFB) seeks to cultivate more talent in Islamic Finance. In pursuit of this, the bank will sponsor ten University Technology Mara (UiTM) students in their first degree in Islamic banking.

AFB chief executive officer Datuk Mohamed Azahari Kamil said the bank and UiTM would work together to identify the recipients…………………………….Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Sunnewsonline.com: The global asset of Islamic banking industry has been estimated at 750 billion United States dollars, an Islamic financial expert and Chief Executive, Metropolitan Skills Ltd, Abuja, Hajia Ummahani Amin, has said.

She spoke in Kano at a workshop entitled: Fundamentals in Islamic Finance Workshop for International Islamic Economics and Management of Sciences Project……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Maktoob.com: National Bank of Kuwait, the country’s largest lender said Tuesday it has got the approval to increase the capital by 10% during the second half of this year.

“The increase represents 10% of the Bank’s paid capital after adding the bonus shares that have been recently distributed as per the decision of the Bank’s extraordinary annual general meeting”, the bank’s chief executive Isam Jasem Al Sager said in an e-mailed statement……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Timesofmalta.com: A guidance note for shariah compliant funds has been issued by the Malta Financial Services Authority. The note explains how the legal and regulatory framework established under the Investment Services Act would apply to shariah-compliant funds established under Maltese law.

The MFSA stated that Malta’s principles-based regulatory regime lays emphasis on the disclosure of all information that the investor needed to know before taking the investment decision and on the transparency of investment management process itself……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Thestar.com.my: A new blueprint for the financial sector is being drawn up to realise the nation’s vision of becoming a developed economy by 2020. Another key milestone in the coming years is the review currently undertaken on the existing legislations governing financial institutions and intermediaries.

While the new Central Bank of Malaysia Act 2009 reinforces Bank Negara’s mandates on preserving monetary and financial stability, the proposed enhanced legislation will provide further clarity to its powers, supporting a differentiated regulatory and supervisory regime that best achieves the mandates given to the central bank, including promoting a sound, progressive and inclusive financial sector……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Infozine.com: As the world reels from the knock-on effects of the US subprime crisis, many are questioning the validity of the current financial regime and asking what should replace this flawed system.
Leading Islamic Finance experts Iqbal, Mirakhor and Krichene make a strong case for adopting principles of Islamic Finance……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Aljazeera.net: International bankers have gathered in the United Arab Emirates to finalise a multi-billion dollar debt plan to restructure the troubled Dubai World conglomerate.

Creditors from 97 banks met in Dubai on Wednesday to discuss ways to restructure the company’s $26 billion debt……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Gulf-daily-news.com: Gulf Finance House (GFH) yesterday signalled a back to basics strategy, which will see it concentrating on a core business of creating financial institutions.

That was the message from chairman Dr Esam Janahi after shareholders at the bank’s annual meeting at the Gulf Hotel gave their support to the bank’s strategy to return to profitability……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Dailynews.lk: Islamic finance is certainly the fastest growing industry in the world, worth over US $ 1 trillion to date-a 28 percent increase from last year, which clearly demonstrates the industry’s potential despite the global financial crisis and the consequent economy downturn. Interestingly, the industry is already catering to a non-Muslim customer base as much as 15 percent throughout the world.

The Sri Lankan financial sector remained comparatively insulated from the global financial crisis, despite the fact, like the island’s conventional finance sectors, Islamic finance has also witnessed insolvency before even the industry kicked off……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Reuters: The Gulf’s first exchange- traded fund (ETF), launched by National Bank of Abu Dhabi, will begin trading on the Abu Dhabi bourse on Thursday, in a move to attract more international investors.

The new fund, the NBAD OneShare Dow Jones UAE 25 ETF, will provide investors with exposure to 25 blue chip companies in the United Arab Emirates and will be traded on the Abu Dhabi Securities Exchange (ADX)……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Bernama: The Islamic capital market achieved significant milestones last year with landmark issuance and listing of US dollar denominated sukuk, Bank Negara said.

Despite the downturn in the global economy and heightened risk environment, the Islamic capital market in 2009 saw the landmark issuance of the US$1.5 billion Emas Dollar Sukuk and US$3 billion Emas Dollar Bond by Petronas……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Arabianbusiness.com: A slump in trading revenues and Dubai’s delicate financial state could lead to a merger of the UAE’s two main stock exchanges, analysts said.

The Gulf Arab emirate has three bourses - the Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), and Nasdaq Dubai - each fighting to draw liquidity……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Arabtimesonline.com: Emad Al Monayea, Chairman and Managing Director of Liquidity House said that Islamic banking is growing at a rate of 10-15 percent per year with signs of consistent future growth. He also added that Islamic banks have more than 300 institutions spread in 51 countries, including the United States, as well as an additional 250 mutual funds that comply with Islamic principles.
It is estimated that over $822 billion worldwide Sharia-compliant assets are managed, he said citing The Economist. This represents approximately 0.5 percent of total world estimated assets as of 2005. According to the CIMB Group Holdings, Islamic finance is the fastest-growing segment of the global financial system and sales of Islamic bonds may rise by 24 percent to $25 billion in 2010……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Reuters: Bahrain launched an oversubscribed $1.25 billion 10-year bond at 200 basis points over mid-swaps on Wednesday, mopping up pent-up demand for Gulf sovereign issues.

The bond attracted orders of $5.5 billion, banking and fund management sources said, and the launch spread tightened from initial guidance of 210 bps over mid-swaps. Investors had initially expected a smaller $1.0 billion deal……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Albawaba.com: In celebration of its 4th anniversary, National Bonds Corporation PJSC, the Sharia compliant saving scheme has announced its new mega draw format. From its present weekly draw structure, National Bonds will be moving on to a weekly and monthly draw format effective 1st April 2010.
Having taken the leadership role in promoting the savings culture in the country, National Bonds Corporation PJSC, has now taken a major step towards creating thousands of weekly winners from over half a million bondholders……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Reuters: Banque Saudi Fransi 1050.SE on Wednesday confirmed it raised $650 million in a euro medium-term note which were priced at 175 basis points above mid swaps.
“The subscription’s volume has exceeded the targeted amount of this transaction … with some $3 billion,” the bank said in a statement posted on the bourse’s website……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Tradearabia.com: The cost of insuring Dubai’s debt against restructuring or default fell on Wednesday and troubled Dubai World subsidiary Nakheel’s 2011 Islamic bond rose as markets awaited a restructuring deal for the conglomerate.

Dubai World will discuss how it plans to repay its commitments this week with an informal bank panel……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Bernama: As Malaysia progresses towards a high-income economy, household expenditure on healthcare is expected to increase especially with a growing middle-class population.

Insurers and takaful operators are expected to respond to such developments by providing more cost-effective options to consumers, said Bank Negara Malaysia (BNM) in its Financial Stability and Payment Systems Report 2009 released here on Wednesday……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

From Cpifinancial.net: Takaful Re bounced back in 2009 with profit for the year of $10 million, against a net loss of $10.6 million in 2008. In view of the significant growth in performance and profitability, Takaful Re’s Board of Directors recommended a cash dividend of 3.8 per cent on paid up capital ($0.038/share) amounting to $4.75 million.
Shareholders approved the payment at the company’s Annual General Meeting held Sunday, 21 March 2010 in Dubai……………………………..Full Article: Source

Posted on 25 March 2010 by Laxman |  Email|Print

March 2010 has been “the month of the emerging markets.” Both the Dow Jones Islamic Market Index (DJIM) series and the conventional Dow Jones indexes saw composites from the Middle East and East Asia on the rise.

After a humble 2010 debut, the Dow Jones Dubai Financial Market (DFM) Titans 10 Index was boosted by rumors that Dubai’s state-owned conglomerate Dubai World is in an advanced stage in negotiations with its creditors over a restructuring of its crippling US$26 billion debt. The Dow Jones DFM Titans 10 Index jumped 12.21% higher, closing at 2,422.61 points (as of the close of trading on March 23).

The next largest gainers were the DJIM South Korea Index (up 8.64% at 800.79 points) and the DJIM Hong Kong Index (7.96% higher at 1,510.40 points). As a direct comparison, the conventional bellwethers Dow Jones Industrial Average in New York added 5.46% (closing at 10,888.83 points (note that 8 is the lucky number in Asia)) and the Dow Jones Europe Index ended at 267.50 points (up 5.70%).

The emirate of Dubai, home of Dubai Islamic Bank - which is the oldest regulated Islamic financial institution - and the United Arab Emirates (UAE) are undergoing a series of radical changes. Its building boom might have slowed, but Dubai has successfully constructed the first metro system on the Arab peninsula, which has been in operation since September 9, 2009.

“Dubai 2.0 will not be a remote place in the desert anymore, but a well-connected international hub”, says Jeff Singer, CEO of Nasdaq Dubai. Moreover, the Gulf States have projects worth a whopping US$2.2 trillion in the pipeline, according to Dr. Nasser Saidi, Chief Economist of the Dubai International Financial Centre DIFC. Take Kuwait, for example: The small northern Gulf state alone announced a five-year plan worth an astounding US$104 billion in mid-March.

Shares of Kuwait National Airways have been added to the DJIM GCC Index, which covers Shari’ah-compliant stocks from Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. They are considered Shari’ah-compliant (or pure) because civil airlines usually do not or post rather insignificant turnover with pork, pornography, tobacco, weapons, or interest-bearing financial products.

Another new addition to the DJIM GCC Index is Vodafone Qatar, which saw a US$1 billion IPO in May 2009. The DJIM Kuwait Index dropped by a quarter percent and finished at 861.95 points - one of the worst composites of March. But, remarkably, it is still the top-performer on a year-to date basis (up 10.55%). At the bottom of the charts, the DJIM Sri Lanka Index plummeted two percent and closed at 1,661.61 points.

According to Jennifer Choi, Director of Research, Emerging Markets Private Equity Association, emerging markets have not seen a major decline in the market for non-capital market financing, bringing innovative firms “from Main Street to Wall Street”. “ In 2009, 26% of all private equity (PE) deals worldwide - which stood at US$85 billion - were done in the emerging markets in South America, Eastern Europe, the Middle East and North Africa and East Asia”, Ms. Choi explains. Rising activity private equity is seen as a prelude for increasing capital market liquidity. Privately financed firms, mergers or acquisitions are often followed by IPOs, listed spin-offs or bond issues.

However, PE firms and banks are focused more than ever on the “old economy” rather than on IT and biotech-firms, as they used to be. Consequently, the DJIM Industrials Index closed 7.59% higher at 1,491.97 points - the highest of the DJIM industry indexes. All Shari’ah-compliant industry composites gained territory in March.

By Gérard Al-Fil

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